Soon after his fortieth birthday, Jason died from cancer of the blood. His death left his family reeling. They had to deal with the grief from his death, and the uncertainty about his wishes for his estate. Jason died without a will. The legal term for this is Intestate Succession. Intestate means dying without a Will and succession is how to divide the estate of the person who has died.
Jason had a son from a previous marriage. His new girlfriend had moved in with him less than a year ago. Two weeks before his death, she asked him if they could get married, which they did. His mother questioned the motives behind this request.
In legal terms, dying without a will is to die intestate. The state decides what to do with your property, your bank accounts, and everything you own. If you die without having a Will, your assets would go to your closest relatives.
If Jason had died before getting married his son would have inherited his assets.
Getting married before his death meant his new wife would now receive the lion’s share of his assets. Was that what he wanted?
Why do you need an estate plan?
To provide income for any dependents or beneficiaries.
If your spouse or dependent children relied on your income while you were alive, you will want to continue to provide for them when you die. You will want to set things up well to provide for them through a stream of income or a lump sum payment. What about providing for the disabled adult child, if you had one?
An estate plan minimizes disputes among family members.
Conflict is one of the biggest fallouts with the death of a parent. A will and a proper estate plan should communicate your wishes for how you want to divide your assets. If possible, discuss your wishes with your family. Open communication will eliminate surprises once you’re gone.
A good estate plan can reduce how much you end up paying in taxes – while alive and upon death.
A good estate plan ensures you have enough liquidity in your estate
An estate plan minimizes costly government involvement
An estate plan is able to address the viability of your business
Estate planning gets more complex if you own a business. Your children may not be interested in running your business once you die. Who will take over the company? You will need to deal with these questions with your accountant and a lawyer.
An effective estate plan provides peace of mind
Death is a stressful and painful time for loved ones left behind. It is not fair to leave them without a well thought out estate plan. They may end up making poor decisions as a result of having to deal with the estate at the same time as grieving your demise
The fundamental questions behind your estate plan should be: how do I want to be remembered when I am gone, and who do I want to share my legacy with?
What does a proper estate plan comprise of?
- A Will
- An Enduring Power of Attorney
- A Living Will or Health Directive
A will is a legal document that a lawyer prepares. A will states your wishes for who gets your assets after you die. Your will also names the executor. The executor is the person who will carry out the terms of your Will. A Will simplifies matters and ensures that your property goes to those you want it to when you die.
In many jurisdictions, you do not need to have a lawyer draft your Will for it to be valid. I still recommend that you not only have a lawyer draft your Will but one who specializes in estate law. They will be able to see potential issues that you may have overlooked.
If you have minor children – you may also want to name a guardian (s) for your them in your Will.
If you have a disabled child or grandchild, you may want to make special provisions for them. This can take the form of a trust.
An Enduring Power of Attorney (POA)
A power of attorney is a legal document that you sign to give a person(s) the authority to manage your money and property on your behalf iff in the future you are no longer mentally able to manage your financial affairs. That person does not have to be a lawyer.
What can and can’t the POA do?
A POA can manage and make financial decisions on behalf of the grantor. These financial decisions must show a direct benefit to the grantor of the POA.
There have been many cases of elder abuse, and often it has been the misuse of the POA role.
Besides a POA, the other important document is called a health directive or Living Will.
An Advance Directive or Living Will:
You might want to include instructions on
- The use of dialysis and breathing machines
- If your health provider is to resuscitate you if your breathing or heartbeat stops
- Tube feeding
- Organ or tissue donation
Also known in some places as a durable power of attorney for health care, it names your health care proxy. Your proxy is someone you trust to make health decisions if you are unable to do so.
In BC, Canada, this comes under the BC Representation Agreement Act
Discuss your wishes with your family members.
Choosing a Legal Custodian or Guardian for Minor Children or a dependent adult child: The role of the guardian will mainly be the role you have now as a parent—caring for your children, acting in their best interests, and providing for them physically, emotionally, psychologically, spiritually, and culturally.
If the child’s other natural parent is alive and competent they will have guardianship rights no matter who you name in your Will as your desired guardian. If there are no other surviving parent, then you will need to assign someone that role for your dependent children. A Court can review the custody of children at any time.
If a legal custodian is unable or unwilling to act, the Court can appoint another person to be the legal custodian. It is essential to deal with this matter in your Will. They are an important consideration should someone challenge the issue.
There are many complex issues involved in planning your estate.
As is the case with many blended families, estate planning will require greater sensitivity.
Death is a difficult time for any family. Preparing your estate is one way to ensure your loved ones are not having to deal with more than the grief of loss. Communication is vital.
A comprehensive guide to starting you on this process is the “Family Law Legal Planning Kit – Legal Forms (last will, Power of Attorney, Healthcare Directive forms) & 2 laminated Legal Reference Guides.”
We cannot control when we are going to die, but we can have a say on the legacy we leave behind.
An excellent book I recommend is, American Bar Association Guide to Wills and Estates, Fourth Edition: An Interactive Guide to Preparing Your Wills, Estates, Trusts, and Taxes (American Bar Association Guide to Wills & Estates)
For Canadians, a great resource is, “You Can’t Take It With You: The Common-Sense Guide to Estate Planning for Canadians.“
Some additional resources
For residents of BC
Through coaching, webinars, and public speaking Jennifer teaches people how to live on their terms. What would that look like for you? After twenty years in banking and finance, Jennifer Thompson discovered another passion – a passion for writing. She has written numerous self-published books on money: Women and Money: 7 Principles Every Woman Needs to Know to Be Financially Prepared in Any Economy and Growing Up With Money: Raising Financially Resilient Kids in an Age of Uncertainty.
Jennifer can be reached at firstname.lastname@example.org