Who can be a beneficiary in your Will?

We receive this question from time to time; “who can be a beneficiary in my Last Will and Testament?”. This is a different question to “who must be included in my Will?” which we may address in a future blog posting.

It is a wonderful question though and opens up a world of opportunity for doing great things with one’s legacy. In general, anybody can be a beneficiary of an estate with a couple of exceptions; most notably, they cannot be criminally responsible for your death! The other restriction is that they can not be a witness to the signing of the Will. So the Executor of the Will can be a beneficiary, but not the person who acts as a witness and in some jurisdictions the spouse of a witness. It’s actually a matter of common sense that nobody who can be seen to materially gain from the contents of the Will can serve as the independent witness to the signing.

When your estate is administered, debts, taxes and funeral expenses are paid first, then the estate is distributed according to your wishes. Generally speaking, you are free to leave your possessions to any person or organization in the World . This means that you can include family on the other side of the world, or an organization as a beneficiary like a church, a school or a charity. Even a child can be named as a beneficiary, although their inheritance would be held in trust and used for their benefit until they become adults (or at an age specified by the terms of the trust), at which time, they would actually receive their full inheritance.

But, although anybody or any organization can be a beneficiary of your Will, in general, an animal cannot be named as a beneficiary as most jurisdictions regard a pet as property. Some jurisdictions allow a pet trust to be set up which effectively leaves part of your estate to a person designated as carer of your pet, and it stipulates the kinds of expenses that can draw upon the funds in the trust e.g. food and medical bills. But in general, most people leave a sum to a person with the understanding that this person would use the funds to care for a designated pet.

So a beneficiary does not have to live in the same jurisdiction as you, nor do they have to be a family member or relative. As long as you have taken care of your primary responsibilities, a beneficiary can be any person or any organization in the world. So as always at LegalWills we encourage people to be creative with their legacy as it is an opportunity to do great things.

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“I’m not quite ready to write my Will….”

I love this statement; “I’m not quite ready to write my Will”. Sometimes it is said in the context of “I’m not quite ready to die” but more often it means that the person’s family and financial situation hasn’t settled down enough to consider writing their Last Will and Testament.

There’s a sense of finality in the expression “Last Will and Testament”. It implies that this is it – this document is my final expression of how I would like my assets to be distributed when I die. It conversely implies that if you haven’t reached your final situation, you shouldn’t be writing your final wishes.

This of course is nonsense. A Will should not be written once in a lifetime. It should be reviewed and updated and modified every time there is a change in personal or financial circumstances. For a person to say that they are not ready to write their Will because for example, they hope to have a greater net worth this time next year, doesn’t make any sense. Some people put off writing a Will because they hope to have children in the future and they don’t want to go through the hassle of having to update all of their documents. This is an extremely dangerous approach to estate planning.

It would be great if lawyers would charge to draw up a Will which included unlimited updates, but unfortunately this isn’t the case. It’s quite possible that on your way home from the lawyer’s office there could be a change in your personal or financial circumstance, or a change to the circumstances of your named Executor, Guardian for your children or even a beneficiary, that may warrant a change to your Will. You may even suddenly realise that you’ve forgotten something or somebody and should be included in your Will.

Maybe that’s why people postpone and procrastinate on writing their Last Will and Testament, because they only want to do it once.

At LegalWills we encourage people to have a Will in place now. Everybody is then given a year to make sure that they haven’t forgotten something and for that year they can make unlimited updates to the document. Each time a change is made, the document is just printed and signed in the presence of witnesses to create a new Last Will and Testament. Then, we encourage people to review the document on an annual basis. This is just a matter of logging into the account, making appropriate changes, and creating a revised Last Will and Testament. Some of our clients have done this dozens of times.

Your circumstances will likely never completely stay the same, and certainly the lives of your beneficiaries, Executors, and Guardians will be constantly changing. That’s why you cannot wait until you only have to prepare your Will once. Your Last Will and Testament is simply the last one until the next one is created, and this may be in a few years time, but may be tomorrow.

There is never a good reason to postpone the writing of one’s Last Will and Testament.

Writing your Will?…time to get creative…

I was drawn to an interesting article today that described the Will of Adriana Xenides . The article describes her bequest of “magazine clippings, videos and memorabilia” left to a close friend.

