What is estate planning?
Estate planning is making a plan in advance to distribute your assets to your loved ones and naming whom you want to receive the things you own after you die. However, good estate planning is much more than that. Many people think that estate planning is only for those who have lots of money and assets.
What is an Estate?
Your estate is comprised of everything you own— your car, home, other real estate, chequing and savings accounts, investments, life insurance, furniture and personal possessions.
What is the right time for estate planning?
Individuals put off estate planning because they think they don’t own enough, they’re not old enough, they’re busy, think they have plenty of time, they’re confused and don’t know who can help them, or they just don’t want to think about it. Then, when something happens to them, their families have to pick up the pieces.
What happens if you don’t have an estate plan?
If your name is on the title of your assets and you can’t conduct business due to mental or physical incapacity, only a court appointee can sign for you. The court, not your family, will control how your assets are used to care for you through a guardianship. It can become expensive and time consuming, it is open to the public, and it can be difficult to end even if you recover.
If you die without a proper estate plan, your assets will be distributed according to the laws of the province. If you are married and have children, your spouse and children will each receive a share. This mean your spouse could receive only a fraction of your estate, which may not be enough to live on. If you have minor children, the court will control their inheritance. If both parents die (i.e., in a car accident), the court will appoint a guardian without knowing whom you would have chosen.
Steps to plan your estate:
Many people think making a will is the only part of estate planning, but there are also some other steps that you need to take. To plan your estate you need to organize everything step by step so that it will be easier for your dependents to know what is going to happen after you pass away. You should appoint someone to act for you if are going to a nursing home and if you are disabled. All estate plans should include three important instruments: a power of attorney, a representation agreement, and a will.
• Representation agreement:
The Representation Agreement Act allows you to appoint someone as your legal representative to handle your financial, legal, personal care and health care decisions, if you’re unable to make them on your own. You cannot appoint any person who is paid to provide you with personal or health care or who is an employee of a facility through which you receive personal or health care, unless that person is your child, parent or spouse. The document is called a representation agreement and it creates a contract between you and your representative.
• Power of attorney:
A Power of attorney is a way to appoint an “attorney” to take care of your financial estate in your absence. With the power of attorney if something happened to you, the person you appointed as attorney will step and take over the situation. Without a durable power of attorney, no one can represent you unless a court appoints a guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer.
A will is a document which comes into effect after a person’s death. It is revocable and subjected to amendment any time during your lifetime. It gives all the information about a person’s wishes, how the person wants his/her estate to be managed and distributed after his/her death. Sometimes it also called a “last will” or “testament”.
A valid will cannot exist unless three essential elements are present. First, there must be a competent will maker. Second, the document purporting to be a will must meet the execution requirements of statutes, designed to ensure that the document is not a fraud but is the honest expression of the will maker’s intention. Third, it must be clear that the testator intended the document to have the legal effect of a will. In BC the will must also be witnessed by 2 individuals.
For more information and advice on estate planning and to get everything organized for will preparation please contact Harinder Dail Notary public.