Protecting Your Wishes with a Will

Protecting Your Wishes with a Will

Planning for your own death is a difficult concept to embrace. No wonder we often choose to avoid thinking about how our loved ones will be affected when we die. However, in doing so we tend to ignore important issues such as the support of a surviving spouse, the long-term needs of a disabled child or guardianship of minor children.

Proper planning can help you choose an arrangement that best suits the financial requirements, individual personalities and welfare of your loved ones while providing them with the assurance of financial security later in life.

A will is the most important part of the estate planning process.

Without a will, a person dies “intestate” and the court appoints someone to administer the estate and distribute its assets according to provincial laws. As a result, the distribution may not suit your wishes or your family’s needs.

Planning your will

A good approach to planning a will is to apply the “Who?”, “When?”, “What?”, and “How?” tests.

WHO?

To start, think of the people whom you want to benefit from your will and who should carry out your wishes. You can distribute your assets generally by leaving all or a portion of your estate to an individual or individuals, including charities, or you can simply gift certain assets or sums of money to specific parties. A combination of these approaches is also effective.

Spouses often leave all their assets to the surviving spouse, with the provision that if both spouses die at the same time, the children share equally in the assets. If minors are included as beneficiaries, trust provisions are usually included to ensure that children do not receive their full entitlement at once, but rather receive staged distributions from a trust arrangement on a periodic basis. This is typically done to ensure the inheritance is not squandered by the children at a young age.

WHEN?

The timing for the conferring of benefits under a will is an important consideration. You have numerous options in this regard:

  • Immediately upon your death
  • On a life interest basis (i.e. as long as the beneficiary lives)
  • Terminated on the occurrence of an event (e.g. remarriage)
  • Provided for a specified period only
  • Available on a discretionary basis as the need arises
  • Contingent on other events occurring

WHAT?

Full disclosure of your assets is very important if a proper disposition – or transfer of ownership – is to be made. However, the disposition of certain assets will often be predetermined independently of your will. For instance, life insurance or registered retirement plans under which a beneficiary is named will pass to that named beneficiary and bypass the estate. If you have children, it is also important to include a guardian provision for any children under the age of majority in case both parents pass.

The will may also include burial instructions or provisions to prohibit or enable the donation of body parts or organs for medical research or transplant purposes. These are only a few examples of the “personal wish” clauses that you can include.

HOW?

You can accomplish your objectives through a variety of means. For example, you may make outright gifts in your will, create a trust or create contingent gifts to apply only under specific circumstances.

Multiple wills

The use of primary and secondary wills is becoming increasingly common in estate planning. With multiple wills, you can place assets that require probate in one will while placing assets that do not require probate in another, thereby avoiding the applicable estate administration tax (also known as probate fees) on the value of the latter assets.

The most notable types of assets to include in a secondary will include:

  • Shares in a privately held corporation.
  • Any interest in a partnership or joint venture.
  • Amounts owing by virtue of a trust.
  • Any personal property of significant value, such as jewelry, antiques or artwork.

By placing these assets in a secondary will, you avoid the tax payable on the value of these assets and you keep your testamentary wishes private and confidential.

Power of attorney

Your power of attorney, also known as a “living will,” is just as important as having a will in place. A power of attorney appoints another person to make medical decisions and manage your affairs while you are alive but physically or mentally incapable. If you do not appoint a person to manage your bank accounts, investments, home and valuable assets in the event that you are incapable of doing so, a court may choose to appoint someone for you. This process can be time consuming and expensive and it does not ensure that the person chosen is the one you trust the most.

Doing it right

Testamentary documents are often deemed invalid when they do not meet specific legal requirements. When planning your estate, it is therefore a good idea to consult a lawyer to clearly set out your wishes and ensure that all documents are valid and enforceable. Keslassy Freedman LLP would be pleased to assist you in the estate planning process.

 

This blog post was written by Adam Freedman of Keslassy Freedman LLP. For a free consultation, please contact them directly.  

 

Importance of Life Insurance in Family Law

Importance of Life Insurance in Family Law

Families typically consider life insurance policies as a forward looking estate planning tool, which it certainly is. However, in case of the unfortunate life event such as a separation or divorce, life insurance can also play a vital role from a context of family law.

The Importance of Life Insurance in Family Law: Security Blanket

 

life insurance in family law

For separated spouses, life insurance is most commonly used as security for a child and/or spousal support obligation that may be owed at the time of their death. Similarly to property insurance, that is obtained as security in the event of any potential theft, fire, or damage to our homes, life insurance is obtained in the event of a spouse or parent’s death. It can provide security to ensure that the other spouse and the children are provided for in the future. The obligation to maintain a policy of life insurance as security can be mandated by either a Court Order or a written agreement, known as a Separation Agreement.

The Court may require that in situations where a parent or spouse does not have life insurance, a new policy is purchased upon separation and the other spouse/child is designated as the beneficiary.

The two most common questions family lawyers are asked in relation to life insurance are based on the amount, and the duration of life insurance.

The Amount of Life Insurance in case of Separation or Divorce

How much life insurance is required, on one hand, to provide sufficient protection for an existing support obligation and, on the other hand, that does not result in a potential windfall for the recipient? When negotiating the amount of insurance, it is important to contemplate whether a review mechanism or an automatic discounting formula should be included in an Agreement to allow for an adjustment of the life insurance policy amount over time. To calculate your basic life insurance need, read Rubach & Associates’ previous blog post here.

The Duration of Life Insurance in case of Separation or Divorce

For what time period would a spouse be legally obliged to maintain a life insurance policy? As life insurance in this context is intended to be security for a support obligation, the duration to maintain life insurance should be consistent with the timelines for payment of spousal or child support. Such that when a party’s obligation to pay support terminates, life insurance should also end.

The amount and duration of life insurance are both important considerations as they involve the balancing of rights of both spouses/former spouses and children. This is especially important in contexts where a spouse wants to designate all or a portion of their existing life insurance to a new partner (especially where they no longer qualify for additional life insurance and/or the policy premiums are no longer affordable).

Family law lawyers, together with the assistance of a financial planner or life insurance professional, should work to assist spouses/parents with determining what life insurance policy may be appropriate based on their individual circumstances.


This post was written by Jennifer L. Valliere, a family law associate at Kronis, Rotsztain, Margles Cappel LLP, Barristers and Solicitors. 
Rubach & Associates collaborate with family lawyers when developing financial plans and strategies. Please email us or comment below with questions and enquiries.