Estate Planning for Albertans

Have you been putting off your will? Are you unsure where to begin? You’re not alone; many people struggle to understand the full scope of estate planning. It might sound like a daunting process, but this blog will cover all the basics you need to help get started.

Understanding Estate Planning

An estate plan allows you to dictate what happens to you and your assets if you pass away or are incapacitated to the degree that you can no longer make those decisions. The basic documents of an estate plan include a will, an enduring power of attorney, a personal directive, and the establishment of a trust(s). You will want to discuss each of these matters with professionals including lawyers, accountants, and perhaps a financial advisor, depending on your situation.

What is a will?

A will is a document that specifies where your assets will go upon your death, as well as designates who is responsible for settling your estate. It’s important to ensure the person you designate (the executor) knows you have selected them, and where your will can be found. Being an executor can be stressful and time-consuming. You may choose to designate a trust company as your executor, in which case the costs will be covered by your estate.

If you don’t have a will when you pass (which is called “dying intestate”), government legislation will determine who gets what portion of your estate. If none of the government designated beneficiaries exist (or can’t be found within a two-year period), the funds are turned over to the government. Ten years later, if no one has claimed the funds, they are added to the government’s bank account!

What is the power of attorney?

The enduring power of attorney allows a selected, trusted individual to legally make financial decisions on your behalf if you no longer can. Just as in choosing your executor, you need to be certain your trusted individual not only has the ability and knowledge to act in your stead, but they are willing to accept the responsibility. Like a will, you may choose to select a trust company to act as your attorney.

What is a personal directive?

Your personal directive is a document declaring who will make medical and personal care decisions in the event of your mental or physical incapacity (this person is known as your agent). Anyone can be selected as an agent; generally, spouses would select each other. It’s a good idea to select a secondary agent, in case the primary agent is unable or unwilling.

The Government of Alberta has established a registry where you can upload the name and contact information of your agent(s). This is an optional choice and is free of any charge. Specific details can be found on the following website: https://www.alberta.ca/personal-directive Should you end up in a hospital, unable to make decisions, the registry can be accessed by hospital personnel and your agent will be contacted.

What else should I consider?

In addition to the basic three elements briefly described above, there are several other elements that may be of interest, depending on your personal situation, and desires.

If you or your spouse own a small business, there may be succession planning and special life insurance you need to consider.

Are you responsible for the care of a dependent child or other adult? Again, life insurance may be a significant consideration, as well as any special planning for the care of the surviving dependent.

Many people have “furry children,” but what happens to any pets that survive your death? In Canada, pets are considered property, and therefore cannot be a beneficiary in your will, or have a trust set up in their name. An easy solution would be to entrust your pet to a guardian (after discussing with the appropriate individual) along with a sufficient financial gift to cover the expected lifespan of your pet.

You may choose to set up a trust in your will, called a Testamentary Trust. It is usually set up to defer the distribution of any bequests to beneficiaries. There are additional and ongoing costs in setting up and maintaining a testamentary trust.

A final item to consider is a letter of wishes. This nonbinding communication provides clarity for your decisions, which can eliminate (or at least reduce) family disputes. You may choose to have separate letters for the will, personal directive, and enduring power of attorney to remind the family and your representatives of your wishes. Be sure to identify the letters as a letter of wishes; you don’t want them to be misrepresented as a will or other legal document.

Remember, there is no one-size-fits-all solution for this process. If you’re ever unsure which decisions are best for you personally, speak to professionals and ask as many questions as necessary. Make a commitment to review the documents on a regular basis so all your wishes are up to date. You will not live forever, but your estate will live on after you—make sure it does so as you desire.

Ray Hoger
Chair, Pension and Financial Wellness Committee