It’s an area of estate planning that is often overlooked, particularly when people make an appointment with a lawyer. Your Will is your chance to be creative with how your possessions are distributed, so if you have a signed photo of John Lennon, you might want to pass it on to your friend who is the huge Beatles fan. Another friend may have always admired your amusing cufflinks. Your favourite well-thumbed paperback may mean something to a particular family member, but not so much to your main beneficiary.

In most cases an estate is distributed with everything going to a main beneficiary, but family heirlooms and personal effects should be distributed with more thought. A collection of old letters  may not belong with the main estate, but should be identified as a specific item going to a specific beneficiary. In fact, old letters may have more meaning to certain family members than a car, house or cottage.

In most cases when you make an appointment with a lawyer to prepare your Will, they will ask you to name your main beneficiary, guardians, the Executor, and then they will write your Will for you. They are not likely to have much patience if you start listing a teapot, a postcard, a love letter, a DVD collection, a hockey stick and so forth, even if they are charging by the hour. Furthermore, if your relationships change and the beneficiary of a specific item may not be appropriate any more, you are not likely to want to return to a lawyer’s office to make such a subtle change.

That’s why we encourage our customers at LegalWills to be creative. To think about their legacy and take time over who they would want to receive each of their possessions. Everybody will always have a main beneficiary, but you can take as long as you need to list the things you own and if any item is to be received by somebody other than the main beneficiary, include it as a specific item in the Will.

If a relationship changes, you can make an update in a few seconds and create a new Will without any further charge.

You have a chance to be creative with your legacy. Spend some time over it and make sure that everything is being passed on to the most appropriate person.

The weight of a signature

The key element in converting a document expressing your wishes, into a legal Last Will and Testament, is the signature in the presence of two witnesses. The requirement to have the document signed is written into the law of every jurisdiction which is why, today, audio and video Wills are generally not legally valid.

In a World that sees technological advances happen on an almost daily basis, it is quite surprising that so much weight is placed on the scratch that is a person’s signature. In fact, when we started LegalWills ten years ago, we planned for something that just hasn’t materialized; the evolution of digital signatures.

Here’s a couple of signatures; one of these belongs to the new mayor of Toronto:

Unfortunately, in the legal world of Last Will and Testaments, a signature like this is regarded as more authentic than a video Will, audio Will or digital Will signed with a digital signature.

To make your Last Will and Testament legal, it must be signed in the presence of two witnesses, and that signature is critical element of the Will that identifies it as yours, and not a fraudulent document. The Will is usually typed, but by signing at the end, in ink, it allows the law to recognize that document as authentic. Of course, there are other variants on the signature; one is allowed to mark the document with an “X” if illiterate, and some cultures are more likely to go with a thumbprint as described in the recent fight over an Ojibwe Will.

But the weight attached to a signature seems preposterous to us. How many times have you needed to have a person sign a document, only to witness their signature as a nondescript doodle? Yet, the various statutes describing  Wills has not kept pace with technology. In the US, the law is captured under the Uniform Electronic Transactions Act which states within it “This Act does not apply to a transaction to the extent it is governed by: the law governing the creation and execution of wills, codicils, or testamentary trusts”. In Canada and the UK there are no explicitly exceptions in the digital signatures acts (the Personal Information Protection and Electronic Documents Act in Canada and The Electronic Signatures Regulations in the UK). But the law describing the creation of Wills does include a provision for requiring a written signature.

Although it makes more sense to allow people to store a Will online, encrypted, and digitally signed, so that it can be accessed by one’s family at the appropriate time. It is currently not legal. Today, in 2010, it must have that doodle at the end of the document, that we call your signature.

At LegalWills we’re hoping that one day, the law will catch up.

The Living Will….

We mentioned in a previous post the three documents that make up most estate plans; the Last Will and Testament, the Living Will and the Power of Attorney. So I thought we would discuss in a little more detail the Living Will; what it does and why you may need it.

The topic of Living Wills is another one with a number of confusing terms which may or may not mean the same thing, and an area where there is no consistency in the use of these terms. You may see the term “Advance Health Care Directive” used interchangeably with Living Will, but we tend to use that term as a collective name for both the Living Will and your Healthcare Power of Attorney (another term that has many, many variations depending on where you live).

