On the topic of your Will, Personal Directive, Enduring Power of Attorney, and General of Attorney
To everyone: I hope that you are doing well during these stressful times.
That being said… I want to raise the topic of your Will, Personal Directive, Enduring Power of Attorney, and General of Attorney.
Wills
It is necessary to consider each person’s circumstances in order to address what to do with the estate on passing, and to set out who should be in charge of your estate (the executor) and needs to be considered carefully. In broad terms, there are two categories of Wills:
The first category, by and large, is a Will for younger people who do not have a significant estate, nor significant tax issues on disposition of the estate on death, nor tax planning issues. These people, in my experience, are generally under the age of 45 or less;
The second category, by and large, is a Will for more mature people, who have accumulated significant assets, and may have tax issues on disposition of the estate or other tax planning issues. Such persons may have more considerations in respect of their Will.
In Canada, there is no “Estate Tax”. However, death is deemed to be a disposition, similar to a disposition when one is alive and sold an asset. If it has increased in value since its purchase, that is to say, its adjusted cost base is less than the value of the time of death, then there is tax to be paid on the gain. There are exemptions in some jurisdictions, such as a principal residence.
It is for this reason that many people should consider life insurance, in order that there be sufficient liquid cash to pay for the income tax payable on the disposition of any assets (on this differential between the adjusted cost base and its present value). Most people should have some life insurance, even if only on “term life” basis (that is to say, is not a savings plan life-insurance policy), to handle these possible tax issues.
If there are no tax issues, as aforesaid, and if you do not want to be nitpicky about who gets specific parts of your assets, and you fall into the first category, by and large your Will can be very basic, mostly a precedent form, with minor changes.
Important Clauses
In my assessment, most Wills that I have reviewed from the past years do not include three important clauses, as follows:
Firstly, unless stated otherwise, and unless dealt with by a Will, beneficiaries of an estate who are minor children will receive their share of the estate ( in Alberta) when they turn 18 years of age. Candidly, although that is an “age of majority”, the likelihood of the beneficiary being inexperienced or otherwise dealing with such share of the estate in an inexperienced way (a way in which the testator would otherwise unlikely approve), necessitates there ought to be a clause in the Will that says that the interest does not vest in the young beneficiary until an older age.
Some Wills provides 50% would vest at 25 years of age and 50% might vest at 30 years of age. Other Wills might provide that a share does not vest until 30 years of age, or even older.
Secondly, in the present era, an executor/trustee needs to be empowered to deal with what are known as “ digital assets”; An ability to utilize passwords and so forth, and to access otherwise inaccessible digital matters.
Thirdly, and likely because I have been an insolvency lawyer for many years, most Wills should have a provision that says that if a beneficiary is insolvent or on the eve of insolvency, then the share does not vest and may only vest if such beneficiary is not insolvent. If that insolvency persists, then at a certain date another person will receive that share (most likely related in some way to the insolvent beneficiary, such as a wife, son or daughter or brother ). That is to say, the maker of the Will most likely would not want the assets only to go to the creditors of a bankrupt beneficiary.
When I am preparing a “basic” Will, I obtain an acknowledgement by the person making the Will (the testator) to the effect that, as counsel, I am not providing tax advice, and that I am simply providing the very “basic” Will, as stated above. The cost of such a basic Will is quite reasonable because it is being in such “usual form”.
A basic Will can be prepared and finalized remotely, without the need for personal attendance in a lawyer’s office.
To be clear, to be enforceable as a Will, the Will must be witnessed and signed by two, independent witnesses, who are not the executor/trustee or a beneficiary under the Will. The Will cannot have handwritten changes that are also not signed by the testator and two witnesses.
Witnesses must strangers to the Will, now and in the future.
Although I would like to discuss this aspect further, and you ought not to rely on this, in many jurisdictions a document that is in your own handwriting entirely, with no typing, and signed by you, declaring it to be a Will, is known as a holograph Will. Such a document is enforceable and does not need to be witnessed. But it entirely must be in your own , recognized, handwriting. That is not to say it may not be challenged, but if it meets the criteria, it shall be recognized by the court as a Will. Generally, a holograph Will is done at “death bed” because there is no time to do otherwise.
Personal Directive
In addition to a Will, it is normal to prepare a document known as a “Personal Directive ”, which empowers a person to make decisions on your behalf regarding your health and welfare, when you may not be able to do so.
Generally speaking, Personal Directives are often in an “standard form”, however, the standard form may depend upon which person is doing the drafting.
There are many medical treatments which require “consent” , and a Personal Directive ensures that someone can give that required consent.
For some people, their Personal Directive can be tailored to specific instructions. For example, a personal directive may provide for the ability of the person with the power to “pull the plug”, and provide guidelines as to when that should occur.
Enduring Power of Attorney
An Enduring Power of Attorney, sometimes referred to as a “living Will”, provides authority to a person or persons to make decisions about your personal affairs, while you are still alive, but only if and when you become incompetent and not able to do so on your own. An example is Alzheimer’s. Sometimes, however, incompetency arises from a motor vehicle accident, or some other form of illness.
The Enduring Power of Attorney will provide that the power shall only come into effect upon a written statement from one (or if you want, two ) physician, to the effect that you are incompetent.
Generally speaking, an Enduring Power of Attorney is often in “standard form”, although the powers also can be tailored.
General Power of Attorney
A General Power of Attorney provides authority to a person or persons to make decisions or to represent a person in respect of your personal affairs, when you are not able to be present to do so on your own behalf.
An example of that need, perhaps, is when you are out of the country. Another example, perhaps, is if you are hospitalized .
Overall
I encourage all of you to consider the foregoing.