When we work with our clients on their estate planning and administration, we do our best to help them navigate this essential aspect of life and hopefully learn something new along the way. Delve into our baker’s dozen of true or false statements below to uncover some best practices and some misconceptions around estate planning decisions.
Answer true or false to the following:
(click to reveal the answer!)
I should choose my executor based on family birth order.
FALSE: Sometimes your family members are not the best choice at all. Certainly, birth order should not be a key criterion when making your choices.
It doesn’t matter if I haven’t named my spouse as my RRSP beneficiary, because my bank knows we’re married and will give it to my spouse anyways.
FALSE: Correctly naming beneficiaries on registered plans (like an RRSP or TFSA) or on life insurance is critical to ensure that proceeds pass directly to them and your estate planning intentions are met.
I don’t need a Power of Attorney because I’ve named an executor in my Will.
FALSE: A Power of Attorney appoints someone to manage your financial and legal affairs while you are still alive but you’ve become incapable of doing so yourself. A Will (and the executor appointed under it) only takes effect upon death.
Everything I own when I die will be divided according to the terms of my Will.
FALSE-ish: You may have assets that would pass directly to named beneficiaries, or that will pass under a right of survivorship, or that are affected by contractual arrangements – Estate Planning involves looking at all of these things and making sure the pieces fit together so your intentions can be met.
In my Will, I can give the investment property that my company owns to my brother.
FALSE: Even if you are the sole owner of your company, that piece of property belongs to the company and you can’t give it away directly under your own Will.
It’s always the best choice to put my house in joint names with my adult child.
FALSE: While it can be a useful choice in some circumstances, it can create ownership, control, tax and creditor issues that can be more harmful than helpful.
If I want everything to charity when I die, I don’t need a Will because it’s so simple.
FALSE: If you don’t have a Will, your estate will be distributed according to a priority list of beneficiaries (essentially, family members), not to charities.
I can appoint my 18-year old daughter to act for me under a Power of Attorney.
FALSE: In B.C., a person must be 19 years or older at the time of being appointed under a Power of Attorney
My daughter must be 19 before she can make a Will.
FALSE: A person 16 and older can make a Will in British Columbia.
As long as I write down my wishes, that’s enough. I don’t need a formal Will.
FALSE-ish: Although B.C. legislation gives a bit more flexibility to consider non-formal Wills as being valid, there is much more likelihood that your wishes will be respected if you have created and signed a formal Will.
If I become mentally incapacitated, then I will have to create a Power of Attorney.
FALSE: A Power of Attorney and other incapacity planning should be done BEFORE you become mentally incapacitated, otherwise it will likely be too late.
My TFSA will go directly to my children if I named my spouse as beneficiary but my spouse dies before me.
FALSE: If you have named your spouse as the beneficiary under a registered plan (like a TFSA) and your spouse has died before you, and you never changed your TFSA beneficiary, the proceeds of the plan do not automatically go directly to your children or other next of kin. Instead, the proceeds become part of your estate and are distributed under the terms of your Will, (if you have one!)
Most people have made a Will – I’m one of the very few who have not.
FALSE: More than 50% of Canadians have not prepared a Will and, of those that have, many have not reviewed and refreshed their Estate Planning for many years. An even greater percentage of Canadians have not done any Incapacity Planning, appointing others to manage their legal and financial matters, and/or make their personal and health care decisions, if they become incapable of making those decisions for themselves
Creating an estate plan now can help to avoid confusion or disputes in the future
If you sensed a pattern in the answered above, and figured out that the answer to all of these is ‘FALSE’ (or at least ‘FALSE-ish’), then your brilliance shines strong and true. Congratulations!
But (and there’s always a ‘but’…)
Even if you scored 100% on the test, you still might be one of the 50% or so of Canadians who haven’t done any Estate Planning (even the brilliant ones procrastinate!). Or maybe you’re one of the many, many Canadians who haven’t done any Incapacity Planning, or who haven’t reviewed and refreshed their plans in recent memory.
If you scored less than 100%, you are probably making some assumptions about Estate and Incapacity Planning that aren’t quite right and that might lead to financial and emotional toll for you and your family if you don’t have thoughtful plans in place.
So, be prepared – Make a plan. Ratcliff’s Wills & Estates Group can work with you to discover your unique needs and customize your Personal Legal Planning and inject clarity into your present situation and help you anticipate the future.