In essence, the Living Will allows you to state ahead of time the types of medical treatment you wish to receive if you were ever in a condition where you were unable to communicate those wishes. It is a document that is in effect while you are alive (unlike the Last Will and Testament), but the law determining what can go into a Living Will and under which circumstances it can come into effect vary by each jurisdiction. The main reason for creating a Living Will is to avoid family turmoil when loved ones are expected to decide how long to preserve your life if you are in an irreversible, persistence vegetative state. The situation that everybody wants to avoid was probably most graphically illustrated a few years ago with the Terri Schiavo case . The types of treatment usually requested or denied in a Living Will are things like analgesia (pain relief), antibiotics, hydration, feeding, and the use of ventilators or cardiopulmonary resuscitation.

The document that complements the Living Will is the one that names a Healthcare Proxy or “Power of Attorney for Healthcare”. This document names somebody who can make healthcare decisions on your behalf if you were ever unable to speak for yourself. This will typically be authorizing certain types of treatment, or potentially refusing some treatments. This person has the same rights to refuse treatment as you would have yourself. The decisions though would most likely be guided by directions provided in the Healthcare Power of Attorney document or Living Will.

We encourage all of our clients to prepare a living Will and Healthcare Power of Attorney. President Obama publicly stated last year that he has one and encouraged everybody to write their own. He said

“You may be familiar with the principle behind a living will, but it basically is something that my grandmother, who you may have heard recently passed away, it gave her some control ahead of time so that she could say, for example, if she had a terminal illness, did she want extraordinary measures even if, for example, her brainwaves were no longer functioning? Or did she want just to be left alone? You know, that gives her some decision-making power over the process. The problem is, right now, most of us don’t give direction to our family members and so, when we get really badly sick, sadly enough, nobody is there to make the decisions and then the doctor, who doesn’t know what you might have preferred, they’re making decisions in consultation with your kids or your grandkids and nobody knows what you would have preferred.

So I think the idea there is to simply make sure that a living will process is easier for people. It doesn’t require you to hire a lawyer or — or to take up a lot of time, but everything is going to be up to you.

And if you don’t want to fill out a living will, you don’t have to, but it’s actually a useful tool, I think, for a lot of families to make sure that, you know, if, you know — you know, Heaven forbid, you contract a terminal illness, that you or somebody who’s able to control this process in a dignified way that, you know, is true to your faith and true to how you think, you know, that end-of-life process should proceed?

You don’t want somebody else making those decisions for you. So I actually think it’s a good idea to have a living will. I’d encourage everybody to get one. I have one; Michelle has one. And we hope we don’t have to use it for a long time, but — but I think it’s something that is sensible.”

Unlike a Last Will and Testament, you may never need a Living Will. It depends on the circumstances behind your demise. Unfortunately, by the time you need one, you will be in no position to create one. At LegalWills, you can create one in about 20 minutes and it isn’t expensive at all.

Your parents don’t have a Will? oh dear!

We’ve devoted a great deal of space on this blog trying to convince people of the importance of writing their own Will. Most people should by now realize how important it is, but they just have to overcome the procrastination. After all, up to 70 percent of adults do not have a Last Will and Testament in place and of those that do, most are not kept up-to-date.

So lets turn change the focus of the discussion; supposing I was to tell you that your parents don’t have a Will in place, after all, statistically they probably don’t. Let’s make it more fun and imagine that you have siblings.

Unfortunately your father dies; what happens next? You think you can start sharing out your father’s possessions? think again. Your father’s estate temporarily becomes property of the court system; after all, there may be taxes to be paid, and that is going to be step number one. Funeral expenses will also have to come out of his estate.

Then the courts will appoint an administrator of the estate; they have to make sure that the estate is divided up according to the pre-determined laws of your jurisdiction. You don’t all just move in and take your pickings, and no, your mother won’t simply receive everything either. You should take a look at intestate succession laws for your jurisdiction.

