The Ultimate Estate Planning Checklist

Getting an estate plan in place is among the most important things you can do to protect yourself, your loved ones, and your wealth. Many people put it off, not wanting to think about death or incapacity, or because they believe estate planning is too difficult.

The truth is that having an estate plan can bring you incredible peace of mind. Another truth? Estate planning can be straightforward when you know what you want and have clear advice from an estate planning lawyer on how to achieve it.

This estate planning checklist will help you understand the key components of a good estate plan. It will get you thinking about what you need to get your personal and financial affairs in order. Once you have considered the checklist, consult with an experienced estate lawyer to get your customized plan in place.

Have specific questions about estate planning? We can help you create a comprehensive and tailored estate plan for your unique situation. Contact Onyx Law Group for a free consultation today!

What is an estate plan?

An estate plan is essentially a collection of legal documents. A Last Will and Testament is an important one, but estate plans can also include documents such as a power of attorney, representation agreement, an/or trust deed. Each of these documents is discussed in the estate planning checklist in Section II below.

What is the purpose of an estate plan?

Estate planning can achieve many goals. Your estate plan can:

• set out how and to whom you want your assets to go after your death (including your digital assets).
• create a plan for care and upbringing of your minor children.
• make legally binding decisions about how you want your health and financial decisions to be handled if you become unable to make decisions during your lifetime.
• put a business succession plan in place if you are a business owner.

There are other objectives an estate plan can achieve, such as minimizing taxes and probate fees, and supporting charities by making charitable donations. An estate planning lawyer can help you determine which documents are needed in light of your needs, wants, beneficiaries, and assets.

At what age do most people do estate planning?

Many people postpone estate planning until after a major health scare or after a major life event such as having a baby or getting married. The reality is that it is never too early to do estate planning—but it can be too late. For example, you can’t make a valid Will once you have lost mental capacity due to illness, injury, or age-related cognitive decline. It is best to start early; you can always change or update your estate plan as your life progresses and your needs/wants change.

Estate Planning BC Checklist

Here are the key components of a comprehensive estate plan.

1.  Last Will and Testament

Why you should have a Will

Your Will sets out how your assets are distributed after you pass away. If a person dies without a will (“dies intestate”), their assets are distributed according to BC legislation. If you die without a will, the risk is that your estate will be distributed in amounts that you didn’t intend or to family members who you did not want to inherit.

Your Will can also appoint guardians for your minor children, who will oversee their custody and care until your children become adults.

Importance of appointing an executor

Your Will also gives you the opportunity to appoint an executor (or executors). This is the person or people you choose to handle your affairs after your death. It is an important role that comes with a lot of responsibilities. Your executor is in charge of handling your funeral, paying estate debts, locating beneficiaries, filing income tax returns, and distributing estate assets.

If you don’t have a Will nominating an executor, your family members or friends will need to apply to court to be appointed after your death. That costs time and money.

Requirements for valid Wills in British Columbia

For your Will to be valid in British Columbia, it must meet the following basic requirements as required by the Wills, Estates and Succession Act:

• be in writing
• signed at the end by you (the will-maker)
• signed in the presence of 2 witnesses

If your Will doesn’t meet these requirements, it may not be enforceable, which can result in litigation and your estate being distributed in a way you didn’t intend.

What documents are needed for Will preparation?

It is a great idea to make an itemized list of all your assets and liabilities, owned in Canada, the US, or elsewhere. Include any bank accounts and digital assets. Your estate plan can then be tailored based on what you own, how you own it (e.g. joint ownership), and who you want it to go to.

Your list should also include RRSPs, RRIFs, RESPs, pension plans and any life insurance you have. When you prepare a Will,
it is an ideal time to ensure that beneficiary designations in your registered accounts and life insurance policies are properly named, and to consider whether the amounts they’ll receive from those assets may impact your choice of beneficiary in your Will.

2.    Power of Attorney

What is a power of attorney?

A power of attorney is a powerful legal document. It allows another person or trust company to manage your money, property, business, taxes, etc. on your behalf. A power of attorney document is only valid while you are alive; in contrast, your Will comes into force only after your death.

An Enduring Power of Attorney remains valid when you are incapable but still alive. An ordinary (non-enduring) power of attorney ends if you are declared mentally incapable.

