Your Legacy of Love…

At LegalWills we were sent a complimentary copy of “Your Legacy of Love” by Gemini Adams as one of our sister sites at PartingWishes.com is listed as a recommended website. There is a great deal of interesting information in this book which describes the importance of leaving an emotional legacy and not just focusing on the estate planning of your material goods. The author started an online survey asking: What would you prefer if one of your parents died: to inherit their wealth or a letter saying how much they loved you? Over 90% expressed a wish for the loving letter. The book explains that

“our real wealth lies not in our Financial Assets, but our Emotional Assets: the stories, lessons, values, image, voice and love that makes us who we are. By sharing these in a legacy of love, we can leave our children, partners, and grandchildren a precious gift they will treasure forever, and: – reduce the suffering for our survivors.”

So, I hear you ask, what does this have to do with writing a Will? I want to address the procrastination excuses of

“I’m not going to be here anyway, so why should I care”

or the

“It’s obvious who will get anything anyway, so I don’t need a Will”.

These are thoughtless attitudes. At a time when your family and loved ones will be struggling the most with your loss, you can help them tremendously by having a Will in place. The difference in having to administer an estate with, or without a Will is night and day. If you have a Will and have named an Executor (and guardian for your children), it can be a relatively straightforward business and your loved ones can receive their instructions and financial inheritance quickly and efficiently. If you don’t have a Will, you have probably left your family with a nightmare. In your everyday life you would unlikely ever show this level of “it’s someone else’s problem” to anybody, certainly not for your family.

Everyone should do the decent thing and not leave their loved ones with a mess to sort out. And once this is in place, spend some time thinking about your emotional legacy. Maybe we’ll cover this more in a future posting.

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Don’t forget to tell somebody where you keep your Will….

I read a great post yesterday on militarymoneymight.com . It’s a site that offers financial advice for the military, but they make one great recommendation regarding Will planning that many others miss. The single most frequent question we receive from people who are not our clients is “I know my mum/dad/brother/wife, had a Will, but nobody can find it, do you know where it might be?”

It’s not a completely ridiculous question, because many people think that there is a central registry for Wills somewhere. There is a notion that once a Will is written, it is stored somewhere with the authorities to be retrieved at the appropriate time. Unfortunately this is not the case.

In Canada, some Provinces like BC have a registry of locations of Wills. For $17 you can record the location of the Will (not the Will itself) with the BC Vital Statistics Agency. This was obviously set up to deal with the same question that we deal with on a too frequent basis here at LegalWills. There are even independent businesses that have been set up to offer the same service, like the one at WillsIndex.com. Again, they offer a service to store the location of your Will (not the Will itself).

We have to make a distinction here between the Wills of people who have died and the Wills of the living. Once a person dies the Will is often probated and filed with the courts. That is why genealogists are able to research the archives and find the Wills of their ancestors. But this is very different to registering a Will while you are still alive. Your Last Will and Testament should be reviewed and updated on a regular basis; we discussed in a previous blog entry when it makes sense to update your Will. And each time the Will is updated, a new document should be created and the old one destroyed. So even if the facility existed, registering the document with the government probably wouldn’t make sense.

The most important message from this blog entry is make sure that your Executor knows where your Will is located. Whether you have prepared your own Will, or used a lawyer who has filed your Will in their archives, your Executor still needs to know where to go to access the document. Whether you store your document in a vault at the bank or in your bedside table at home, let your Executor know where the document can be found.

Today, somebody somewhere will be dealing with the loss of a family member and they will be trying to locate a Will. They may even carry out some searches on the internet and find LegalWills and then give us a call out of desperation. If you have taken the time to prepare a Will, let your Executor (and alternate Executor) know where you are keeping it.

So when do you need a lawyer to write a Will?

We’ve devoted a lot of space on this blog to explaining why not everyone needs a lawyer to write a Will, and it’s true; you are perfectly entitled by law to prepare your own Will, and there is no legal requirement to use a lawyer to make a legal Will. However, in the interests of balance, it is only fair to explain why it may, in some circumstances, be a good idea to seek legal advice when preparing your Last Will and Testament.

