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3 min read
Overview
It's not about You, It's about Your Family
Estate planning is a gift to your loved ones during a time of sadness and transition. Your family will benefit from your estate planning which, when done properly, speeds up the transition of assets to your intended beneficiaries, ensures beneficiaries are protected, and reduces expenses and estate taxes.
Regardless of the complexity of your estate, without proper estate planning, your family or friends will have to navigate a court process to get the authority to step in. This leaves your loved ones dealing with a complicated legacy as well as unnecessary costs and delay.
What happens if you Fail to Plan
If you die without a will, you are considered to have died “intestate”. Each province and territory in Canada has its own set of intestacy rules. In Alberta these rules are codified in the Wills and Succession Act. Without a will, you do not get to say who inherits your assets or who administers your estate. This could result in your assets going to unintended beneficiaries or not taking into account the special circumstances of your estate and your beneficiaries. Intestacy often results in greater costs slower distribution of assets to the specified beneficiaries. You would also not be able to provide direction with respect to who you would like to have as guardian for any minor children.
Planning Considerations
Estate planning ranges from simple to complex depending upon your circumstances. There are a multitude of potential estate objectives that we may consider with you in the development of your estate plan. Generally speaking, if your assets do not pass through your estate, they will not be subject to probate or probate taxes. As we work with you to design your legacy, there are various methods of transferring assets that you may wish to consider including:
Gifting Assets before Death
Establishing Family Trusts
Transferring Assets into Joint Tenancy (so that they pass outside of probate)
Life Insurance
- Your Will (which can include outright distributions on death or testamentary trusts for spouses, minor children or beneficiaries with disabilities or addiction or financial literacy issues).
It is important to consider these strategies with the assistance of your advisors to ensure that this planning works with your specific situation including your wishes and estate planning objectives.
Succession Planning for Significant Family Assets
Legacy planning often involves specialized planning in respect to assets of significant value and complexity such as family businesses, family vacation properties and family farms, which you may not want to transfer and dispose of without additional considerations. We often address the complexities of these types of assets with the use of additional tax planning, family trusts, unanimous shareholder agreements, co-ownership agreements, or rights of first refusal that speak to the succession goals (whether that be the sale of a business to a third party, the transfer of power to the next generation and/or key employees, or a co-ownership agreement between siblings in respect to the family cabin).
Planning for Incapacity
A good estate plan should also address potential situations where you may be alive but lack physical or mental capacity. Two separate legal documents are prepared to deal with situations where you are alive but lack the physical or mental capacity to deal with your financial matters and health care and living decisions. In Alberta the document that deals with your finances and assets is called an enduring power of attorney (“EPA”). Typically, an EPA is used for finances and property where you, the donor, are unable to act or make decisions for yourself, although sometimes an EPA may be enacted immediately even if the donor still has capacity. The second document is a personal directive (“PD”) and takes effect when you no longer have capacity and need someone to make decisions about your health and well being.
The number of Canadians living with declining capacity continues to rise. We are living longer, but more often with diminished capacity. Cases of dementia are expected to rise 68% over the next 20 years and therefore its prudent to be proactive in preparing these documents so that your loved ones are not left with a stressful, time consuming and costly court application to be appointed to assist you.
How do you get started?
Reach out to us! With our in-depth and specialized knowledge, we can provide estate planning recommendations and plans to accommodate your objectives and your specific situation (and any changes along the way). We will work with your other professional advisors to ensure your planning today ensures the legacy you want to leave tomorrow.
