As an estate lawyer, people often ask me, what is an estate? Many people assume I work in real estate, which is not the case.
An estate is the collective sum of a person’s net worth, including all the real property they own (such as houses or cabins), possessions and other assets. It is important to note that from an estate planning perspective, not all assets are considered part of a deceased person’s estate. Accounts that have designated beneficiaries, such as TFSAs, RRSPs and RIFs often do not form part of an estate to be divided according to a Will, but flow directly to the person named as beneficiary on the account. It is therefore very important to discuss your estate plan with an estate professional.
When preparing an estate plan, there are generally three documents that are included:
It is important to have an estate plan to ensure that your loved ones are taken care of and that the friends, family and charitable organizations most important to you are considered.
These Estate Planning documents (Will, EPA and PD) are all important and work together to ensure your interests are protected while alive and allow you to set out your wishes for your property and health care. The EPA and PD are documents that appoint a person(s) to look after your assets (EPA) and your health care and personal decisions (PD) while you are still alive, but unable to manage our affairs. It is a big decision and one that should be discussed with an estate lawyer. Unfortunately, financial abuse of elders is a real concern in society.
A Last Will and Testament (Will) is a testamentary document, meaning it is meant to set out your wishes for when you’ve passed. It is arguably the most important tool in your arsenal to help protect your assets, preserve your wishes, and provide for your loved ones.
In a Will, you will appoint someone to look after the distribution of your assets and ensure your property goes where you want it to. This person is called the Executor and is ideally someone you trust, resides in the same city, and who is younger than you are. In addition to naming the Executor, the Will provides the Executor with certain instructions and certain powers and responsibilities when administering your estate. It is important to discuss these aspects with an estate lawyer.
The Will also sets out the beneficiaries; the people you want to receive your assets, which may include money, bank accounts, investments, homes and possessions. You can also discuss what to do with assets like TFSAs and RRSPs that may fall outside your estate and how best to organize such assets.
There are certain steps that must be taken to ensure a Will is a formal Will pursuant to Alberta Law. It is important to discuss these formalities with a lawyer to ensure that your Will is effective and valid. It is important to have a Will to protect your wishes, take care of your affairs, and make things easier on those you love. If you don’t have a Will, you are now dependent on provincial legislation which sets out the distribution of your estate and it may be different from what your preference would be.
A common thing I hear from clients is “I don’t have many (or any) assets so what’s the point in making a Will?” In addition to being the best way to ensure the people, charities and organizations that are important to you benefit from your Estate, a Will also provides important powers and responsibilities to the named Executor that are often essential to dealing with insurance companies, banks and pension administrators. It can also help those close to you avoid higher legal costs in administering your Estate. Without a properly named Executor, there are numerous hurdles in the way of your loved ones being able to administer your assets and/or pay debts.
I hope this article has helped explain that while a Will is essential, it is only one tool in your toolbelt when thinking about estate planning. The Enduring Power of Attorney and Personal Directive are also valuable tools in ensuring your finances and property, as well as your personal and health care, are taken care of when you’re no longer able to do so yourself.
Jenna Bever is a Wills and Estates lawyer with DD West LLP and she has experience in preparing Estate Plans for clients from all walks and stages of life.