Nancy Graham January 25, 2021 Starting Out Revisiting Your Estate Planning Essentials As long you’ve got worldly goods and loved ones, basic estate planning materials are a must-have for almost everyone. If anything, the coronavirus pandemic has shown us how important these legal documents remain, even if you are relatively young, and you expect to be around for years to come. But what makes for good, basic estate planning? As I covered back in 2018, your plans don’t usually have to be highly complicated. There are three essential types of documents, you and your loved ones should have in hand to cover whatever the future holds. These include: Your will Your powers of attorney for healthcare (along with a living will) Your powers of attorney for property Let’s take each of these one at a time. Creating Your Will Your will describes what you want to have happen after you pass – that is, who gets what, and who will be in charge of making it happen. If your circumstances are straightforward, your will can be too. It should answer these three key questions: Who will administer your estate? This is your “executor.” Who will inherit how much of what – and at what age? These are your “beneficiaries.” If you have dependents, who will take care of them? These are your “guardians.” It’s okay – often advisable – to name different people to oversee the money versus the daily care of your children. What if you haven’t created a will? That’s called dying “intestate,” and your provincial regulations will kick in instead. Unfortunately, these default provisions may not be what you had in mind. For example, depending where you live, your worldly goods may end up being divided among your spouse and kids – and only your spouse and kids. What if you would have left your spouse all your estate, because your kids don’t need it and your spouse does? Or what if you have a charitable wish? Too bad, your true intents may never happen. Determining who will be in charge of actually liquidating your estate can get messy as well. Distributing your assets, controlling costs, resolving debts, and paying taxes may not be managed as you would wish either. All this only gets more convoluted if you’re in a common-law partnership, have minor children, or have been married more than once. Bottom line? If you haven’t got a current will, we suggest making that a top priority. Once you’ve completed that, here are three bonus pointers: If you replace old documents with updated versions, be sure to destroy the old ones, to prevent confusion. When naming individuals for various roles, talk to them about it first. You may decide they’re the perfect fit, but they may not be as enthused. Even if they are open to the idea, they may have important questions or suggestions you hadn’t thought of. Make sure key people know where to find your estate planning documents and can readily lay their hands on them. “Key people” can include family, business associates, financial intermediaries, and medical personnel. Creating Powers of Attorney for Health Care (and a Living Will) Remember, your will only kicks in after you die, so any preferences you include there won’t happen until that fateful day. That’s why you also want some basic legal protections for when you are alive, but are unable to make your own decisions. When you grant someone a power of attorney (POA) for health care, you authorize them to make decisions about your health care, treatments, living arrangements, and similar concerns – again, only when you cannot do so yourself. Your living will mostly describes the kinds of care you’d like to receive – or not – at end of life or during emergencies. Together, these documents can provide comfort during crises that are plenty stressful already. First, your loved ones won’t have to second-guess what your preferences would have been. It also gives them stronger legal standing to carry out your preferences. Again, you don’t need to overcomplicate things. There are free provincial forms available to walk you through creating legally binding documents. Of course, it can never hurt to consult an estate planning attorney to ensure you don’t miss anything vital. This is often money very well spent, especially if your life has a lot of moving parts. Creating Powers of Attorney for Property A power of attorney (POA) for property lets you name others to administer your property if you are temporarily or permanently unavailable. As with the POA for healthcare, this POA applies while you are still alive. Once you pass away, your executor(s) will take over discharging your estate. (Or, if you’ve got more elaborate estate plans that call for ongoing oversight of your assets, you may have a trust in place to augment your basic will.) A POA for property can kick in indefinitely, such as if you’re alive but incapacitated. Or it can cover specific timeframes, such as if you’re on an “off-grid” vacation and you need a temporary stand-in. POAs can be broad, covering a wide range of administrative actions you may need someone to take on your behalf. Or they can be explicit, such as the ability to administer a single account at a single location. POAs also can be invaluable if you’re a business owner, and you want to ensure your personal and business interests continue to operate smoothly whether you’re here or there. Estate Planning in Action So, are your estate plans fresh and current? Do they include these three essential components? Do they even exist? Based on what I’ve seen and heard over the years, many families tend to procrastinate on essential estate planning. It’s too easy to tell yourself it can wait for another day … and thankfully, it usually can. Still, if there’s one thing we learned in 2020, it’s that you never know. So, let’s make today the day you revisit your estate planning for real. Share: Facebook Twitter LinkedIn Email CIRO Advisor Report