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Will Planning

Reasons for a will If you answered YES to any of the above, your will is in need of review.

Power of Attorneys (POA’s) Financial & Healthcare

Wills look after the wishes of the deceased. However, when an individual who is in an institution covered by the Mental Health Act is declared incompetent, the law automatically provides that the Public Trustee, which is a government body, takes over control of that individual’s financial affairs. Currently, in such a situation, the Public Trustee moves swiftly to take control of the person’s assets, bank accounts and pensions.

The current Powers of Attorney Act permits a donor who is mentally competent at the time of execution of POA to provide that the Public Trustee shall not take over in the circumstances referred to above. Instead the POA states that the Attorney may continue to handle the financial affairs of that person.

Under the new law, without a POA in place, a court procedure is required to have the person declared incompetent and someone appointed by the judge to handle the person’s affairs. The new laws will permit an application to the Public Trustee rather than the courts. The Public Trustee will have the authority to appoint someone to handle the financial affairs of the incompetent person.

Power of Attorney for Personal Care were recently created under The Substitution Decisions Act. This allows an individual (the donor) to select someone (the attorney) to make health care decisions on the donor’s behalf when the donor is incapable of making those decisions.

Naming Executors

There are no set rules or formulas for naming executor(s) of your estate. In fact, the role of an executor can be quite tedious and undesirable at times. In addition to the financial issues, there are the emotional problems which suddenly appear on the agenda. Typically, one or two family members are appointed as executors. In other situations a trust company or lawyer may be appointed as executor. The key issue is to select someone who will act in good faith with honesty and integrity ensuring finalization of funeral arrangements and that the assets are distributed as per the direction in the last Will.

Selecting a Guardians/Trustees for minors

If you are fortunate enough to have several relatives or friends who could possibly serve as guardians for your children, here are a handful of questions and comments that may serve in guiding your selection;
  1. Are the proposed guardians capable of handling their own financial affairs ?
  2. Could they manage your children’s assets ? (consider designating a different person as guardian for your children’s property)
  3. Are the guardians financially secure ?
  4. Should your estate plan authorize a specific payment or compensation to the guardian ?
  5. How will your children’s share of living costs be determined ?
  6. Can the trustee and guardians agree about what costs should be shared and what allocations should be made to the guardian ? (consider mortgage payments, real estate taxes, insurance, maintenance, repairs, remodeling, food & utilities)
  7. Should trust distributions be permitted to give the guardians’ children some benefits (such as allowance, summer camp and cars) comparable to those your children will receive because they all will be living in the same house ? (this could be handled through appropriate compensation paid to the guardian)
  8. Will the guardians’ home be able to accommodate your children, and, if not, should your trust permit loans or gifts to guardians for expansion of their present home ? Or, should the guardians be permitted to move into your home, at least until your children have reached majority or left for college ?
Testamentary Trusts

A Testamentary Trust is a terrific tool for splitting income. It works this way; A trust would be created on your death through instructions in your will. All or a portion of your assets would be transferred to the trust on your demise, and your intended heirs would be the beneficiaries of the trust.

Any investment income earned on the inheritance may now be taxed in the trust, rather than in the hands of your beneficiaries. You see, the trust is considered to be a separate person for tax purposes and will be taxed at the same graduated tax rates as any individual.

For a simple explanatory article on Testamentary Trusts, please contact Rick Schilling.