Having conversations about estate planning can be difficult. Few want to think about, let alone plan for their death. There are a number of important reasons to plan in advance; a lack of planning can lead to family disputes, inappropriate distributions, litigation, costly court fees, unanswered questions, and unnecessary delays in the estate administration process. Planning gives you the opportunity to select individuals you trust to manage your affairs and carry out your instructions.
Presently, changes are being made across the country to allow for estate planning professionals to execute documents in a remote fashion to ensure the health and safety of their clients. Taking the time to plan now is giving the gift of clarity to your loved ones.
There are three important documents to consider when you are planning for your estate in British Columbia: A Health Representation Agreement, Last Will and Testament, and the Power of Attorney. We have provided a brief overview of what these documents mean, why you want them and some things to think about.
HEALTH REPRESENTATION AGREEMENT
A representation agreement is a personal directive – it enables you to communicate what your wishes are in the case that you are incapable of communicating them yourself. A representation agreement only deals with health and your physical body and only comes into effect when an individual is no longer capable of caring for themselves.
Some items that might be covered in such an agreement would be:
• Is there a preferred care home or do you have the resources for home care?
• Hospice care – do you have a place in mind?
• Have you noted any allergies, medical conditions, and your blood type?
• Would you like heroic measures taken?
• Are you registered with the Organ Donor Registry with BC Transplant?
POWER OF ATTORNEY
A power of attorney is a document that deals with your assets and financial affairs. An attorney is the person who is appointed by you to act on your behalf and is only valid during your lifetime. The attorney can do most things that you would be able to do yourself, with some limitations. An enduring power of attorney maintains validity during any period of mental incapacity.
Some things to consider when selecting the individual to be your attorney:
- Do you trust them?
- Do they have the time?
- Will they be diligent and careful in their duties?
- Where are they located?
- When do you want the attorney to begin to act?
- Would you like the document to be held in secrecy until a certain date or incapacity?
- Should there be multiple attorneys that need to act together?
- Are they likely to survive you, what is their age and their health like?
- Do you want them to be paid for their duties?
In British Columbia if you wish to have your attorney receive compensation for the work that they are completing, you must specify this information in the power of attorney.
Note that you can have a representation agreement in BC that contains both the health and financial powers of attorney, you may not wish to disclose your health-related information to the banks etc. so it can be preferred to have them in separate documents.
LAST WILL AND TESTAMENT
Your last will and testament names your executor and instructs them on how to administer, liquidate and distribute your estate.
The key responsibilities for an executor are arranging the funeral, securing, and looking after your assets, identifying and communicating with your beneficiaries, engaging a lawyer for any probate needs and any legal advice, valuing your assets, liquidating your assets under the terms of the will, filing income tax returns, and setting up any trust(s) that you have set up in your will.
Multiple wills are allowed in British Columbia and can serve many purposes such as if you have shares of a private corporation, assets that are not subject to probate, or wish to keep information private and separate from the main will. Note that it is a requirement in British Columbia that the wills have a different executor.
Some things to think about when planning for your will:
- Are there any specific gifts you want to make?
- Who do you want to be your executor? Do you want to appoint more than one?
- Do you want a professional trust company to look after your affairs?
- Are your assets going to form part of your estate or will they pass outside of your estate? (Who is on title for real property? Are there assets held in a trust? Are assets held in joint name? Are beneficiary elections up to date?)
- Do you have minor children to care for?
- Are there any disabled beneficiaries?
- Do you have any children form a previous marriage or born out of wedlock?
- Do you have concerns about the ability for the beneficiaries to manage the property once it is transferred to them?
- Do you want to maintain control through the use of trusts?
These documents should be reviewed on a regular basis. If you are without these documents, it is highly recommended that you engage a lawyer to execute these documents as there are complexities that can be easily overlooked.
While RHN CPA is not able to execute these documents, we can work with your legal advisor to ensure that your goals are met with careful attention to the tax treatment of your assets and the legacy that you are leaving behind. Estate planning often involves a team of professionals working together to ensure that you are provided with the advice and expertise needed for your unique situation.
This post has been prepared for general information purposes. It is not advice. The information presented may not fit your unique situation, please consult one of our trusted business advisors at RHN CPA for further clarification and interpretation of your circumstances.