Wills and Estates

ESTATE PLANNING

The drafting of a formal estate plan can, in some instances, require a high degree of planning and expertise. However, for most people, avoiding complications in the distribution of one's estate upon death can be achieved simply by having a properly drafted Will, and, for married persons, holding assets "jointly" with one's spouse.

POWERS OF ATTORNEY

Enduring Powers of Attorney ("EPA's") provide a relatively simple and straightforward means of enabling people to plan for their own incapacity. They are designed for a situation where a person anticipates becoming unable to manage his or her own affairs. An EPA enables people to plan for their own incapacity, giving them the freedom to choose someone whom they feel is most likely to act in their best interests. If no EPA is in place, then in the event of incapacitation, it becomes necessary to obtain a formal Court Order for Trusteeship, which can be a complicated, time consuming, traumatic and expensive procedure.

LIVING WILLS

The Personal Directives Act gives legal recognition to "Living Wills" which deal with health care matters and also provide a mechanism for individuals to deal with other personal matters should they become incapacitated, including decisions as to where a person will live, who they will associate with, etc.

A Living Will or Personal Directive can be implemented either by appointing another person to make health care and other non-financial personal decisions or by setting out written instructions for preferences and direction regarding these matters. The directive takes effect only when the person becomes incapacitated.

The need for a court-approved trustee or guardian is eliminated as long as a person has the foresight to properly prepare an Enduring Power of Attorney and a Personal Directive.

WILLS

THE EFFECT OF A WILL

A Will is a written direction controlling the disposition of property which has been acquired during the maker's entire lifetime.

There are numerous formalities which must be complied with when executing a Will. These formalities affect both the Testator and the witnesses to the Will. In order to ensure that these formalities are satisfied, the Testator should consult a lawyer.

Basically, a Will provides for the appointment of an Executor (sometimes called a "Trustee") to administer the assets of the Estate. In addition, a Will provides for the appointment of a guardian of any infant children. The Guardian's role is to act as a substitute parent.

A Will may be changed by the maker (called a "Testator") as changes in circumstances or choice dictate. If necessary, the entire Will can be redrawn or partial changes can be made by an additional document called a "codicil", which must be drawn with the same care and executed in the same manner as a Will.

An existing Will is automatically revoked or cancelled upon marriage, except where the Will refers specifically to the contemplated marriage.

A Will is not revoked if the Testator divorces. A new Will would be required.

THE PITFALLS OF NOT HAVING A WILL

For most individuals, a Will controls the largest disposition of property that they will make. In order to properly prepare a Will, it is necessary to take into consideration legal formalities, applicable legislation, and tax consequences.

In order to adequately deal with these concerns, a lawyer must spend some time in each case reviewing the family situation and financial position. Having reviewed the relevant matters, the lawyer is then in a position to prepare a Will or Wills which fit the particular situation.

The main reason for "bothering" with a Will is to see that your intentions are carried out in an orderly, efficient manner, with a minimum of expense and delay. A properly drawn Will will save considerable administrative expense for your family and heirs. If there is no Will, there is no opportunity to select an Executor of your estate or a Guardian of your infant children. Instead, these individuals will have to be appointed by the Court and must comply with additional requirements. This will result in delay, additional cost and may result in the appointment of individuals that you would not have chosen.

WHAT HAPPENS WHEN THERE IS NO WILL

The estate of a person dying intestate (without a Will) will be distributed by a Court-approved Administrator pursuant to the provisions of the Intestate Succession Act. Once the estate debts and taxes have been paid, the remaining assets are distributed in accordance with priorities established by Alberta Law.

If you die intestate, leaving only a surviving spouse, your entire estate is distributed to your spouse. "Spouse" is defined as a married person, not a common-law relationship.

If you die intestate, leaving a surviving spouse and children, the first $40,000.00 of the estate is distributed to your surviving spouse as a preferential share. Any amount exceeding $40,000.00 is divided equally between your spouse and child. If you have more than one child, the amount exceeding $40,000.00 is divided 1/3 to your spouse, and the remaining 2/3 is divided equally among your children. If a son or daughter is dead but survived by children, the children will receive what would have been their parent's share.

If there are no children or spouse surviving the deceased, the estate goes to the deceased's nearest next of kin, who are determined in the following order: parents; brothers and sisters; or, if dead, their children; grand-parents; aunts & uncles and cousins.

THE ESTATE

ADMINISTRATION OF AN ESTATE

The administration of an estate may take anywhere from two months to two years depending on the specific assets of the estate and various tax ramifications. If trusts are involved, the administration may be ongoing for a number of years, depending on the terms of the trust. Hence, one must plan his estate taking account of this time factor and providing for the family in the interim (i.e. mortgage insurance, life insurance).

DUTIES OF THE EXECUTOR

Executors have three primary duties in handling an estate:

They may enter into possession of the estates' property; may bring legal action against the debtors of the estate; may enforce demands; may give effective receipts and discharges; may pay the Testator's debts; and, in effect, perform all directions of the Will or the Intestate Succession Act.

The Executor's duties are completed once the property has been distributed in accordance with the provisions of the Will and the necessary documentation has been completed.