When you think about estate planning, what is the first thing that comes to mind? For the majority of the population, estate planning is often synonymous with getting a will, which deals with the distribution of your estate and guardianship of minor children after your death. A will is one of the most important documents to have in order to protect your loved ones from complicated, costly, and sometimes heartbreaking court applications in the future. However, as important as getting a will is, it is not the only document you should be considering when creating a comprehensive estate plan. Here is a non-exhaustive list of other important estate planning documents to consider getting in addition to your will:
Power of Attorney. This often feared document grants authority to a person or persons to manage your finances and property when you are otherwise incapable of making decisions yourself. Powers of Attorney can be either time-limited or enduring. A time-limited Power of Attorney might be used in situations where you will be temporarily “incapacitated”, such as if you are travelling out of the country for an extended period of time without access to the internet or telephone and need to appoint someone to briefly manage your financial affairs. Some people will also execute a time-limited Power of Attorney prior to elective surgeries or other potentially dangerous activities.
By comparison, an enduring Power of Attorney (sometimes also referred to as a “durable” POA) is either not terminated on account of the signor becoming mentally or physically incapacitated after signing the document or, more commonly, only comes into effect upon the signor losing mental or physical capacity at a future date. If you become incapacitated without a Power of Attorney in place, your loved ones will need to make a court application to have an attorney appointed to manage your finances and property, in order to pay for your bills and support your family, on your behalf. If none of your friends or relatives are willing or able to step into this role, the Office of the Public Guardian and Trustee will become the public trustee of your finances and property.
Personal Directive. Similar in nature to a Power of Attorney, a Personal Directive comes into effect in the event you lose the physical or mental capacity to make your own decisions. Personal Directives are also sometimes known as Living Wills or Health Care Directives, as they provide authority for an agent to make medical, social, and end-of-life decisions on your behalf, as well as appoint a temporary guardian for your minor children if the other parent is unable to care for them. Perhaps more importantly, not only are you able to appoint someone to make these decisions for you, through a Personal Directive you are also able to leave binding instructions for your medical and end-of-life care that your agent(s), relatives, and healthcare providers will be legally required to follow. You can be as specific as you want about the types of medical treatment you do or do not want to receive (within some legal limitations).
Unlike wills, which cannot be registered in Alberta, Personal Directives can be registered with the Office of the Public Guardian and Trustee. This is an important step to take once you’ve signed your Personal Directive so that medical and healthcare professionals can more easily find your agent(s) if something happens to you (e.g. you’re brought into the hospital in a coma following a bad car accident). If you become incapacitated without a Personal Directive in place, your healthcare providers may simply pick your nearest relative (as defined in the Personal Directives Act) to make decisions about the care you receive, or your loved ones will have to make a court application to have an agent appointed. In either case, you will not be able to provide instructions on the type of care and treatment you do or do not want to receive.
Testamentary Contract. Generally signed between spouses or common-law partners, a Testamentary Contract is a legally binding agreement between two parties which guarantees the inclusion of specific provisions in one or both of their wills, and which crystalizes upon the death of one party. These types of contracts are especially important to consider for blended families, so that neither party’s children are intentionally or unintentionally disinherited upon the death of their biological parent. Without a Testamentary Contract in place, the still-alive spouse could sign a new will leaving their entire estate just to their own children and relatives, or they could eventually repartner again and choose to leave their estate to that new partner.
Testamentary Contracts can be signed in conjunction with the execution of your wills and other estates documents, or they can be signed at a later date. Keep in mind that each of the people signing the Testamentary Contract will require independent legal advice before signing, so there are additional legal fees associated with these contracts.
Codicil. This middle English word originally meant “little codex” and was designed as a way to add or change minor aspects of a larger, handwritten document. Section 1(1)(k)(i) of the Wills and Succession Act classifies a codicil as a type of will, in and of itself. As life situations change and evolve, you may want to amend certain aspects of your estates documents. Small changes, such as updating who you’ve named as guardian of your children due to the illness or death of a loved one, fixing typographical errors, or naming your newly-turned-18 child as an executor, can be done through a codicil. This is especially useful if your existing will was drafted in a different jurisdiction, or with a different lawyer than you plan to hire to draft the codicil.
There are two caveats when deciding whether to use a codicil for your proposed changes. The first is that codicils are not designed to accommodate significant changes to your will. If you intend to make anything more than a minor change, such as altering your beneficiaries or removing anyone who was previously named in your will, those changes must be codified in a new will. Always consult with a lawyer about what constitutes a major or minor change to your will. Second, the signing requirements for codicils are the same as for wills (you must sign in front of two adult witnesses, neither of whom are beneficiaries to your estate), so there is not much time saved by getting a codicil drafted compared to an updated will. In fact, if you intend to have the same lawyer who drafted your original will draft the codicil, it would likely take longer for them to draft the codicil than it would for them to update a pre-existing draft of your will.
Please note that nothing in this blog post constitutes legal advice, and no lawyer-client relationship is created as a result of reading this post. This blog is for general information purposes only. You should consult with a lawyer about your specific circumstances before relying on any of the information contained in this blog post.