WHY YOU NEED AN ESTATE PLAN
Your estate plan simply integrates your financial plan with planning for your possible mental incapacity during your lifetime and your eventual death. The intention is to pass your assets to your family, or others of your choosing, in a simple, stress- and tax- reduced manner. Whether or not you think it is important in your case, consider some of the possible consequences if you don't have an estate plan in place.
If you do not have a Will, you are leaving it to the government under the Wills, Estates and Succession Act to provide a scheme of distribution for your family and to appoint someone to administer your estate. The administrator of your estate could be a government official in some circumstances.
The problem for you is that what the government considers acceptable might not meet your requirements.
If you do not have a power of attorney, the only option available to allow someone to look after your affairs is for that person to go to court to have a judge declare you mentally incapable and to appoint a "committee." This is an expensive and time-consuming process. If nobody is prepared to take on the task, the Public Trustee will do the job. The Public Trustee acts if they are aware of impropriety. Once they become aware, your assets may already have been squandered.
One misconception is that if land is held in joint tenancy between spouses, one or the other party can sign transfer documents. This is incorrect. If one of the spouses becomes mentally incapable, the way to transfer property is through a power of attorney or committee.
If you do not have a health care representation agreement, a hierarchy of different classes of people related to you will make health care decisions for you. For example, if you have no spouse but have children, then all children have an equal say in health care decisions made for you. This can cause problems if your children's philosophical viewpoints are not in keeping with your views, or your children have different opinions.
If you have not set up joint tenancies on bank accounts or real property, there are considerable financial implications with regard to probate fees and taxes. With joint tenancies in place, the property is transferred automatically to your joint tenant upon your death, because joint tenancies are handled outside the Will. Care does need to be taken with joint tenancy. The same goes for naming beneficiaries on RRSPs and RRIFs, as well as life insurance. Setting up trusts, life estates, and gifts as part of your estate plan may also be beneficial if your situation calls for it.
In an increasingly complex world with very diverse family structures, estate planning is not just for the wealthy but for all people who wish to have a say in how their financial and personal affairs will be managed upon death or mental incapacity.
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