Need help making or updating your Will?
1.Decide who gets your assets (property and money).
2.Decide who will be in charge (executor, estate trustee).
3.Decide who will be your back-ups (alternative choices).
Estate Planning
4.What is estate planning?
5.Why is an estate like a pie?
6.Six dangers of owning property jointly
Making a Will
7.Why do I need a lawyer to make a will?
8.How do I choose the right executor?
9.What is important about wills?
Powers of Attorney
10.What you should know
11.Powers of Attorney – Tips to Remember
Need help making or updating your will?
If you want to avoid headaches for your loved ones, then remember this key rule:
Update both your will and estate plan every time you have a change in your:
• assets (e.g. inherit money or buy property)
• beneficiaries ( e.g. have children or stepchildren)
• relationships (e.g. divorce or separate )
When writing your Will, here are 3 key decisions you must make:
1. Decide who gets your assets(property and money).
These people are usually called your beneficiaries. Legally you must include your spouse and those financially dependent on you.
Exclude a spouse or a dependant and you risk having your will contested. Your family can be torn apart in the process.
2. Decide who will be in charge(executor or estate trustee).
Every estate needs someone to call the shots. These people resolve matters among family members when inevitable conflicts arise.
Questions can arise such as dealing with creditors, disputes over the sale of property, and arranging for custody of children.
We call these people Executors. In Ontario, they are referred to as Estate Trustees with a Will. They are your estate’s legal representatives.
3. Decide who will be your back- ups (alternative choices).
You need back-up executors and even back-up beneficiaries in case your first choices are no longer available, not interested in the job, or not available. You do not have to make these decisions alone. You can trust my experience to guide you.
Don’t wait any longer to protect yourself and your loved ones.
Get your MrWills.com Guide to Estate Planning today. Book an appointment today.
Estate Planning
4. What is Estate Planning?
Even professionals disagree on how to define estate planning.
Don't be fooled thinking you have to be rich. It’s something everyone must do.
Estate planning is what you do for the people you care about. You do it to make sure your hard-earned money goes to those closest to your heart.
A picture can save a 1000 words. Estate Planning Should Look Like This:
This picture describes what your estate planning does.
You take steps so your money goes straight to the people you love. You plan so you can:
• save taxes
• avoid unnecessary problems
• reduce and delay legal expenses
5. Why is an estate like a pie?
Simple. Everyone wants a piece of your pie. My “easy-as-pie” system will help you get started. I have taught it to thousands of people across Canada.
The first step in estate planning is this: Find out what’s included in your estate.
Draw a circle. Imagine it contains all your estate assets.
Now divide the circle into three wedges. These three wedges represent three kinds of assets in your estate: joint assets, designated assets and will assets. I’ll explain each one of these in turn.
This will help you understand what is included in your estate.
Your Estate Pie looks like this:
When you die these three assets are controlled respectively by laws, contracts and wills. It’s important to know that each asset group has distinct ownership characteristics.
Now let me explain. Each of these has a different estate planning consequence.
1. Joint Assets
Your home and bank account, jointly owned with your partner, are examples of joint assets.
Joint owners have the legal right of survivorship. This means joint assets to the surviving owner.
You cannot control joint assets by your will unless your joint owner dies first.
2. Designated Assets
Your RRSPs, RRIFs, life insurance and pension plans have designated beneficiaries. Such assets are transferred after your death by written designation to your named beneficiaries.
3. Will Assets
What are will assets? Anything not designated or jointly owned. Will assets are covered by your will. Note: Life insurance policies or assets made payable to your estate, are will assets.
Each asset slice in your circle may be a different size. Your pie could be worth thousands or millions of dollars. Everything you own fits into one of these sections.
Understanding how these assets affect your estate is the key to start successful planning.
Learn more with Estate to the Heart: How to Plan Wills and Estates for Your Loved Ones.
6. Six dangers of owning property jointly
Owning your property jointly with a married partner may be part of a good estate planning strategy. Do not make the mistake of doing this without legal advice.
However, recent Supreme Court of Canada decisions have made this practice dangerous.
Do not make this mistake. Placing your assets into joint ownership with another person may not avoid probate. It can create headaches and heartaches.
There are many dangers in transferring property into joint ownership without legal advice.
Here are the six dangers that start with the letter “D”.
1. Disaster
Joint owners can refuse to cooperate when you need to deal with the property. No law says your family member has to do exactly as you say. Once they are a joint owner, they can refuse to cooperate with you.
2. Death
Your child could die first, or at the same time as you. This means you must plan for other contingencies. You still need an estate plan.
3. Divorce
Divorced or separated spouses of your child can make a claim to the property. This can force you or your estate to sell the property.
4. Debts
A child’s creditors or bankruptcy can make claims against property. Again, this can place a lien on your property.
5. Disposition
Transfers of some types of assets can be expensive. You can create a taxable capital gain when you transfer capital property (stocks, cottages, real estate) even though you get nothing in return. You can be liable to pay income taxes.
