Estate planning can be complicated. It requires attentive and thorough thought to be given to exactly you want your property and assets to be divided. Estate planning should also consider situations in which you’re still alive, but unable to make your own financial and personal decisions.
Wills are a large part of estate planning. However, a complete estate plan will also include an Enduring Power of Attorney (EPA) and a Personal Directive (PD).
Will
What is it?
A will is a legal document in which you choose one or more executors, beneficiaries, and guardians to take over certain roles at the time of your passing. In short, each of these has the following responsibilities:
- Executor: This person makes sure your property and assets are distributed according to the wishes set forth in your will. You can find more information on how to choose an executor here.
- Beneficiaries: These people receive gifts or inheritances from your estate. As long as the will is written legally, these “gifts” can include any belongings or property you own.
- Guardians: These people take care of and provide for your minor children. Like executors, guardians should be chosen with considerable care.
What you need to know
A legal will takes effect at the time of your death. Without a will, your estate will be distributed according to the legislation in effect at the time of your death.
Wills can be changed at any time – provided you have the requisite mental capacity to do so. These changes might occur to reflect current legalities or to simply accommodate new situations, such as divorce or new family members.
To ensure that your present wishes are reflected in your will, we recommend reviewing your will every 2-3 years at minimum.
Misconceptions
Wills take effect when you pass away. If a will isn’t drafted properly – in accordance with current provincial legislative requirements – it becomes just an unenforceable piece of paper.
Enduring Power of Attorney (EPA)
What is it?
An Enduring Power of Attorney (EPA) is a legal document in which you appoint one person or more individuals – referred to as attorneys – to handle your finances and property. Two types of EPAs exist: (1) Immediate EPAs or (2) Springing EPAs. The first takes effect immediately after the document is signed, and the other only under certain conditions.
What you need to know
A Springing EPA usually takes effect once you’re unable to make your own sound decisions. This is through loss of mental capacity. Commonly, this takes place after a serious stroke or brain injury, mental health problem, on-set dementia, or in other similar scenarios.
Once an EPA is in effect, your attorney has the ability to make small to serious estate decisions on your behalf. This includes managing your finances and property.
Common Misconceptions About Enduring Power of Attorney
An EPA appoints an attorney, but that doesn’t mean a “lawyer.” An attorney is simply the name we used to refer to the person charged with handling your finances and property. You can appoint anyone to this role – provided they’re over 18 years of age and of sound mind.
EPAs differ from personal directives as they cover only financial and property-based decisions. They also can come into effect at different times, depending on your precise wishes.
Personal Directive (PD)
What is it?
A Personal Directive (PD) is another legal document. This document appoints a person, or “agent,” to handle all of your personal matters when you are unable to do so. Once you lose the capacity to make these choices on your own, your agent will step in and make health-care, accommodation, end-of-life, and other decisions for you.
What you need to know
Specifying your wishes before you’re incapacitated is vital. Your agent should know your precise wishes. They may have to decide if and when to end life support, which medical treatments you want or don’t want, where you should live, and with whom you can associate. These details should be outlined in the PD itself and also reiterated to your trusted agent.
If you don’t make a PD and are incapacitated, healthcare providers can choose your nearest living relative to make serious personal and healthcare decisions on your behalf. Your family members or close friends could also end up going to court to become your guardian – a costly and time-consuming process.
Common Misconceptions About Personal Directives
PDs differ from EPAs in what sorts of decisions they deal with. The agent of your PD cannot make financial decisions on your behalf, and the attorney of your EPA cannot make your health or personal decisions.
It’s important to have both an EPA and a PD, as these documents usually come into effect during stressful and trying times and having them in place tends to ease family stress and tension.
What you need to remember about all three
Each document is essential to create a thorough estate plan. Each reduces family tension and helps direct your loved ones through stressful and emotional times in which they may not be thinking clearly.
Since these documents transfer your decision-making power to people, it’s important that they are written properly, clearly, and legally. Having a lawyer review – or better yet, create – these documents on your behalf ensures they will be upheld and followed when necessary.
To speak to one of our lawyers about Wills & Estates planning, please contact us today.