Lawyers will often say “never prepare your own Will, you will screw it up”. We don’t believe that. We believe that in many circumstances, there may be no requirement to pay for legal advice that you don’t need. Especially with the technology available at our disposal today and with interactive software like the services at LegalWills. It is certainly within many people’s capabilities to prepare their own Will, in the same way that not everybody needs a professional accountant to file their own taxes.

There are definitely circumstances that benefit from professional legal advice and very often we tell prospective clients to not use our service. We even list on our website the types of situations where we would advise people to not even consider preparing their own Will. Here’s just a few;

  • If you are involved in a matrimonial dispute, or wish to disinherit your spouse or children.
  • If you have a history of mental illness, or the question of your mental capacity may be raised in objection to the statements in the Will.
  • If you own personal property or real estate in multiple countries.
  • If you are under the age of adulthood.
  • If you have complicated business investments (e.g. you are part owner of property or businesses where ownership may be challenged).
  • If you are about to be married and are preparing a Will in contemplation of that marriage.
  • If you have a large, complex estate and feel that you would benefit from some advice on estate planning and tax reduction.
  • If you own a farm, as there may be significant estate planning implications.
  • If you need to provide for long-term medical care for a dependent.
  • If you have any litigation pending which involve large sums of money or where a prison term is possible.
  • If you think that somebody may challenge your Will in court or you have any other doubts about your situation.

If any of these situations applies to you, then don’t even think about trying to prepare your own Will; you need legal advice and you need a lawyer.

If not, then you could consider preparing your own Will.

But I’m not worth anything…

I just had a conversation with somebody this morning who was explaining why they didn’t have a Will. I am not a hard seller of the benefits, but I love to listen to the reasoning, and this person came up with number 2 from our top 10 list “I have nothing, so why do I need a Will?”.

As we noted in our original post this could indeed be the case if you were writing your Will to come into effect today, but a Will is written to take effect sometime in the future. (Hopefully, the very distant future.) Events change, financial circumstances change. You cannot always write your Will as soon as you have accumulated what you regard as a significant estate.

There is a good chance that if I die unexpectedly, it would be as a result of an accident, and this could have arisen from the negligence of a company. My estate could then sue the company for wrongful death, and any settlement then becomes part of my estate . But it doesn’t have to be a company; O.J. Simpson was required to pay $33.5M as part of a wrongful death settlement. You may not feel that this is too relevent to your situation, but take a look at this; medical malpractice lawsuits are worth about $500k auto accidents are worth anything around a million dollars.This site lists a few examples; debris on the road $1.9M, SUV rollover $2.9M, and the proverbial hit by a bus $1.1M.

The point of all of this, is just to say – You have absolutely no idea what you are worth, even if, heaven forbid, you died this afternoon. So, postponing a Will until you think you are worth something is never a sound estate planning tactic.

Which documents are in an “estate plan”?

The term “estate planning” is an often used, but sometimes misunderstood term. We use it to refer to a complete suite of documents that work together to take care of your needs when you are unable to communicate your own wishes. The core set of documents in an estate plan are the Last Will and Testament, the Living Will (with a Healthcare Power of Attorney) and a financial Power of Attorney. Different jurisdictions have variations on the exact terms used, but in essence these are the three key documents.

The Last Will and Testament is the document that everybody must have, no matter what. It only comes into effect after you have passed away, can be updated as many times as you wish while you are alive, and only the most recent (the “Last” Will) describes how your assets will be distributed once you pass away. It is true, that even without one, your assets will be distributed, but this will not be based on your wishes, but on pre-defined laws that vary slightly from jurisdiction to jurisdiction. We’ll talk a little about what happens when you don’t have a Will in a future post. But, everyone will die, so everyone needs a Will.