6. Dumb
Placing property into joint ownership with someone other than your spouse can be dangerous. This can cause a lawsuit. Judges may have to decide what your intentions were when you created the joint asset.
A court can be asked to decide if you were either:
• intending to make a gift
• trying to avoid probate
• wanting to do both.
Years later, evidence may be difficult to find. Witnesses may not be available.
In court, proving a gift is a costly proposition. You do not want your decisions transferring assets into joint ownership to force your family to hire lawyers and go to court.
Joint ownership can create more problems, not prevent them.
Always obtain professional advice before transferring assets into joint ownership. Get independent legal advice before you make a mistake.
Contact us for a consultation or second opinion. Find out more in Breakthrough Estate Planning: Finding All the Answers You Need to Know.
Making a Will
7. Why do you need a lawyer to make your will?
Do not be fooled into thinking that using a will kit can prevent disputes from arising.
Here is the process I follow after you have received the Mr Wills.com Guide to Estate Planning:
You will receive:
• office interview
• explanation of confidentiality rules for couples
• review of your estate planning checklist and estate pie concept
• review of your financial information
• effective ways to distribute your estate
• review of income tax saving
• recommendation of possible individuals to serve as executor, attorneys, guardians and backups
• answers to legal questions and contingencies
• any potential legal problems are identified based on your information
• preparation of draft will to include provisions dealing with debts, taxes and distribution of estate with alternate executors
• provisions that protect your beneficiaries’ inheritance from spousal claims in case of a divorce
• forwarding a draft will for your review
• review provisions of the joint, designated and will assets
• office conference to review documents and to answer any final questions before you sign estate planning documents
• additional time spent to review separation agreements, marriage contracts or corporate documents is charged on an hourly rate
8. How do I choose the right executor?
Having the right executor ensures that your:
• last wishes will be respected
• taxes will be paid on time without penalty
• investments will be properly managed
• creditors will not sue your estate
• beneficiaries will get their inheritance on time
• family can avoid battles
You must choose wisely. The wrong executor can sabotage your estate planning. Executor's mistakes can rob your loved ones of their financial rewards.
I have written a special report to help you choose the right executor to control your estate. That way your money will go straight to the people you want to benefit.
This report includes an executor scorecard. This will help you evaluate the factors in making choices. It includes the advantages and disadvantages of choosing a:
• spouse
• children
• relative
• professional or
• corporate executor
Learn more with Choose or Lose: How to Get the right Executor and Keep Control of Your Estate
9. What’s important about wills?(Some lawyers may forget to tell you this.)
Lawyers must comply with legal formalities when they prepare your will.
Lawyers must confirm that you:
• know that you are making a will
• know what your assets are, and
• understand who you wish to benefit.
Lawyers must also comply with professional responsibilities preparing a will.
Lawyers must:
• identify who their clients are
• avoid any conflicts of interests
• provide independent and confidential legal advice
• confirm all instructions received from anyone else, and
• keep notes of all instructions.
This may help you understand why a lawyer will ask you to wait in reception.
Read more about testamentary capacity and legal formalities for wills under Contesting a Will.
Some lawyers will not meet with you to personally analyze your needs and answer questions. This role may be played by a law clerk.
When you book an appointment with me, you will always meet a Certified Specialist in Estates and Trusts law. Make an appointment.
Powers of Attorney
10. What you should know
Your best protection against a financial disaster is a document called a power of attorney for property. If you do not have one, your family must go through the costly court process of having a guardian appointed to handle your finances.
You want to appoint attorneys (who are substitute decision makers). You do this by signing a written legal document authorizing them to act as your agent.
Attorneys can do almost anything you can do except make a will. They can act only when you are alive; executors take over after you die.
Attorney for property – person appointed to handle only the financial and property decisions specified in the powerof- attorney documents.
Your attorney must, by law:
• avoid any conflict of interest
• keep financial records
• have his or her work audited by the court if necessary.
Family members who are also beneficiaries of your estate can be your attorneys. You can specify that your attorney will or will not receive a fee at rates set by government regulation.
Caution:
If you own real estate, changes in the law since 2008 require lawyers to confirm your power of attorney is legally valid to deal with your real estate.
If your power of attorney:
• is out of date
• cannot be found
• does not comply with new legal standards
you can find out the document is ineffective.
Protect yourself with a new power of attorney.
Powers of attorney are legal documents you sign to designate a person as your agent. These documents can name someone to handle your finances, property or health care decisions.
11. Powers of Attorney for Property – Tips to Remember
• don’t name someone who will not accept the responsibility of being an attorney
• get the consent of whoever you choose to name as your attorney
• always name a backup attorney
• the qualities you need in an attorney are quite similar to the ones you need in your executor
• powers of attorney are legal documents. This means they can be interpreted by a judge
• the wording used is important as their validity can be challenged in court
• powers of attorney for property are like loaded guns; once signed, they can be used immediately unless they contain restrictions
Before acting as an attorney, get legal advice to know how you can stay out of trouble.
Contact my law firm to arrange for a consultation or appointment to review your needs.
