Estate Planning: Key Documents and Tips for Maintaining Your Estate Plan

Estate Planning: Key Documents and Tips for Maintaining Your Estate Plan

By Nathan Samuels & Stephanie Matthews

Effective estate planning will ensure, primarily, that (i) your affairs will continue to be managed during your lifetime in the event that you become incapacitated and (ii) that your assets are distributed according to your wishes after your death.

Your primary estate planning documents are likely to include a Will, Power of Attorney and a Health Care Directive.  For clarity, the following is a summary of the purpose of each of these documents:

Will

• A Will does not become operative until your death and deals with the distribution of your assets according to your wishes;
• The primary purpose of your Will is to identify those individuals who you wish to benefit from your estate assets. 
• In addition to beneficiaries, you will need to appoint an Executor (or Executors) who will be responsible for gathering together your estate assets, paying any debt taxes, funeral expenses and administration costs from funds in your estate, and distributing any legacies to the beneficiaries named in your Will.  Your Executors may also be appointed as trustees of your assets while your affairs are dealt with. 
• A Will is not valid until it has been signed and witnessed according to legal formalities.  Your legal advisor will ensure that the required procedures are followed, to ensure its validity.
• You should instruct a legal practitioner to prepare your Will, even if you believe your Will is straightforward.  A badly drafted Will could result in a failed gift, or an entirely void Will.
• There are exemptions and relief available for various types of gifts and property. It is recommended that you make a list of your assets and their values for your legal advisor, so that they can advise you as to the most tax efficient way to deal with your assets.
• If you die without a Will, the rules of intestacy will apply. This means that your assets will be distributed in accordance with the fixed rules set out in the Succession Act 1974. Essentially, the rules are structured so that relatives of the deceased benefit from the estate in fixed proportions, which may be contrary to your wishes.

Power of Attorney

• A Power of Attorney is the document by which you may appoint another individual to manage your affairs, either with immediate effect, or with effect from the date of your mental or physical incapacity. Such incapacity will be evidenced in writing by the production of a medical certificate from your doctor. 
• A Power of Attorney is only operative during your lifetime and becomes void upon death.
• You should consider carefully who you will appoint as your attorney (or attorneys) as this power requires a great deal of trust. 
• A Power of Attorney may be revoked by signing a deed of revocation. 
• If an individual loses mental capacity, that individual is no longer able to sign legal documents.  The importance of a Power of Attorney, therefore, cannot be understated and may avoid a costly and time consuming application to the courts for an order for Receivership.

Health Care Directive

• This document deals with your medical care in the event that you are suffering with a terminal condition and do not wish to be artificially resuscitated. 
• You are required to appoint an individual to carry out your wishes set out in this document, relating to such medical care.    
• Copies of this document will be filed with your family doctor and the King Edward Memorial Hospital to ensure full communication in respect of your wishes.

With those meaningful conversations with family and friends concluded, decisions made and documents signed and dated, you should be commended for pulling a robust estate plan together. However, the process should not stop there. Instead, your estate plan should be treated like any other valuable asset, such as your house.  It may have been acquired for the purpose of providing you with a benefit throughout your lifetime, but in order to get the most out of it and to ensure it meets your specific needs, your estate plan will need to be properly kept and maintained, periodically reviewed and if necessary updated from time to time. Below are a few tips to ensure your primary estate planning documents continue to work for you throughout your lifetime.

Tips for Maintaining Your Estate Plan

Notice:   Once clients finish preparing their estate planning documents they often ask the question, “Who should I give copies to?”  Generally, it is a good idea to be transparent with and inform those persons that will be affected by your estate plan of your intentions prior to finalizing your estate planning documents.  In particular, persons being granted powers of attorney or charged with the responsibility of making healthcare decisions on your behalf in the event of a medical emergency or appointed as executors of your will should be notified and given the opportunity to understand and accept the role you wish for them to play in your estate plan.

Storage:  After taking the time to carefully consider your estate plan, getting it down on paper and then signing off on the final documents, the question of where to store your estate planning documents can easily be overlooked.  But storage should be viewed, not as an afterthought, but as an important part of your estate plan.  When storage is considered, finding a “safe place” free from prying eyes, tampering or damage is typically what comes to mind. However, in addition to these concerns, your primary estate planning documents must remain accessible. Remember your primary estate planning documents have been prepared to deal with situations of medical emergency, loss of mental capacity and death.  Therefore, if these documents are stored in a “safe place” that no one else knows about or has access to, this can significantly hinder the effectiveness of your estate plan.  Instead, your estate plan should allow for your estate planning documents to be quickly located and retrieved by your loved ones as soon as they are needed.

Review:  You should periodically review your estate planning documents every few years to ensure they continue to reflect your current wishes.  In addition, your estate planning documents should be reviewed in tandem with significant life events that you anticipate will have an impact on your estate, such as marriages, births, deaths and the acquisition or disposal of significant assets.  If your primary estate planning documents no longer reflect your wishes, you should consider having them updated.

Changes:  Often, clients are concerned about the hassle and added expense of making changes to their estate planning documents.  This is understandable.  There is no reason to update your documents simply because they were prepared many years ago. They may be just as applicable and appropriate for your estate now as they were then.  However, if changes are necessary, it is important to note that nowadays just about all professionally prepared wills are prepared and stored electronically, which often means making changes to your will is not as cumbersome as perhaps it once was. More importantly, any perceived hassle or eventual cost of making necessary updates to your will usually pales in comparison to the cost and hassle of dealing with estate planning documents that are no longer adequate for your estate.