People sometimes have an idea of what they think estate planning is but may only be seeing a small piece of the larger picture. In our previous blog, we focused on some of the ways estate planning is essential for protection in life, to highlight how it isn’t only valuable once we’re gone. This time around, the focus is on some ways proper estate planning makes dealing with our absence easier for loved ones.
A top priority in estate planning is – you guessed it – having a will. It can either be a full blown one done up by a lawyer or a holograph will someone has written themselves. If you need some convincing on why they’re so important, there are numerous stories online, especially of celebrities who have died intestate, illustrating just how complicated things can get. Sure, most of us don’t have comparable assets, but the point is there are still countless ways not having a will can burden loved ones after we’re gone. Among other things, wills generally:
- Delineate how the deceased’s assets will be disbursed and to whom
- Appoint an executor – a trusted individual – to handle the disbursement according to the deceased’s wishes
- Ensure dependants have an appointed guardian if something were to happen to both current guardians
- Specify how pets should be taken care of
Although most of us know wills are important, a lot of us don’t have one because, lets face it, it’s one of those tasks in life that is exceptionally easy to put off. Standard wills can be expensive to create and while holograph wills are certainly easier and more accessible for some folks, issues regarding validity can potentially arise during the administering/probate process. For some, creating a will may not appear to have an obvious, immediate payoff so time isn’t made to write one up.
But just like how healthcare directives and powers of attorney are an absolute must have, for your own sake as well as others’, so too is having a legal will. Spending the money and/or a few hours of your time now, will almost certainly save your (grieving) loved ones hours of unnecessary, not to mention difficult, work and possibly significant amounts of their own money.
A very important aspect of having a valid will – and sparing loved ones – is naming a capable executor; the person entrusted to handle the administration of your estate. In Manitoba, in situations where someone dies without a will, the administration process will be directed by the Intestate Succession Act. This Act states that all your assets are to go to your spouse which… doesn’t sound so bad, right? Unfortunately, there are situations in which it could be.
In Canada, blended families and multigenerational families are increasingly common. As of 2016, 1 in 10 children were living in a stepfamily and 2.9% of all households were multi-generational – the fastest growing household type in Canada. Evolving family dynamics present complications for estate planning and require special attention to address them properly and equitably. In situations where someone has been divorced and remarried, but has children with their previous spouse, the Intestate Act may divvy up assets between their children and new spouse in undesirable ways.
In a multigenerational household, imagine what might happen if a single-parent were to die unexpectedly, leaving behind grandparents and children – some of whom may be step-relations with one another? Do the grandparents assume they become the de facto guardians? What would happen to the house and residents now that the legal owner is gone? The responsibility to answer these questions shouldn’t fall to grieving individuals with varying degrees of ability to answer them. An updated will would have addressed these issues and made provisions for all parties involved so no one was left guessing or stuck in an unfair situation.
Beyond wills and executors, good estate planning also involves lists… a lot of them. Think about all the things in life making up your day to day. Creating lists detailing how to access all tangible and intangible assets is invaluable to the folks who will be tasked with deciphering our lives once we’re gone. Lists should include things like:
- Passwords to online accounts (online banking, social media, etc.)
- Insurance policies, investment and bank accounts and respective policy/account numbers and advisor contact information
- Cryptocurrency access protocols
- Bills and debts
- Memberships and subscriptions
- Physical possessions, heirlooms, etc. and who they should go to
Once all your lists have been compiled, best practice is to make copies of the lists and give them to trusted individuals, so they won’t have to go looking for them in an emergency. Of course, these lists should be regularly updated and redistributed. Remember, estate planning is not just intended to make your life easier, but to make the lives of your loved ones easier too.
Estate planning is an involved, and ongoing form of planning that’s as valuable in life as it is in death. For any questions you may have about starting or developing your estate plan, connect with us.