The “Simple” Will Package — Alberta, Canada
Lawyers are often instructed to prepare a Simple Will, together with an Enduring Power of Attorney (“EPA”) and a Personal Directive.
This sets out the nature and a basic outline of relevant matters relating to a Simple Will, an Enduring Power of Attorney (“EPA”) and Personal Directive in Alberta, Canada.
The Simple Will
With respect to a Simple Will, a Firm only provides limited legal advice, specifically:
The preparation of a Simple Will does not engage in any detailed review of your assets, liabilities or tax situation;
The preparation of a Simple Will does not provide you with any tax or estate planning advice with respect to your Will;
The preparation of a Simple Will does not provide you with any advice with respect to any special needs of any members of your family, other than those you specifically included in the Will; and
With respect to real property, the preparation of a Simple Will does not conducted a review of titles and ownership, unless you specifically request the Firm to obtain title of any particular property to confirm same.
Your Simple Will may be straight forward and may include at a minimum the following:
The cancellation of any former Wills;
The appointment of a party or parties to be responsible to administer your Estate, and alternates parties, if the parties you choose do not wish to, or cannot act at the time of your death;
The distribution of your personal items of importance to you, to surviving family or friends;
The gifts or bequests to others you may wish to benefit, including charitable entities;
The distribution of the balance of your Estate, including alternates if your first chosen beneficiaries are no longer living;
The names of a party or parties to be the Guardians of any minor children; and
The manner and timing of distribution of the Estate for minor children beneficiaries.
If a person dies without a Will they are said to be “intestate” and the Alberta Act governs the distribution of the Estate upon the following principles:
If a person dies leaving a surviving spouse or an adult interdependent partner (“Partner”) but no descendants (Children) the entirety of their Estate goes to the surviving spouse or Partner.
If a person dies leaving a surviving spouse or Partner, and all descendants are children of the deceased and the spouse or Partner, the spouse or Partner receives the entirety of the intestate Estate.
If any of the intestate’s descendants (Children) are not descendants of the surviving spouse of Partner, then:
a) the surviving spouse or Partner receives the greater of 50% of the net value of the Estate and the preferential share; and
b) the balance (residue) of the interstate Estate is to be distributed to the descendants.
If the deceased had a surviving spouse and a Partner, and children, the distribution becomes more complex.
If the deceased dies without a spouse or Partner:
a) with children, then the children share equally, and any deceased child’s share pass to that child’s children.
b) if the deceased had no children, the Estate goes to the parents.
c) if the deceased had no children or parents surviving, the Estate goes to the children of the parents (the deceased ‘s brothers and sisters)
d) if the deceased had no children, no parents surviving, no siblings, or children of siblings, then the Estate goes to the grandparents and so forth.
If two people die simultaneously (it is not possible to determine who died first for example in a common accident), then both Estates are dealt with as if the other spouse died first.
Preparation of the Will
If your Estate is complex, you should also consult with an accountant.
The Firm will ask that you fill out the Initial Questionnaire.
Completing these questionnaires can be a daunting task, but ensuring that you have an appropriate Estate plan and Will, is an important matter that requires some attention. You should complete the basic information in the questionnaire in order that the Firm can assist you without you incurring additional cost.
Life Insurance
Regardless of whether or not you proceed with preparing a Will, you should consider your needs for life insurance, term insurance, and other financial planning arrangements, all of which may have certain tax advantages to you.
Capacity
The Firm needs to confirm your instructions, and a part of that is to confirm with you:
a) that you are not under duress or undue influence, or subject to any other circumstance that would otherwise vitiate your ability to give free direction with respect to your Estate.
b) whether or not you have capacity if you are elderly or infirm to confirm that you are able to provide instruction and understand the nature and consequences of making a Will.
c) The Firm may also require a letter from your medical professionals in this regard.
These questions are not meant to be intrusive, but are necessary to ensure that the Will, when it is invoked upon your passing, is valid, and cannot be invalidated by way of someone claiming you did not have capacity to make the Will.
If a family member arrives with you, the firm will require instructions at that time of whether or not they can remain in the meeting. However, when determining your capacity, they cannot be in the room at that time.
