Bell Alliance Estate Planning Guide A Guide to Wills, Powers of Attorney, and Representation Agreements

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1 Bell Alliance Estate Planning Guide A Guide to Wills, Powers of Attorney, and Representation Agreements Wills Powers of Attorney Representation Will Storage ( POA ) Agreements ( RA ) A will is a legal document that lets you decide how your assets are distributed when you die, and who is responsible for doing so. Without a will, the government decides how these assets are distributed based on the applicable legislation. The cost of preparing a will is minimal compared to the costs and problems your loved ones face if you die without a will. See the wills section on the next page to understand the things you need to think about when instructing a lawyer or notary to prepare your will. POAs let you appoint a trusted person to make legal and financial decisions on your behalf. The only things the appointed person can t do on your behalf are 1) get married for you; 2) assume an elected position for you; or 3) serve jail time for you. POAs can be specific or general but note that unless a POA is enduring, it will be ineffective if you become mentally incapacitated. See the POA section in the following pages to learn more about POAs. RAs let you appoint a trusted person to make personal care and health care decisions on your behalf and remains valid if you become mentally incapacitated. RAs grant authority and guide decisions for many more situations than end-of-life. See the representation agreements section in the following pages to understand all of the uses for a representation agreement. It s important that wills are stored in a safe place where they cannot be lost or damaged. We offer to store our clients wills in our water and fire-proof vault at a cost of $75 for a lifetime. For comparison, banks usually charge approximately $47 per year to rent a safety deposit box. Complete Packages single will $650 + disbursements of $60 couple with mirrored wills $950 + disbursements of $100 single POA $200 couple with mirrored POAs $300 single RA $350 couple with mirrored RAs $450 single package will, POA, RA $ disbursements of $100 couple s package mirrored wills, POAs, RAs $ disbursements of $150 Note: the total fee and disbursements quoted together represent an all in price.the final allocation between fees and disbursements may vary from what is shown on the account.

2 Wills Your estate consists of any land, house, money, investments, personal items, and other assets that you own at the time of your death. A will determines how your estate is distributed to your heirs, but note that it does not address any assets you own jointly with another person for example, a joint bank account or a house owned in joint tenancy. The person you name as your will s executor gathers your estate, pays your debts and taxes, then divides the remainder between the beneficiaries. You can appoint more than one executor who can act together as co-executors, or your can choose an alternate if your first choice is unable or unwilling to act when the time comes. Choosing an Executor Someone you trust who will likely survive you. It may be a friend, relative, professional, Bell Alliance, or a trust company. Preferably a person who is a resident of BC. If you don t have someone to act inside the province, ask your legal advisor about the implications. Taking Care of Your Family A will avoids the complications and inconvenience of dealing with an intestate estate one where there is no will. A will ensures your intentions are carried out and that the appropriate people receive the estate proceeds. This concern is particularly acute given the prevalence of blended families. A will also allows you to appoint guardians for your minor children or disabled beneficiaries, and express your wishes as to burial or cremation. Q: What happens if the deceased has no will? WESA, which came into effect March 31, 2014, determines how an estate is distributed and to whom when there is no will. Generally, the spouse and surviving children share the estate. In absence of a spouse or children, the estate goes to the grandchildren. If there are no descendants, it goes to the next nearest relative based on the parentelic distribution scheme (parents, if alive, then to siblings, if any, and so on). Finally, if there is no known relative, the estate eventually goes to the government. FAQ The Wills, Estate and Succession Act ( WESA ) applies to estates where the date of death is after March 31, Q: Is a handwritten will valid? Yes, but only if witnessed by two persons who are present both while the will is being signed and while the will is being witnessed. Q: What are some examples of invalid wills? Unsigned wills, videotaped wills, audio-taped wills, unwitnessed wills, and wills improperly witnessed (e.g. by only one person) are invalid in British Columbia. There are other ways a will can be invalid as well. If a will is invalid, it s exactly the same as there being no will at all. Q: Can I make changes to my will by writing on it and initialing? No, all changes are subject to the same procedures in preparing a will. Q: What happens if I get married or divorced? Under WESA, marriage no longer revokes a will. However, if you were married and the will was revoked under the previous legislation, the will does not get Page 2