A Living Will gives you some say in the way you will be treated before you die, in a situation where death is otherwise inevitable.  This can be used in two ways — to put a swift end to intolerable suffering, or to endorse the use of experimental treatment to try to save your life if at all possible.  Most people die in hospitals and often this is after receiving treatment administered in an effort to prolong a person’s life.  Medical staff are duty bound to use everything within the powers of modern medicine to keep a patient alive as long as possible, and within those powers there are regulations to be followed.  Medical staff are obliged to preserve a patient’s life without necessarily considering the financial or emotional concerns of the patient and loved ones. The most common use of a Living Will is to express your desire for a voluntary passive euthanasia.  Simply put, this means that medical staff should not artificially preserve your life under specific circumstances which are determined by you.  In addition, your Living Will or “healthcare directive” can express your views on the health care that you wish to receive if you were ever in a permanent coma.

With the Living Will comes a Healthcare Power of Attorney. A Power of Attorney for Health Care allows you to nominate a Health Care Representative who can make health care decisions for you when you are incapacitated and unable to make decisions for yourself.  It can be used to complement your Living Will. Together the Living Will and Healthcare Power of Attorney are known as your “Advance Directives“.

Finally the Financial Power of Attorney. Again, this is only in effect when you are alive and is immediately cancelled when you pass away. It is a more complicated document as it has a number of variations as to when it comes into effect and how long it lasts. Essentially though, it allows somebody to take control of your finances if you were even unable to do this for yourself e.g. in a coma. This person would be able to pay bills, perform banking transactions or buy and sell assets on your behalf.

These three documents are your estate plan. The Last Will and Testament will definitely be used if you have one, the Living Will (and Healthcare Power of Attorney) and Financial Power of Attorney will only come into effect if the appropriate situation arises. It is however prudent to have all of the documents in place and stored together in a safe place.

So what exactly does an Executor need to do?

Your Last Will and Testament is an expression of your wishes for how you would like your possessions to be distributed, and within every Last Will and Testament a person will be identified as the Executor (or Personal Representative). We always highly recommend that before you name that person in your Will, you ask them first, as it is not everybody is in a good position to take on the responsibility. Here’s just a few things that the Executor will have to do;

The first obligation of the executor is to locate  and read the original of the most recent Will of the deceased. Hopefully, the “testator” (the individual who wrote the Will) has previously informed the executor or their family where their Will and other important papers are kept. If not, then the Executor must search all likely places for a valid Will. If the Will is kept in a safe deposit box, then the Executor will have to take a key, the Death Certificate and personal identification in order to access the box. The bank will then draw up an inventory of the contents, and the Will will be released if the Executor can demonstrate that they are indeed the person with Executor responsibilities for the Will.

In some jurisdictions, a Will search may need to be undertaken with any government body, in order to prove that the Will being submitted is indeed the most recent Will. It is possible in some jurisdictions to receive a Wills Search Certificate, which should be filed together with the application for the “Grant of Letters Probate” (or equivalent in your jurisdiction), which will grant the Executor the legal right to administer the estate.

The Executor should apply for the Death Certificate of the testator, which can usually be obtained from the Funeral Home director. This usually takes one to two weeks to receive.

The Executor has the right to determine how to dispose of the deceased’s body. Any funeral wishes expressed by the deceased are not legally binding, although in practical terms personal wishes are usually respected. Hopefully the deceased has documented their funeral wishes somewhere, for example, by using a service like the one at www.PartingWishes.com

The deceased’s assets are frozen until the Grant of Letters Probate is received. This document formally acknowledges that the Executor has the legal authority to administer the estate. However, any property held jointly between a married couple can automatically be passed in its entirety to the surviving spouse upon presentation of the Death Certificate.

The Executor must notify everybody who has an interest in the estate and what, if any, is their entitlement described in the Will. If the Will, or the authority of the Executor is challenged, then the Executor may have to provide documentary evidence that they have complied with any legal requirements.

A list of assets and liabilities must be drawn up, including their value at the date of death. This list must be included in a Disclosure Statement, which is submitted together with the application for the Grant of Letters Probate.

The Executor must secure all assets, either by taking them into his or her possession, changing locks on doors or by taking out a full insurance policy.

