PLANNING YOUR ESTATE

Wills

There are many tools to help you effectively plan your estate and one of the most important is your will.  A properly drafted and up-to-date will can ensure an orderly and efficient distribution of your estate, minimize family conflicts and reduce tax exposure.  The laws governing wills, estates, trusts and taxation are complex and it is important that professionals experienced in these areas review your estate plan and prepare your will.

What happens if you don't have a will?

If you don't have a will, those you leave behind may encounter many obstacles as they try to finalize your estate.  Without a will Alberta legislation will determine the beneficiaries of your estate.  The Public Trustee may take control of a minor child's share of your estate.  Your estate will go to your spouse or adult-interdependent partner if you have one.  Your children may also receive a share of your estate depending on their relationship to that surviving spouse or adult-interdependent partner.  In the event that a child of yours does receive a share of your estate, that child will become entitled to his or her share upon attaining the age of majority.  In Alberta, that is currently the age of 18.  Children are not often financially responsible at that age.  If you do not have a will, you have no opportunity to select a guardian for your minor children and the court will appoint one for them.  Your estate would pass to more distant relatives in the event you do not have a spouse or adult interdependent partner or children or if they do not survive you.  You will have no control over the ultimate destination of your assets.  Friends and favourite charities will receive nothing.

What matters should you consider before preparing a will?

Before you meet with your lawyer, consider the following:

Your Assets:  If you own your assets jointly with your spouse, those assets will typically pass to the survivor automatically.  If you have RRSPs, life insurance, and TFSAs you should ensure that your beneficiary or successor holder designations are up-to-date and are consistent with your estate plan.  If you own a business, be sure you have planned for your succession.  Special attention needs to be paid to any assets you own outside Alberta.  If you have assets which, upon your death, may trigger a significant tax liability, you will want to consider how to minimize this liability and how to pay for the taxes.

Your Beneficiaries:  Consider how you will provide for a spouse or adult interdependent partner.  Also think about how you will provide for your children if you or your spouse or adult interdependent partner should die together, particularly if the children are minors or otherwise dependent on you.  Take into account any beneficiaries who may be born after you die.  If your beneficiaries predecease you, consider who else you would want to receive a share of your estate.  Do you have any favoured charities to which you would like to leave a legacy?

Your Executor (can also be referred to as Personal Representative or Trustee):  Generally speaking, the executor of your estate will be responsible for gathering up your assets, ensuring all debts are paid and making distributions to your beneficiaries.  If your spouse or adult interdependent partner is your sole beneficiary and your estate is relatively simple, he or she is the most likely choice.  An alternative executor should be appointed in the event you and your spouse die together.  If you have minor children, your executor may be supervising ongoing trusts for those children for some time.  Consider your executor's age and background, and be certain that he or she capable, available and diligent enough to ensure the proper administration of your estate and any trust arrangements you may have established in your Will.  You may wish to appoint more than one executor.  It is preferable that at least one of your executors reside in Alberta.  Consider whether your family dynamics or the complexity of your estate lend themselves to the appointment of an impartial party, a professional or a corporate trustee.

Guardians for Minor Children:  Choosing guardians for your children can be one of the most difficult decisions you will need to make.  As you decide who that person or persons will be, you may wish to consider the guardians' morals and values.  Observe how they raise their own children, and consider whether or not they would be able to raise your children.  You should discuss your wishes with them to ensure they are willing to take on that responsibility.

Special Circumstances:  If you have special family or financial circumstances, you should discuss them with your lawyer.  A prenuptial agreement, divorce, or ongoing support obligations may affect the way in which you plan your estate.  Children with special needs may require distinct arrangements.  Common law or same gender relationships can add increased complexity to your estate plan.

Income Tax Consequences:  Your death may trigger significant tax liabilities.  Discuss how you can plan to minimize this exposure.

How often should you change your will?

We recommend that you revisit the terms of your will periodically or as your family or financial circumstances change.  Divorce or the termination of an adult-interdependent relationship will have an impact on certain provisions made in your Will.   The birth or adoption of children or grandchildren, or the death of a beneficiary may impact your plan.  The death of an executor will require that you appoint a new one.  A growth in your assets, an inheritance or windfall may affect the distribution.  Similarly, a financial loss or asset reorganization may also necessitate changes to your will.

What expenses might your estate incur?

Naturally, your debts and any income taxes owing at your death and as a result of your death will have to be paid.  Executor, lawyer and probate fees may also arise.  Unless you specify otherwise, your executor is entitled to compensation for looking after your estate.  Being an executor can be very time consuming and demanding.  Guidelines have been established for this compensation which typically depend on the nature, complexity and time it takes to complete all estate matters.  Your executor will likely retain a lawyer to assist him or her in administering your estate; the lawyer's fees are also governed by guidelines.  Both executor's fees and lawyer's fees may be reviewed by the court.  Probate fees in Alberta are among the lowest in Canada and will depend on the value of the estate.

What is involved in preparing a will?

Begin by calling a lawyer to determine the issues involved in your estate.  The lawyer will then estimate the fees and begin preparing your will with you.  The fees for the preparation of your will may vary depending on your family situation and the complexity of your estate.  The lawyer at Underwood Gilholme will ensure that he or she has all of the information needed and will take time to properly plan your estate.  A well planned estate provides the best protection for your loved ones.  The time you spend now is an investment in the future for the benefit of those people you leave behind.