Estate Planning

No. The law requires individuals to honour their obligations to their spouse and any other dependants they may have. This obligation does not disappear just because a person is deceased. It is also important to remember that death triggers tax obligations which must be satisfied at that time. Therefore, only after you have satisfied your obligations to your dependants and the tax department will you be free to dispose of your remaining assets as you wish.

Probate is the judicial procedure by which a testamentary document is established to be the valid will of a deceased person. If the Court is satisfied that the will put forward is the proper will of the deceased, it will issue a Grant of Probate. The Grant of Probate is a court order that confirms the will and appoints the Personal Representative. It is important because it gives the personal representative legal authority to deal with the deceased’s bank accounts, investment accounts, real estate, and other assets.

Unless the sums involved are small, most banking and investment companies will not transfer assets to a Personal Representative without a Grant of Probate. A Grant of Probate is also necessary to transfer land at the Land Titles Office. Therefore, obtaining a Grant of Probate is often a critical step in the administration of an Estate.

In the vast majority of Estates it is necessary to obtain Probate of the deceased’s Will.

The main reason is that the majority of Estates include real property – whether it is the deceased’s primary residence or other real estate holdings. The Alberta Land Titles Office will not permit land to be transferred unless a Grant of Probate is obtained.

Another key reason for obtaining a Grant of Probate is that banking and financial institutions will generally not release funds to a Personal Representative unless Probate is obtained. The reason for this is simple – how does the bank know who is the proper Personal Representative? What happens if the Bank were to release funds to the wrong person or to a person who was attempting to defraud the Estate? In that situation, the Bank would likely be liable to the Estate for the funds which were improperly released. Therefore, in order to protect against this it is the practice of the majority of financial institutions to require a Grant of Probate before funds are released to the Personal Representative.

Probate Fees are basically taxes which are payable before a Grant of Probate will be issued.

There is a lot of material out there which talks about the steps to be taken to avoid Probate Fees. This is because in Ontario and British Columbia Probate Fees can be very onerous. In Ontario, the “Estate Administration Tax” is calculated using the following formula:

• $5 for each $1,000, or part thereof, of the first $50,000 of the value of the estate, and
• $15 for each $1,000, or part thereof, of the value of the estate exceeding $50,000

The result is that for an estate valued at $500,000, the Probate Fee payable to the Ontario Government would be $7,000.

In Alberta, the maximum Probate Fee payable is $400. Therefore, unless you own assets located outside of Alberta, there is no reason to structure your estate plan to avoid Probate Fees.

A Power of Attorney is a legal document naming a specific person to manage a person’s property and financial affairs in the event that the person loses the capacity to manage their own affairs.

At Lypkie Henderson, we consider the Power of Attorney, along with a Will and Personal Directive, to be part of the core set documents that make up a client’s comprehensive estate plan.

A General Power of Attorney gives another person the authority to carry out tasks when someone is incapacitated. Generally, mail can be redirected, bills paid, credit cards paid or closed, taxes paid, property of every sort can be rented, leased or even sold. Bank accounts can be accessed to pay for anything, such as care a facility. Also, fees and insurance policies can be altered, and so on. Alternatively, with a Special Power of Attorney, authority can be limited to specific tasks; such as business functions like collecting rents, etc.

A Power of Attorney can be temporary, in the event of assisting someone who needs to recuperate from illness. And a Power of Attorney can also be permanent, as in the event of an aging parent or spouse.

It is important for our clients to know that the most prudent time to establish the terms of a Power of Attorney is at the same time as a Will. A person cannot and must not wait until it is too late. Once a person is deemed incapacitated by a medical professional, it is illegal to create a Power of Attorney. Please contact Lypkie Henderson to get advice concerning the creation and maintenance of a Power of Attorney and your family’s other Estate Planning needs.

A Personal Directive, also referred to as a Living Will, takes effect when a person suffers a debilitating illness or injury and is unable to express their wishes. It designates someone to manage non-financial matters, such as your personal care and health care choices. It also gives instructions to your family and your doctors about the type of medical care you prefer.

At Lypkie Henderson, we consider a Personal Directive, along with a Will and the Power of Attorney, to be part of the core set documents that make up a client’s comprehensive estate plan.

Some of the issues that can be addressed by a Personal Directive/Living Will in the event that you or a family member were incapacitated by illness or injury are:

• Medical treatments you would or would not want.
• Where you would like to live.
• With whom you would like to live.
• Choices about other personal activities; such as recreation, employment or education, etc.

As a law firm that is committed to serving the best interests of you and your family, we feel that it is important to have a comprehensive Personal Directive in place because it takes away the burden of life-and-death decision making from your family and loved ones. Please contact the law office of Lypkie Henderson and we can help satisfy any questions you have concerning your Personal Directive/Living Will.

A Mirror Will is a term which refers to the situation of a couple in which their wills are practically identical. The only difference is that any designations in the husband’s will naming his wife as executor or beneficiary, for example, are reversed in the wife’s will where she will name her husband in these same clauses. All of the other provisions in the will (guardianship, trust provisions, alternative executors, etc.) are the same and the two wills are said to be “mirror images” of each other.

An article published recently in the Globe & Mail business section provides an excellent overview of the unfortunate tax consequences that can occur when individuals transfer business and real estate assets to their family members.

Click here to read the article.

Although trusts can become very complex, at their core they involve assets which are being held by one person for the benefit of another. In estate planning, the most common example of a trust is one created for children who are minors. These trusts may also extend into the child’s adult life as well. Many parents do not want their children inheriting large sums of money until later in life and will create testamentary trusts where their children do not receive any money until they are 21, 25, or in some cases even 40 years old. Often these types of trusts have provisions enabling payments to be made for a child’s educational needs.

Other examples include trusts created for charitable purposes and for certain business objectives, but these are less common.