An Estate Planning Review

Now that RRSP season is over and many of you have filed your income tax returns, it’s a good time to take a step back and review your estate plan. 

You may think, “Why? I have a Will and Power of Attorney in place. Why would I spend time reviewing my estate plan?” 

You may be right – perhaps nothing needs to be updated or changed. Or perhaps the child you named as your executor has moved away or one of your beneficiaries has died or the person you named as your Power of Attorney is no longer in a position to take on the responsibilities involved. How will you know if you don’t periodically review your estate plan? 

Let’s review the basics: 

Your Will – Your Will lays out your wishes for how you want your earthly possessions distributed upon your death, and it names one or more people who will carry out those wishes (your executors). You should read through your Will every few years to ensure that your wishes remain the same and that your executor is still appropriate. 

Your Power of Attorney – An Enduring Power of Attorney names one or more people you trust to manage your financial affairs should you become physically or mentally incapacitated (i.e. if you are still alive but can’t manage your finances on your own). 

Your Representation Agreement – A Representation Agreement is a document in which you name a representative to act on your behalf. The stated purpose of it is to enable adults to arrange in advance how, and by whom, decisions about their health care, personal care or financial affairs will be made should they become incapable of making decisions independently. Your health care wishes may change from time to time, so you should review this document to ensure that it still accurately reflects your wishes. 

Now that you’ve reviewed the three main documents involved in your estate plan, let’s make sure that the other pieces of your estate plan fit together with them. 
You have the ability to name beneficiaries for Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Funds (RRIFs) and Tax Free Savings Accounts (TFSAs) directly within these documents. Thus the assets in these plans pass to your named beneficiaries without passing through your Will, and this not only facilitates quicker distribution of your assets, it also means that the funds do not pass through probate. And if you have named your spouse as the successor annuitant/beneficiary, the funds can be transferred to his/her name without incurring any income tax either. If you have life insurance in place as part of your estate plan, you should review the beneficiary designation(s) to ensure that nothing needs to be updated. 

It is important to review your beneficiary designations from time to time. Some marriages end in divorce, and in the turmoil of a separation and divorce, it’s easy to forget to update the beneficiaries on your registered accounts and insurance policies. 

If you have non-registered investments, ones that are held in joint ownership with rights of survivorship, also bypass your Will and go to the surviving owner without passing through probate. In addition, if the funds are passing to a surviving spouse, realizing capital gains can be deferred until the death of the surviving spouse. 

Finally, you should have a written record that gathers together information about your advisors, your assets, insurance policies, taxes, debts and any funeral arrangements you might have made. This document can make your executor’s job much easier. 

For those of you who don’t already have a Will and Power of Attorney in place, now is a good time to work on setting them up. If you die without a Will (“intestate”), the Public Trustee will determine who manages your estate and who will become the legal guardian for any minor children. And your estate will be distributed according to the laws of British Columbia, which may or may not fit with your wishes. 

If you become incapacitated and can no longer manage your finances, no one can step in to take care of them for you without approval from the courts – a lengthy process that can be easily avoided if you have a Power of Attorney document. 

You’ve worked hard to build your assets throughout your life, and many of you have made significant sacrifices along the way to give your loved ones the lifestyle you want for them. Making sure that your estate plan is effective and up-to-date helps to support the efforts you’ve already made. 

If you would like assistance with reviewing your plan, please contact your Rogers Group Financial advisor.