At the time that you sign your Will, as part of a comprehensive planning strategy, you also should consider having in place an Enduring Power of Attorney (“EPA”) and a Personal Directive.
Enduring Power of Attorney
An Enduring Power of Attorney (“EPA”) appoints a person to be responsible for your financial affairs and takes effect only upon two medical professional determining that you are no longer able to make such decisions. The Enduring Power of Attorney appoints a trusted person to be responsible for and to act in your best interests in that regard.
Personal Directive
A Personal Directive appoints a person to give directions with respect to your healthcare and medical treatment, in the event that you are no longer competent mentally to do so. This may occur for example, if you are hospitalized and in a coma, and are unable to give instructions. This Personal Directive appoints a trusted person to act in your best interests, in such circumstance and gives instructions to said person.
Explanation Regarding the Will and other Documents
The following aspects are covered by a well-planned Will. While a Will need not be complicated, it is key that you discuss with your lawyer the minimum elements that should be included and considered.
In the context of a Simple, Basic Will, some fundamental principles are:
Real estate held in joint tenancy: It is typical that spouses hold title to their matrimonial home (and sometimes other real estate) as co-owners in “joint tenancy”. The characteristic of joint tenancy is that the surviving owner will become the sole owner of the property upon the death of the other co-owner. When property is held in joint tenancy, the property remains with joint tenant and does not form part of the deceased’s Estate. While a document must be filed at the Land Title’s Office, there is no need for there to be a Will to direct that the other co-owner will become the sole owner of the property.
You may need to consider if real estate should be held in joint tenancy.
Real estate held in “tenants in common”: Sometimes co-owners of property have decided that each co-owner owns a particular share of the property (albeit undivided while the parties are living and using the properties). This means there are certain fixed shares or interests in the property for each co-owner. Upon the death of one of those co-owners, the ownership of that person’s interest will pass to that person’s Estate. If the co-owner dies without a Will, the property will pass to the persons entitled to receive portions of the deceased’s Estate under the Act. For this reason, if you wish to have your interest in property dealt with otherwise then as it would result under the Act, it will be necessary to have a Will.
You may need to consider real estate should be held in tenancy in common
Bank Accounts: With respect to joint bank accounts, personal or corporate, upon notice of one spouse’s death, the bank will typically freeze the account, and require a copy of the Will and death certificate. Automatic or pre-authorized payments are reviewed by the bank before payments are allowed. The bank will wait for probate (if required), and then likely pay out any liabilities first, then the bank will remove the deceased party’s name from the account rendering it sole ownership.
You may need to consider some or any bank account should be held jointly.
Insurance and RRSPs etc: Life insurance policies, RRSP plans or RESP plans or similar sort of pension plan: In these instances it is important that there is a beneficiary designated. If there is a beneficiary designated (other than “Estate”), there is no need for there to be a Will to administer these assets as you have already selected and registered your beneficiaries for any life insurance policies and/RRSP accounts, which may be specific individuals and not necessarily your Estate. If specific individuals are designated for these policies/accounts, then the policies/accounts do not form part of your Estate; if you have designated your “Estate” as your beneficiary, then the proceeds of those policies will then be included in your Estate and then distributed in accordance with your Will.
You need to consider whether there designated beneficiaries of your insurance and RRSPs are appropriate.
Tax and Canada Revenue Agency etc.: In certain instances, it is important to consider tax issues with a tax specialist regarding the tax consequences of disposition of your Estate on death, without limitation:
a) Death is a deemed disposition[sale] of your assets. Certain assets may not be subject to tax on such disposition- such as a principle residence;
b) Assets that pass to a spouse may be tax exempt at that time upon proper measure;
c) Assets that pass to other persons may be subject to tax [based upon any increase in value above the adjusted cost base purchase price). In this regard, you may need to consider a form of life insurance that will pay such tax upon your death.
We are not providing any tax advice in respect of your Will.
