Time to Dust Off Your Estate Plan

Estate planning is a series of tasks that dictates how your assets will be dispersed upon your incapacitation or death. Your estate plan, like your home, periodically needs a thorough polishing. Your life circumstances are constantly changing. An estate plan that was the perfect fit a couple of years ago may now be cluttered with outdated provisions or documents. Every now and again, you need to dust off your estate plan to ensure that it will still achieve your goals as well as to avoid unintended consequences that may arise because of divorces, deaths, births or other changes that have occurred since the last time your plan was reviewed.

Here are a few of the items you should review, so any necessary changes can be made to ensure your estate plan is up to date.

Have your children reached adulthood and/or are there any other factors that need to be considered?

Although it feels like only yesterday when kids were in diapers, time flies. If your children are no longer minors, your estate plan needs to be updated. You might want to change your estate plan to reflect their personalities and requirements. A trust that allows distributions exclusively for the child's health, education, support or welfare, for instance, may be a preferable choice if one of your kids has a tendency to be careless with money or has developed an addiction.

You might also have a situation where your children are independently wealthy, and you can consider increasing your charitable giving upon death and reducing the size of their inheritance. You might also be faced with a situation where one child might need a bit more financial support than the other, and thus consider not dividing the estate equally. In addition, if your children now have a family of their own, you may want to revise your estate plan to include your grandchildren.

Do you need to name different fiduciaries?

Your estate plan can be impacted by more than just changes in your life circumstances. If your fiduciary (e.g., executor, trustee or agent under a power of attorney) has died, moved to another country or is otherwise no longer able or willing to serve in that role, you need to revise your estate plan to designate a new fiduciary. It is also wise to name alternates who can serve if the fiduciary is not available when needed and to consider appointing a professional to preserve family harmony and reduce stress on your family members or friends at the time of your death.

Has your spouse passed away?

It is especially important to review and revise your estate plan if your spouse has died. It is likely that you named your spouse as one of the main beneficiaries of your will, trust, retirement account or life insurance policy, so it is crucial for you to update the beneficiaries named in those documents. If your spouse was named as your executor, trustee or agent under a power of attorney, you need to take the necessary steps to name another trusted person to fill those roles.

Make sure there is sufficient liquidity in your estate and access to funds during the probate process.

Probate is a process that verifies the deceased’s last will and testament. The official name in Ontario is the Certificate of Appointment of Estate Trustee with (or without) a will. If there was not a will, then the probate process confirms who the executor of the estate can be.

When an executor gathers the deceased’s information to complete the paperwork to obtain the Certificate of Appointment of Estate Trustee, it’s common practice to contact financial institutions to obtain the financial details needed to complete the Application for a Certificate of Appointment of Estate Trustee that is being submitted to the Superior Court.

Once the financial institutions know about the death, they will freeze the accounts, ensuring that no unauthorized transactions occur. The wait times vary depending on the court location, but this can take as long as seven months to obtain the Certificate of Appointment of Estate Trustee. The executor can physically go into the bank with invoices, bills or income tax returns to request bank drafts from the deceased’s bank account to pay this debt, even if the executor is still awaiting the issuance of the Certificate of Appointment of Estate Trustee, as long as the deceased’s account has enough cash to cover everything.

If there is not sufficient cash, then the executor has the option to become a lender to the estate, ask the beneficiaries for financial help or take out a loan to settle any debt and will then be reimbursed once the Certificate of Appointment of Estate Trustee has been issued and there is sufficient liquidity in the estate.

The other option is to carefully consider whom you designate as beneficiaries on your registered plans or life insurance policies for these beneficiaries to use the proceeds from these accounts or policies to cover debts until the Certificate of Appointment of Estate Trustee has been issued.

Statistics and factual data and other information are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities nor is it meant to replace legal, accounting, taxation or other professional advice. We are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax-related matters. The information is furnished on the basis and understanding that RJL is to be under no liability whatsoever in respect thereof. This is intended for distribution only in those jurisdictions where RJL and the author are registered. Securities-related products and services are offered through Raymond James Ltd., Member - Canadian Investor Protection Fund. Insurance products and services are offered through Raymond James Financial Planning Ltd. (“RJFP”), a subsidiary of Raymond James Ltd., which is not a Member - Canadian Investor Protection Fund. When providing life insurance products, Financial Advisors are acting as Insurance Representatives of RJFP. Raymond James Trust Services are offered by Raymond James Trust (Canada) in the provinces of British Columbia, Alberta, Saskatchewan, and Ontario, and by Raymond James Trust (Québec) Ltd. in the province of Québec. Trust Services are not covered by the Canadian Investor Protection Fund. Raymond James advisors are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax-related matters.