Why you should consider making a power of attorney

An Enduring Power of Attorney is key to incapacity planning. If you become very sick or have an accident, you may need someone else to take care of your finances, sign your documents, file your tax returns, pay your bills, etc. Even your spouse can’t do this without an Enduring Power of Attorney. 

What happens if you don’t have an Enduring Power of Attorney in place?

If you don’t set this up in advance, your spouse, family member or friend will have to apply for a court order to be appointed as committee of your estate, which is expensive and can cause delay in handling your financial affairs.

Importance of choosing the right person to act as your attorney

The person, people, or trust company you appoint as your attorney for property will have a lot of financial power. It is important to choose someone you trust to make financial decisions on your behalf. It is also highly recommended that you name an alternate in case the person you choose isn’t able to act.

You should talk to the person about it. Are they comfortable with the role? Do they know and understand your wishes? Do they know where you keep your important documents and passwords for banking?

3.    Representation Agreement

What is a Representation Agreement?

A power of attorney can’t make health care decisions for you if you’re not capable of making those decisions yourself. You must appoint a substitute decision maker for health and personal care under a separate legal document. In British Columbia, that document is called a Representation Agreement. Other jurisdictions use different terminology, such as a “living will” or “healthcare proxy.”

In BC, Advanced Directives can also be created for health care decision making. An Advanced Directive is a written instruction made by an adult of sound mind that gives or refuses consent to health care in the event that the adult is not capable of giving the instruction at the time the health care is required. Talk to one of our estate planning lawyers about the specific requirements to make a legally effective directive.

What happens if you don’t make a Representation Agreement?

A Representation Agreement allows you to plan for future incapacity. If you don’t prepare a valid Representation Agreement and are later found incapable, a family member or friend will have to apply to the BC courts for an order appointing them a “committee of person.” Applying for a committee order is a complex and time consuming process.

Importance of choosing the right representative

Your representative has the power to speak on your behalf to ensure that your medical and healthcare wishes are respected. The person you name as your representative can be a family member, friend, or someone else.

It is important to choose someone you trust to make personal care and health care decisions on your behalf if you become incapable. It is highly recommended that you name an alternate in case the person you choose isn’t able to act.

4.    Trusts

What is a trust?

Trusts can be a great way to transfer assets or provide income for your loved ones, now or in the future. A trust can be created so it comes into effect during your lifetime—this is called an inter vivos trust—or it can be created so it comes into effect on your death—these are called testamentary trusts and are typically created within your Will.

Different types of trusts and their purposes

There are many types of trust, each capable of meeting different needs and achieving different tax goals and probate tax savings. Here are a few examples:

• Disability Trust. If your loved one is a person with a disability, you may wish to settle a disability trust to provide for their financial needs. The money you put in the disability trust can be used for your loved one’s housing, food, medical and other costs. However, in order to remain eligible for financial assistance and special services from the provincial government there are some restrictions and important considerations that must be observed.
• Alter Ego Trust. When you transfer assets into an alter ego trust, the trust becomes the legal owner of those assets. You no longer own those assets personally, but you continue to maintain control over the assets in your capacity as trustee. The trust document directs who you want the trust assets to go to on your death. When you die, the assets in the alter ego trust pass outside of your estate, thereby avoiding probate fees, legal costs, and the estate administration process.
• Joint Partner Trusts. This is similar to an alter ego trust, but in the case of a joint partner trust, both you and your spouse or common-law partner can benefit from the income and capital of the trust during your respective lifetimes. 

Importance of selecting the right trust for your needs

There are many different types of trusts. Trusts also have important tax considerations. A trust is not a separate legal entity, but is treated as such for Canadian income tax purposes. It is always recommended you consult with an estate planning lawyer to see which type of trust offers the most benefits given your unique situation.

Get started on your estate plan today

You’re already on your way to getting an estate plan in place now that you have reviewed the estate planning checklist. Whether you are new to estate planning or have estate planning documents that need updating, contact the passionate and knowledgeable estate planning lawyers at Onyx Law today at (604) 229-2732. We pride ourselves on providing clear legal advice and personalized estate plans to suit your needs.