Why do you need an estate plan?
By Alexandra Balaj & Monica Beffa
Have you seen Knives Out (2019)? Do you remember that scene where the family was shocked, confused, and angered by the reading of the will? When it was discovered that the deceased patriarch left his entire estate and business to an unexpected individual, his family immediately tried to challenge the will. They contemplated arguing that he was under a lot of medication, forced or unduly influenced to make such a drastic change to his will. They fought amongst each other for hours. Unfortunately, this scene is not uncommon when it comes to the final reading of wills. Even if the deceased had thought they were clear and fair in dividing their assets between their family and friends, their written words can be interpreted differently or challenged in court and the deceased will be unable to speak for themselves. This is one of the many reasons why you need an estate plan prepared while you are still alive, and the the best time to start is now.
Some people might hear the word “estate” and think that since they don’t have a multimillion-dollar property, estate planning is unnecessary. This couldn’t be further from the truth. If you’re married, if you have children or pets, if you have any assets or property at all, you and your loved ones will benefit from an estate plan.
What Can Be Included In Your Estate Plan?
An estate plan can include a will; the power of attorney or representation agreements; advance directives; appointed guardians, executors, and trustees; business succession plans; trusts; beneficiary designations; and charitable gifts. The numerous legal terms and their definitions can seem a little intimidating. Essentially, a final Will doesn’t cover everything. There are several important decisions you can make and implement while you’re still alive that can make everything easier for yourself and others, before and after your death. To learn more about Wills in particular and their advantages, you can read these previous posts from our blog:
- Why Do I Need A Will?
- The Curious Case of Jeffrey Epstein’s Wealth, Death, and Estate
- Three Things You Need to Know About Taxes At Death
- 7 Celebrities Who Didn’t Leave A Will
- Do I Need A Lawyer To Draft My Will?
Why Do You Need An Estate Plan?
If you were to have a serious accident tomorrow and you became unable to communicate, did you know that your spouse and family would not have the legal authority to make certain financial and medical decisions on your behalf? That is unless they have power of attorney. This happened to Margot Bentley in 2014. As a nurse in British Columbia, she decided she did not want to end up like many of her elderly patients, so she wrote a living will (a document that outlines an individual’s healthcare and life-support preferences) that stated that if she ever became extremely disabled, she did not want her life to be extended by artificial means. However, now in her 80s with late-stage dementia, her healthcare team and a B.C. Supreme Court decided that since she still accepts food from her nursing home staff, she must be consenting to be kept alive. Her family disagreed and appealed the decision to have her wishes complied with, but their claims had been denied by the B.C. Court of Appeal in 2015.
Part of the reason behind this dispute appears to be the lack of legal authority in her living will. Living wills (in Ontario called “advance directives”) are limited by the individual’s knowledge and foresight into what medical issues may arise in the future. Medical technology may change between drafting the advance directive and the point at which it is implemented. The best practice is a combination of a power of attorney and an advance directive. An advance directive can be used to explain, for example, whether you consent to surgery if you wish to be placed in a retirement home, if you would like to remain on life support and whether you consent to donate your organs. Meanwhile, a personal care power of attorney lets you pick one person to make healthcare decisions for you if you become incapacitated. This is more useful than an advance directive alone because you won’t be able to anticipate and write down your answer to all the medical dilemmas that may occur in your future.
A power of attorney can also be assigned to make financial decisions for you when you no longer can, whether you are incapacitated or deceased. This includes tasks such as paying your bills, banking, processing your mail, filing your tax returns, and even voting on your behalf. If your spouse does not have power of attorney, they will not have the legal authority to perform these for you. You can think about it this way: a power of attorney is for life; a will is for death. An estate plan includes both.
Besides the person(s) to whom you’ve assigned power of attorney, your estate plan should also include appointed guardians if you have any dependents, including pets. It may be best to add a lump sum (potentially in the form of a trust) for the care of these loved ones.
Estate plans can also include funeral and burial preferences and instructions as well as funds assigned specifically for this purpose. This will ease some of the financial and decision-making burdens of your loved ones during the rawest period of their grief and bereavement.
If you have a business, your sudden death or incapacity can create serious damage or delay if you don’t have a plan. This is why it is ideal to have a plan of succession or an idea of a fair market asking price for the business if you don’t have any successors and wish to sell it. As with the points above, it is also beneficial to set aside some money to cover the expenses of running the business during an unexpected transitional period.
When Should You Start Your Estate Planning?
To quote Jennifer Leathem from the Financial Post, “It’s never too early or too late to start estate planning because death or incapacity is often unexpected.”
According to a 2020 survey, over 50% of Canadian adults do not have a Will. That percentage jumps to almost 90% for adults under the age of 34. A Will and estate plan can help you control how your assets will be distributed after your death, how your loved ones will be cared for, and who will make decisions on your behalf before and after you die. An estate plan should involve consultations with a lawyer, financial advisor, and accountant. Their expert advice will ensure your estate plan is properly prepared, up-to-date, and unlikely to be challenged.
This year, the federal government passed a bill that made amendments to the Succession Law Reform Act and the Substitute Decisions Act. In light of the conditions imposed by COVID-19, the amendments officially allowed remote or virtual signing for Wills and powers of attorney.
This makes estate planning quicker and easier than ever!
In our estate practice at BeffaLaw we have a streamlined process for helping our clients draft their wills and power of attorneys. Depending on the complexity of the situation, our clients can have their wills done in a couple of days.
Get in touch! Beffa Law would be pleased to help. Please contact us at 647-812-8462 or email us at firstname.lastname@example.org.