  • Let’s take for example Ontario. If a person dies without a Will then the spousal share is $200k. If there is a spouse and more than one children then the estate is divided so that your mother will receive her spousal share, then the remainder is split so that she will receive a third, and the children will share two-thirds.
  • In Florida it is the same principle, just slightly different numbers. The spousal share is $60k, then everything left over it split: half to the spouse, the other half to be shared between any children.
  • In the UK, the spouse gets the first £125k and half of the remainder, with the other half shared between the children.

That might not sound so bad to you, but you will not be the ones determining how the estate will be resolved; if you receive a half of two-thirds after the first $200k, what exactly will you receive? Will everything that your father owned be sold off and you receive the cash. The court administrator will decide. Have you always wanted a certain family heirloom? you probably won’t receive it. And when exactly will you receive your inheritance? could be months, could be years. It depends on how quickly the court system will move for you and how complicated the estate is. If these spousal share numbers seem high; don’t forget, most houses would put an estate above the threshold of a spousal share.

Now just supposing your father had taken a few minutes to put his wishes for estate distribution on paper. He may have named you as Executor. He probably would have named your mother as the sole beneficiary (don’t worry, you’ll get your inheritance from your mother’s Will). He might have made a note that you should receive that family heirloom. Most importantly, there would be no liquidating of assets, there would be no family fighting. You would be able to concentrate on the emotional aspect of losing your father rather than watching the court administrator sell off your father’s possessions.

Now finally have a think about what you are doing to your family and friends if you don’t take the time to put your own Will together. In 30 minutes at LegalWills you can save your own loved ones the trauma described above. It just seems like a sensible thing to do. Oh, and next time you meet up with your parents, ask them if they have a Will in place? you almost have a right to know.

Planning for death, or just being sensible?

At LegalWills we’ve been working in the estate planning business for over 10 years. We regard writing a Will, a Power of Attorney and a Living Will as the most natural thing to do, somewhat akin to filing one’s taxes. In our World, writing a Will is just a part of sensible financial planning. There is nothing morbid or dark about the process whatsoever.

We realize however that not everybody thinks the same way. Around many dinner tables, if the parents want to raise the topic of their Last Will and Testament, they will likely be shouted down by a chorus of “oh, Mum and Dad, don’t be so morbid, you’ve got years left yet”. But this is fed by the misconception that your Will should be written just before you die, and of course, none of know when that is going to be.

A Will is not a once in a lifetime document. It is part of continuous financial planning that should be reviewed on a regular basis, perhaps even annually. By preparing my Will, I am not saying that I am ready to shuffle off this mortal coil. I just know that I will be leaving a complete mess to my loved ones if I don’t take an hour of my time now.

But this led me to thinking about other preparations that should be done to protect my loved ones. At our sister site of PartingWishes.com there are a number of complementary services to help you ease the burden for the people dealing with your death. One of the most important of these is an expression of your funeral wishes.

Why should you document your funeral wishes?  First of all, it is a thoughtful and considerate gesture for your loved ones who would otherwise be faced with a battery of questions and options at a time when they are least capable of dealing with them.

You may have discussed in general terms with your family whether you would rather be buried or cremated, or that you would prefer a big party over a somber get together, but most people do not even consider these basic questions until they reflect on their own mortality.  For many people it is also a difficult subject to discuss seriously and openly with their friends and family.  However, even if you have made your basic wishes known, did you share your views on the overall cost of the funeral service, or who you would like to be present, or any readings or music that you feel would be appropriate at your service?  And what guarantee do you have that your wishes will be remembered or communicated when the time is right?

Even if you don’t care. Even if you take the attitude that you’ll be gone so you don’t care what happens at your funeral. Just picture your loved ones dealing with questions like “would you like oak or mahogany? brass handles or pewter?” etc, etc, etc. It’s just not fair to make anybody have to sit through that if you can save them the pain by putting in a little effort ahead of time. You also might find it surprising that the average funeral cost is over $10,000. You are in a position today to say either; this is too much, or explain how you would want that money to be spent.

By putting these plans in place and giving some thought to these issues now, you are simply lifting a burden from your loved ones who will without question, have to deal with these issues in the future. Nobody is immortal and many of us will leave loved ones behind. You can perform a massive service to these people by helping them ahead of time by giving some thought to these things today. Take a look at the services at www.PartingWishes.com and have everything organized today.