Preparing Your Estate Plan

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October 15, 2014
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Preparing Your Estate Plan

It isn’t much fun to sit down and make your estate plan because it means you have to think about your own death and the possibility you might become mentally incapacitated before you die.

Over the years, I have heard a variety of reasons from clients about why they don’t want to prepare an estate plan. Some of these are:

  • I am single and don’t have much property.
  • I am married and we don’t have children.
  • If I make these documents now I will become mentally incapacitated or die sooner than I would without these documents. I find this one interesting as it usually men who tell me this.

Sadly, I have seen this thinking continue even when circumstances change and people have children and acquire property. If an accident, heart attack, stroke or other catastrophe mentally incapacitates or kills you, your family is left with no estate plan to help them go forward.

What happens if Mr. X is injured in a car accident, is mentally incapacitated, then dies as a result of his injuries from this car accident and has no estate planning documents?

  1. Family members are even more stressed over this tragic situation as they do not have any documents to refer to in understanding and carrying out the Mr. X.’s intentions and may even disagree about what Mr. X’s intentions were.
  2. Someone will have to apply to court for a Trusteeship Order to look after Mr. X’s property while he is still alive and mentally incapacitated.  The Alberta Adult Guardian and Trusteeship Act sets out rules about who can apply to make financial decisions for Mr. X and who has priority if more than one person wants to apply.   The person who ends up looking after your financial affairs may be the last person you would have chosen. Also, the person applying to be your trustee must put details about your mental incapacity and your financial affairs into the documents filed and presented to the court for this application. All of this information is on the public record, as one of the foundations of our court system in Canada is that our courts are public.In protecting your assets the court may direct your appointed Trustee to return to court at set times for to review this court order and account to the court about the job she or he is doing looking after your financial affairs.  Again, this information is on the public record and your family has the additional financial and emotional costs of coming to court to ask for approval of what your trustee has been doing.

    If you have prudently chosen to have an Enduring Power of Attorney as part of your estate plan, you choose the person you want to look after your financial affairs and property and you maintain confidentiality and privacy because your financial affairs stay private and do not become a matter of public record.

  3. Someone will have to apply to Court for a Guardianship Order to obtain the authority to make decisions about your personal matters such as where you live and what medical care you will receive.  Similar to the Trusteeship application, there are rules about who can apply and in what priority.  If you do not care who makes these important decisions for you and you don’t mind written mental capacity assessment reports about your condition being available to the public, then you don’t need to make a Personal Directive. If you do care about these matters and your privacy, a Personal Directive allows you to choose the person or persons you trust to make these decisions for you within the privacy of your family.
  4. When you don’t have a Will you permit the Alberta Government to decide, based on set rules:
    • who will administer your estate- manage your finances to get them into the hands of your beneficiaries;
    • who will get your property;
    • who will be guardians for your children.  The Public Guardian will get involved to ensure the best interests of your children are met. The Public Guardian representatives will do their best and at the same time they have large caseloads.  Do you want to leave the critical decision about who will be the legal guardian of your minor children to people who have no knowledge of your family or your wishes?
    • how much of your estate your spouse will receive.  If it is not enough to maintain the standard of living you both have enjoyed then she or he will have to apply to court for a greater share.
    • the Public Trustee will hold and administer the share of your estate to which your children are entitled.
    • your children are mature enough to receive their financial share of your estate when they turn 18 years old.

By not having a Will you are also deciding you would like to help the Canadian government by paying more than your share of tax because you don’t want to take advantage of the rules that permit you to elect to defer certain taxes for the benefit of your family.

Estate planning documents are probably the most important documents you can prepare for your family.  Plans don’t fail. People fail to plan.  If you have a Will and a Personal Directive, it will be your plan that is put into effect and, at the same time, you will show your family how much you care for them as your plan will reduce not only the legal costs for the administration of your estate, it will also reduce the emotional and time costs for your family.

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Malcolm Pritchard
Malcolm Pritchard helps you navigate the turning points of life. He is a partner with Pritchard & Co. Law Firm, LLP. Contact Malcolm at 403-527-4411 or at lawyers@pritchardandco.com.