January 04, 2023 by Jen Schreurs
It is that time of the year again where we are all setting goals, making resolutions and bettering ourselves. One goal I have set for myself is to help educate others on why having a well thought-out estate plan in place is not just a good idea but a necessity.
An estate plan is generally comprised of three documents — a Will, a Power of Attorney (for legal and financial matters), and a Representation Agreement (for health care matters). Powers of Attorney and Representation Agreements are useful during your lifetime if you lose capacity and can no longer speak for yourself. Only the Will allows you to set out your wishes in advance for after your death — when you truly can no longer speak for yourself (unless your loved ones have a Ouija board). However most families do not, in which case a Will is essential to ensure your wishes are known and followed.
Here are the top 5 reasons why I believe that everyone needs a Will:
1. Testamentary Freedom, or in other words — who? what? and how much?
In British Columbia, individuals are able to distribute their estate to their friends and loved ones through their Will, in whatever manner they would like to an extent. The ability to be the ultimate decision-maker on how your estate is divided is the concept of testamentary freedom.
If you were to pass away without a Will (called dying intestate), your estate will be divided and distributed as set out in the statutory scheme found in the Wills, Estates and Succession Act R.S.B.C. 2009 ch. 13.
It is important to note that there are both legal and moral obligations that are owed to a spouse and biological and adopted children (both minor and adult). If those obligations have been satisfied, then you can additionally choose to make gifts to grandchildren, friends, or charities. It is not recommended to disinherit a spouse or child from your Will without first seeking proper legal advice.
Every person’s situation is different, and whether you are single, married, in a blended family, widowed, with children or without children plays a vital role in setting up your estate plan in the best possible manner.
2. Guardianship for Minor Children
A Will is one of a few ways to name and appoint the guardians for your minor children if you and your partner should both pass away. While it is a situation that no one wants to imagine, it is an important discussion.
By appointing the guardians for your minor children, you are the ultimate decision-maker as to who will raise your children, whether it is family members or close friends. It is important to pick someone who shares the same values as you. Dying intestate creates the possibility and risk that a family member who does not share your values applies to the court to become guardian of your minor children.
3. Trusts for Minor Children
In British Columbia, the age at which a person can inherit property is 19. While there are some financially responsible 19-year-olds, I would argue that they are few and far between (and become fewer and farther between the greater the value of the estate). By setting up a trust in your Will, you have the ability to increase the final distribution age from 19 to 21, 25, even 35 (or higher), if you believe it would benefit your child and protect their inheritance.
4. Succession Planning
If you run a family business, it is always important to have the discussion about who will be taking over the business after your death. It may be your children, or even grandchildren, it may be your business partners buy you out, or it may be that you want the business to be wound up and liquidated. There are many options available to you, and your estate plan can be tailored to your wishes.
It is important to note that you should seek legal and accounting advice if you wish to leave the business in favour of one child over another or others. This concept ties in with Reason #1 above in ensuring that your legal and moral obligations to your children have been satisfied.
5. Simplifies Probate
In brief, probate is the process of the court formally appointing your personal representative after your death. The benefit of having a Will is that you have named the person you wish to step into the role as executor. If you were to die intestate, then one of your family or friends will need to decide to step into this role. This may cause delays and hard feelings among the persons involved and can prolong an already long process.
Bear in mind that this list has been greatly condensed and there are many intricacies and subtleties that may affect your estate plan that do not affect another’s. It is always recommended to discuss your estate plan with a qualified person to ensure that you are not accidentally disinheriting a loved one or creating immense tax problems to be dealt with after your death.
In the spirit of planning for the next 12 months by making New Year’s resolutions, FH&P Lawyers would love to help you plan for the future by discussing and setting up your estate plan. Contact us now to set up an appointment with our team of Estate Planning Lawyers.