Considerations when Estate Planning
 
A well planned estate plan can protect loved ones, maintain a family business, save taxes, avoid conflicts between beneficiaries, take care of charitable interests and accomplish many other objectives. There are a number of elements of a comprehensive and thoughtful estate plan which may be appropriate in certain cases including wills, domestic contracts, life insurance, gifts during your lifetime, estate freezes, family and other trusts, and powers of attorney for property and personal care. Leaving your affairs in good order when you pass enables you to direct your money in the way you want to, not the government wants to.
It is typically not enough to just have wills and powers of attorney. In the case of high net worth individuals or more complicated fact situations there needs to be more extensive review and planning.
Some of the elements of a comprehensive estate planning process include:
1) understanding your assets, their location (jurisdiction), their value, how they are held and how they will be taxed on your death and your spouses death and whether your assets will be part of your estate or will go directly to certain beneficiaries;
2) understanding your values, those who you want to benefit and the causes you care about;
3) careful assessment of the appropriate executor;
4) working with other professional advisors such as accountants, insurance advisors, financial planners to craft the most effective estate plan;
5) how your life insurance affects your estate;
6) the impact of different beneficiary designations;
7) how trusts affect your estate or how they can be used for various purposes including creditor protection, tax savings, probate avoidance;
8) family law issues such as separation agreements and divorce, equitable treatment of children from different marriages;
9) integrating business succession planning with estate planning;
10) working with your accountant to minimize estate taxes and making provision for the necessary liquidity to pay such taxes;
11) working with your insurance advisor to ensure that adequate insurance is in place to fund your obligations including taxes, support of dependents and charitable causes etc;
12) probate minimization;
13) guardianship issues;
14) special consideration for particular assets such as sentimental personal property and cottages;
15) carefully considering stages in life and how your needs and concerns may vary; and
16) planned giving including setting up foundations, providing a legacy in your will, donating life insurance or marketable securities.
Wills and Multiple Wills
A will is an important part of any estate plan. A will outlines the disposition of assets, names the beneficiaries of estate, and appoints personal executor, to carry the instructions set forth in the will.A relatively recent approach in Ontario to minimizing probate fees is that of multiple wills.The will in respect the Primary Estate deals with the assets that require probate, and the will in respect of the Secondary Estate deals with the assets intended to be exempt from probate. Each will expressly refers to the other and confirms that the making of one is not intended to revoke the other. In certain circumstances, a will in respect of a Secondary Estate must be
probated, despite the intention at the time of drafting that this would not
be the case. For example, probate will be required if the estate is involved
in litigation, third parties refuse to transfer assets unless the will is
probated, or foreign executors intend to deal with assets located in
Ontario. The following are common reasons you should have a will: - to ensure that as large a part of your assets as are legally permissible is transferred upon death to those whom you care for;
- to appoint guardians for your minor children;
- to avoid legislation, such as the Succession Law Reform Act (Ontario), arbitrarily determining the division of your assets;
- to place the administration and control of your assets in the hands of someone you trust;
- to create suitable trust provisions to prevent your children from spending their inheritance prematurely and to avoid the Ontario Office of the Public Guardian & Trustee from controlling your children's assets until they reach the age of majority;
- to save taxes or at least defer them including by means of multiple testamentary trusts;
- to avoid conflict, litigation and unnecessary expense among family members after your death;
- to make sure certain items of special significance are given to designated individuals;
- to make charitable donations in your will to organizations that you care about and have supported during your lifetime; and
- if you have no heirs and family on death to avoid all their assets being transferred to the government.
"Dying intestate"- means dying without a will.
Powers of Attorney
There are three commonly used powers of attorney in Ontario namely the Continuing Power of Attorney of Property, Power of Attorney for Personal Care and a Special Power of Attorney.
The Continuing Power of Attorney for Property
A Continuing Power of Attorney is a legal document in which you give one or more persons the legal authority to make decisions about your finances either in the case of you becoming unable to make those decisions yourself or effective upon the creation of the Continuing Power of Attorney. The reason it is referred to as a "Continuing" power of attorney is that the power of attorney survives the mental incapacity of the person who gave the power of attorney. All powers of attorney cease upon the death of a person who gave the power of attorney. The Continuing Power of Attorney for Property is very useful if you are incapacitated, or going to be outside of the province for an extended period of time. In such case it covers who will take care of your investments, real estate, pay funds to your dependents, pay other financial obligations etc.
As with a will it is extremely important that the Continuing Power of Attorney for Property be properly witnessed and stored. There is a real danger that a Continuing Powers of Attorney for Property can be abused. It is important that safeguards be put in place to avoid such abuse.
Power of Attorney for Personal Care
The Power of Attorney for Personal Care in Ontario is a binding legal document in which you give someone else the power to decide, if you are incapacitated, matters such as health care, nutrition, shelter, clothing, hygiene, and safety. It does not cover issues related to property which should be covered under a Continuing Power of Attorney for Property. It is important that you pick an attorney for personal care who you have confidence in their ability to make personal care decisions affecting you. People sometimes use the term "living will" or "advanced medical directive" to describe the Power of Attorney for Personal Care. It can deal with issues such as whether heroic measures should be used to sustain your life, circumstances in which medical care or intravenous feedings should be discontinued if there is no hope of recovery, and other important medical and care issues. Having a Power of Attorney for Personal Care will help avoid a fight between loved one's, not only as to who has the power to decide medical and care issues, but also on the course of action to be followed.
Special Powers of Attorney
A special Power of Attorney is a power of attorney for property, that can be continuing or not, and which usually is more limited in scope than the broad Continuing Power of Attorney for Property. Special Powers of Attorney would be used in cases such as when you will be out of the country for a few months and you want to appoint an attorney to sell a piece of real estate or a business.
Everyone should have a will and powers of attorney .The information provided here is for educational purposes only.Please consult Lawyers who specialize in Wills & Estate and are knowledgeable in provincial and federal laws.
If you are looking to buy or sell your home , investment property or cottage , or has a
friend of family member who is, please feel free to refer Jimmy Singh, who is dedicated to
providing superior service and is the nicest real estate agent you'll ever meet.
Certified 50+ Specialist, Sales Representative,
Remax Escarpment Realty Inc.
905-575-5478 (Hamilton area) 905-639-5258
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