3 revived. If your spouse is a beneficiary or executor, and you are subsequently divorced, the will stands; however, the gift to, or appointment of, your spouse will lapse and the will is read as if the spouse predeceased the testator. Q: Are registered investment accounts and insurance proceeds part of an estate? If you have named a beneficiary (other than your estate) in your RRSP, RRIF, TFSA, or Insurance Policies, then these assets will pass outside your will and thus will not be subject to probate. The named beneficiaries will get these funds directly. If you own real estate in joint tenancy, this generally also falls outside of your estate and the property can be transmitted to the surviving owner without probate. Q: How much are probate fees? Your estate may have to pay probate fees to the government of BC. Probate is a court process whereby your executor or the lawyer it hires proves the validity of your will after you die. Certain government entities require a grant of probate before they will permit the executor to transfer assets. Probate fees are roughly 1.4% of the estate s value. Q: What are the tax consequences of death? When a person dies, the law assumes that they sold all of their assets on the date of death, and accordingly there may be substantial capital gains on those assets. If you own assets that will attract capital gains taxes on death, you should speak with a lawyer or accountant to see how you can minimize this tax. Q: Can my will be challenged? Yes, a child (infant or adult) or the spouse of the deceased can apply to the court to vary the deceased s will. A will can be varied if the court considers that it does not make adequate provision for the proper maintenance and support of the claimant. A claim must be filed within 6 months of the grant of probate. It is difficult but not impossible to validly disinherit a spouse or a child. Q: Why would you create a trust in a will? A trust gives a person (or group of people) custody of property for a period of time. This person or group is the trustee. The trustee must manage the property in accordance with the terms of the trust, which can be inserted into a will. A trust is created for may purposes such as controlling & delaying distributions to minors, providing for a beneficiary who is incapable of handling money, leaving a source of income for a specific charitable purpose. Page 3

4 Powers of Attorney A power of attorney is a legal document in which you appoint another person, called an attorney, to make legal and financial decisions on your behalf during your lifetime. A power of attorney ( POA ) can be limited so that the attorney is only permitted to make decisions about defined parts of your affairs (e.g. real estate), or it can be unlimited which gives your attorney authority over all of your legal and financial affairs. The most common type of POA is the enduring power of attorney which continues to authorize your Attorney to act on your behalf despite any incapacity you may suffer. Q: Who should you appoint as your attorney? Consider carefully who to appoint as your attorney. You cannot appoint anyone who is paid to provide you with health or personal care or who works at a facility through which you receive health or personal care, unless that person is your child, parent or spouse. It s important that you trust the person s honesty and judgment. If you have no family member or friend that you can or want to appoint, you can appoint a respected professional such as your lawyer, accountant or trust company. Q: Can you appoint more than one attorney? Yes, you can appoint more than one person as your attorney. Multiple attorneys can be authorized to act (1) as an alternative if the other is unable or unwilling to act; (2) jointly; or (3) independently of one another. We usually recommend that multiple attorneys be authorized to act independently of one another. The reason for this is because alternate attorneys cause unnecessary hassle which requires doctors opinions, statutory declarations, and sometimes court hearings to prove the first-appointed attorney is unable or unwilling to act. Joint attorneys on the other hand are logistically cumbersome because this will always require that all of the attorneys be present when making decisions and managing your affairs. When attorneys can act independently, decisions can be made quickly in urgent situations and the POA will continue to be helpful if one of your attorneys were unable to act promptly. Q: Where should I keep my POA? Most institutions (such as banks) require the original document to allow the attorney to act on behalf of their client. This is to prevent copies from circulating and misuse of the document. The POA document must be kept in safe place (preferably not a safety deposit box or a business location that isn t accessible at all times) to allow the attorney access in an urgent situation. Q: What are the duties of an attorney? to act honestly and in good faith to act in your best interests to not dispose of any property gifted in your Will to keep your assets separate from the attorney s assets to keep proper records Q: What causes an attorney s appointment to end? The attorney s bankruptcy, your separation from an attorney who is your spouse (married or common-law), dissolution of a corporate attorney, or if your attorney is convicted of committing a criminal offence. Page 4

5 Representation Agreements A representation agreement is a legal document that lets you appoint another person, called a Representative, to make personal care and health care decisions on your behalf. It also covers situations such as arranging rehabilitation after stroke or consent for surgery as a result of a traffic accident. A representation agreement creates a contract between you and the Representative. The Representative has certain duties they must follow. For example, the Representative must consult with you, as much as is reasonable, to determine your wishes. If you become mentally incapacitated, the Representative has the authority to have the final say on your wishes despite disagreement by other members of your family. This authority applies in all situations, not just emergencies. If there is no representation agreement, the person or persons who wish to manage your affairs in the event of your mental incapacity must first apply to the court a lengthy and expensive process. The applicants will then be known as a Committee and their conduct will be governed by provincial legislation. To protect your interests the provincial Office of the Public Guardian and Trustee will monitor the actions of the Committee under direction from the court. Government intervention usually brings with it a number of additional delays and expenses, all of which can be avoided by having a representation agreement. Some jurisdicitions have what is called a living will. There is no living will law in British Columbia. The provisions contained in a living will in other jurisdictions are covered under BC s representation agreement. The BC Ministry of Health reports that only 10% of deaths are of a sudden nature. Most of us will die having lived for some time with a chronic condition: cancer, Alzheimer s, Multiple Sclerosis, Parkinson s. Planning for future care should reflect this reality. Page 5

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