It can be one of the toughest subjects to talk about, but discussing estate planning is important for families to ensure final wishes are honoured, says Toronto wills and estates lawyer Elinor Shinehoft.
Talking to family members and significant others about wills and powers of attorney should be done before a life-changing event, such as a health crisis, she says.
The will identifies how a person wants their assets distributed after death, while the powers of attorney for personal care and/or property allow for a trusted individual to be appointed to make decisions when the person is unable to do so.
“You can wait and have the conversation after a stressful event, which is what many people opt for. When someone dies without a will, it will be more complicated to administer the estate,” Shinehoft says.
To spare children and other family members the confusion or the legal quagmire that can result from not having a will, succession planning should be done before there is an emergency, she says.
“We tell people it’s not about thinking of it morbidly as when someone dies, but it’s more a matter of a person who worked so hard to have their savings and investments that it would be nice to have the opportunity to deal with it in the way they want,” Shinehoft says.
Discussing succession plans allows a person to design a will based on what family members have said they want or need, she says. It also gives family members the chance to say which mementos are important to them or if they are equipped to handle inheriting an asset, such as property.
“Encourage them to have those conversations while they’re still alive,” Shinehoft says. “One of the big issues deals with estate tax planning. Many parents will put their properties jointly with one of their children — sometimes it works out and sometimes it’s messy.”
Offspring inheriting property from their parents could be ineligible for first-time homebuyers benefits because they already hold the title to the property, she explains.
By law, you don’t need counsel to draft a will, but Shinehoft recommends consulting a lawyer because many people only have a basic understanding of the process and may not be able to see all the legal consequences of a decision.
One of the most effective ways to distribute assets is to gift them to family members while the person is still alive, she says.
“If the goal is to provide for the family and distribute things in the best way possible, then it only makes sense to find out what your family members want,” Shinehoft says. “And you want to save the hassles and problems your family could face while mourning the loss of a loved one.”
A major decision in preparing a will involves choosing an estate trustee, or executor.
“Many people don’t know who to name or they want to name everybody,” she says. “What many don’t realize is that being named an executor is a really big burden. It’s very time-consuming and stressful, and the responsibilities kick in when family members are mourning.”
“In that scenario, the law decides how your assets are going to be distributed, who’s going to get what, and there’s an order of priority of family members,” Shinehoft says. “If you’re not keen on that, this is your opportunity to plan and say, ‘I worked this hard and this is how I intend on leaving it.'”
It’s important to discuss those intentions with family members to ensure clarity in succession plans, but Shinehoft has “received a mixed response from people who don’t want to tell their family members what’s in the will.”
The objective of the family discussion before a crisis is to smoothly transfer assets to survivors, she says.
“I find that often the families who don’t want to have the discussion are the ones who really need it,” Shinehoft says. “They know there is some kind of conflict or poor relationship among family members that don’t want to talk.
“They’re either afraid the way they want to distribute their assets will be problematic or that someone will be upset,” she says. “It could be resolved by having a family discussion.”