All prospective creditors must be given an opportunity to stake a claim on the estate. The Executor must advertise for anybody who may have a claim against the estate. Creditors with a valid claim can recover their debt at any time, even after the estate has been distributed to the beneficiaries.

The next step is to apply to probate the Will, so that the assets can be dealt with legally. This may require legal assistance.

The Executor is responsible for filing taxes on behalf of the deceased, including income taxes and capital gains taxes.

Once the Executor has obtained legal authority to distribute the estate, they must pay all outstanding debts and expenses, including funeral expenses and all taxes. It may be worth obtaining a certificate from the taxation department e.g. Revenue Canada, Internal Revenue Agency or HM Revenue  certifying that all taxes have been paid, prior to distributing the estate.

Once all debts have been paid, the estate can be distributed to the beneficiaries starting with specific bequests to individuals. If the Will provides for the setting up of Trusts, then the Executor is responsible for making these arrangements. Once all specific bequests have been distributed, the residue is distributed.

The Executor is accountable to the beneficiaries for the assets of the deceased. It is therefore vital that accurate records are maintained when dealing with all debts, expenses, taxes and the distribution of the estate.

So, if the person that you have in mind for your Executor isn’t very organized, hasn’t filed their own taxes for a few years, doesn’t show up when you expect them to, find somebody else. Your Executor doesn’t have to be your best friend, it has to be your most capable friend or loved one. Or alternatively, consider naming a professional; most banks offer the service.

Some things that don’t go in a Will

There are two very common questions we receive at LegalWills, and it is probably a good idea to explain the answers here in our blog;

Why is there no place in my Will for my funeral arrangements?

Why is there no place in my Will to list all of my assets?

Funeral Arrangements

It is a very common misconception that your Will includes a detailed description of whether you wish to be buried or cremated, who you would like to attend your funeral, and even the style of funeral. Although the expenses for your funeral will most likely come out of your estate and there is mention of covering your funeral expenses in your Will, the detailed description of your funeral wishes should be kept in a separate accompanying document. There are two good reasons for this; firstly, your funeral wishes are not a legally binding document, they are simply an expression of your desires. Although most families will respect the funeral wishes if they are written down, they do not have the legal weight of a Last Will and Testament. Your funeral wishes may range from the style of service, who you wish to be in attendance at your service, and the amount that you wish to spend. All of this should be written in a separate document that is then stored with your Will. You can even use a service like the one at www.PartingWishes.com that allows your loved ones to access your funeral wishes online once you have passed away. This addresses the other important reason to not include your funeral wishes in your Will – by the time your Executor has located your Will, taken it to the probate courts and been given authority to act as your estate trustee, your funeral would have long been over. It would be a pity at that point to realise that you wanted to be buried, when you were cremated two weeks prior.

Your funeral wishes do not have to be signed and witnessed in the same way as a Last Will and Testament, and can be updated without any of the formality associated with a Will. You can also make as many copies as you wish (which you should not do with a Last Will and Testament) so that your loved ones will have immediate access to the document when they need it.

A List of your Assets

There is another misconception that your Will includes a complete list of your assets. There are a number of reasons why this is a bad idea. Your Will is a document that comes into effect when you die and hopefully this will be at some point in the distant future. If you have a complete list of assets including bank account numbers, household furnishings, cars, bicycles etc, then the Will has to be updated every time a change is made to an asset. If you are leaving something specific to an individual, then it must be named individually, but if you are leaving your entire estate to a single person or shared between a few people, then you should just list it as your entire estate.  The best approach is to keep a separate list of all of your assets to help your Executor at the appropriate time and store this with your Will. This document can be annotated and changed on a daily basis if necessary, but it is not a legal document that has to be signed and witnessed every time a change is made. At LegalWills we have a separate document designed for this purpose, and it includes contact details for loved ones and professional contacts. It serves as an aid to your Executor when they have to distribute your estate, and this is a far more practical approach than including this level of detail in your Last Will and Testament.