3 Essential Tools
that you should have in your 'toolbox'
Fall...the time for buying school supplies, for sending children back to school, for putting away the summer patio furniture, for raking up the leaves. At the beginning of each season there are things we need to organize to prepare for the changes each new season brings. In terms of finances, there are ways to prepare for what changes the future may bring. Now is a good time to organize things there too. There are three essential financial tools to put in place: your Will, a Power of Attorney and a Representation Agreement.
Your Will
A Will is a legal document that explains what you want done with your estate after your death. Your estate is any land, house, money, investments, vehicles and personal items that you own. A Will does not deal with assets you jointly own with another person like a joint bank account, property jointly owned or accounts with a named beneficiary like your RRSP.
In your Will you name an "executor" who gathers up your estate, pays your debts and taxes, then divides what remains to your beneficiaries according to your wishes. It can be a huge task, so it is important to pick someone you trust who will get the job done properly.
Benefits of Having a Will
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Your estate will be distributed based upon your wishes. If you don't have a Will, the government decides who gets what based on the Estate Administration Act.
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Having a Will reduces costs both taxes and probate fees.
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Having a Will in place means it takes less time to distribute your estate. If you don't have a Will it is very time-consuming and complicated and your loved ones will end up getting less due to legal fees.
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You can set up a trust in your Will. Trusts are wonderful vehicles for tax-savings for your beneficiaries. You can decide when your children get their inheritance rather than at the legal age of 19. You can protect your children's inheritance from a divorce and you can distribute your estate differently than the standard equal split.
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Very important if you have children, a Will appoints a legal guardian. Not having a Will could cause a lot of family problems.
Review Your Will Regularly
You should review your Will every few years to make sure it is still relevant, and in particular when your circumstances change such as:
- When your executor moves or is no longer able to manage your estate
- When a beneficiary passes away
- When you have a child
- When you buy a new home
- When you get married (when you get married your Will is automatically revoked unless it was created in contemplation of the marriage)
- When you get divorced (your Will remains legally valid even after divorce unless you change it. You could be leaving your estate to your ex.)
Only about half of the people I see have a Will. It is really important to put yours in place.
Powers of Attorney
A Power of Attorney is a legal document that allows you to appoint another person, called an "Attorney", to make financial and legal decisions on your behalf while you are still alive.
A Power of Attorney can be useful in two circumstances:
- When you are competent but out of town and unable to take care of urgent financial matters or deal with a real estate transaction.
- When you are incompetent due to an illness or accident and you need someone to take care of financial matters for you, for example, arranging for your medical care.
Representation Agreements
A Representation Agreement is similar to a Power of Attorney in that it grants someone the authority to handle your financial and legal decisions on your behalf. But it also gives someone the right to make personal care and health care decisions on your behalf. Your representative speaks for you.
Without a Representation Agreement in place, if you were unable to handle your affairs, it could be very complicated, time-consuming and expensive for your caregivers to obtain permission to deal with your affairs for you. Caregivers have to apply to the courts to get permission. Additionally, once the court grants them permission, your caregivers are monitored by governmental bodies, which makes it a slow and complicated process.
Aging and eventually dying are facts of life. Becoming ill as you grow older is a distinct possibility. These three documents can ensure that your wishes in regard to these events are followed, and that you and your beneficiaries are taken care of according to your wishes.
If you need to get or update any of these three documents, an attorney I highly recommend is Richard Bell of Bell Alliance. His firm is at the top of their field for customer service. His firm was voted FIRST PLACE for "Best Lawyers When Buying/Selling Real Estate" in the Georgia Straight's Readers' Choice Best of Vancouver 2008 awards. Bell Alliance offers a 5-year free rewrites on Wills. Richard Bell's website is www.bellalliance.ca Tel. (604) 873-8723. Tell him I sent you.