Children: If a person who benefits from your Estate is a minor, that minor person’s share shall be paid to a Guardian or a Trustee for the child. Often, because of convers regarding the inexperience of the child or other concerns, such share may be held until a later age such as 25 or 30 years, before the share is finally distributed by the Trustee to the beneficiary. During the time of the Trustee holding such share in trust, the Will shall provide the Trustee with the power to use the share for the benefit of such beneficiary in the best interests of the beneficiary.
You need to consider any special requirements of any of your dependents.
Specific Bequests: If you wish there to be specific bequests to gift a certain asset (such as family heirlooms, or special items) or payment to other beneficiaries, you will need to set that out in more detail. Dependent upon the complexity of these types of dispositions, a more detailed Will may be appropriate, but usually you can attach an addendum to your Will called a Codicil.
Executor(rix): While it was frequent that the surviving spouse is the Executer, in some occasions it is better to have a third party handle the administrative details of your Estate, especially since typically the surviving spouse is emotionally distraught as a result of the passing.
You need to consider who should administer your Estate upon your death, whether you want that to be a single person, or whether you can have more than one persons, who are capable of working cooperatively in respect of administering your Estate.
Joint Deaths: In the event that both spouses die at the same time, and there are surviving minor children, it is important to have an Executor named who will handle your Estate for the benefit of your children. You may want to set out in your Will when and at what age the children should receive full control of their share. Often it is beneficial that children do not receive control of their share until they are of a sufficient age as to handle the funds wisely. In that regard the Executor and Guardian stand in the place of the parents and in that sense manage the Estate and use it for the benefit of your children, as they may need, and then at an appropriate age the distribution is made to the children.
You need to consider whether there are any special factors to take into account if both of you and your spouse pass at the same time.
Insolvent Beneficiaries: Sometimes a beneficiary is insolvent. We include in your Will a clause that allows your Executor to by-pass the insolvent beneficiary or delay the distribution to that beneficiary, until such time as funds may be more beneficial to them.
Pre-death dispositions or gifts: Sometimes a person provides a gift to a particular person or family member prior to passing. You may wish to consider how to take into account these pre-death dispositions.
Sometimes a pre-death disposition can be done in such a way as to minimize tax. This is a consideration, you need to speak to your tax advisor in this regard.
Digital Information: Most people have digital information and property. This information may need to be specifically addressed in your Will. This includes providing information regarding accessing passwords.
Other dispositions: there are other matters sometimes required to be stated in the Will. For example, often Estate distributions or inheritances are not intended to be family or matrimonial property, meaning that if the beneficiary is married, you may only want your gift to be for the benefit of the beneficiary and not their spouse. We include a clause in the Simple Will to reflect this, however it is always wise to inform your married beneficiaries that if they seek to keep inheritances separate from matrimonial property, they should not deposit Estate proceeds into any joint accounts, and ensure they keep the proceeds separate.
Periodic Review of Documents: You should review your Will and update it as required at least every five (5) years, and earlier if there is a change of circumstance in your life. Significant life changes include: a change of Executor or Beneficiary, change of Personal Directive instructions, children, divorce, or disability.
Medical Information: A medical diagnosis of a critical illness typically also prompts a review of these Will documents, in particular the Personal Directive and Enduring Power of Attorney, and in some situations, if health or mental capacity is expected to decline, you may want to consider seeking information/advice with respect to General Powers of Attorney.
Safe-Keeping Your Will
The Firm shall provide an Original and one copy of your Will for your records and safe-keeping, and in accordance with your instructions, we will retain a copy on our files.
You may store your Will in your safety deposit box, or any other safe but accessible place. A bank will typically allow limited access to an Executor to the safety box for removal of the Will. It is advisable that you seek that information from the bank at which you hold a safety deposit bank prior to depositing a copy of these Will documents.
Enduring Power of Attorney and Personal Directive Matters
The Firm shall provide the Original and one copy each of the Enduring Power of Attorney (“EPA”) and Personal Directive.
A copy should be kept by you in a safe place where both your appointed ‘Attorney’ in the EPA and alternate Attorney know where to locate it.
You should also take time to discuss with both your Attorney and alternate Attorney your wishes in the event that you become incapable to make decisions on your own behalf. You should not provide a copy to any other person.
Clive O. Llewellyn
Barrister and Solicitor