Most financial planners focus on doing a “needs analysis” which in turn always gives an insurance amount that is extremely high which causes the monthly payments to be quite high and puts the families under financial strain. Most planner’s focus or concentrate on their individual specialties like mutual funds, life insurance, stocks and bonds. This method is only a “half-a-plan” and leaves far too much to chance.
Term insurance is a form of life insurance to help ensure your family/loved ones are taken care of should something happen to you. Term life insurance in one of the least expensive ways to have some protection and you can purchase only the coverage you want for the length of time you need.
Term insurance premiums increase quite substantially after the term purchased for.
Term insurance is the least expensive and can provide coverage for specific time periods. The good thing is you can minimize the costs now while making sure you have a guaranteed renewable product. If the correct form is purchased you can also guarantee your insurability – this means you can roll it over to a whole life products even if you have some major health issues prior to the term you purchased.
A will permits you to do many things which would not be possible if you were to die without one. While the list is not exhaustive, it includes the following:
- specifying the person(s) who will administer your estate;
- giving direction to your executors as to what is to happen to specific assets;
- forgiving indebtedness from family members;
- achieving desired income tax and estate planning objectives;
- protecting beneficiaries under the Family Law Act; indicating who should be the custodians of your minor children.
Dying without a will (in testate) will have the following consequences:
- the cost of administering your estate will be higher;
- the person who is given authority to administer your estate assets will not necessarily be someone you would have chosen;
- the scheme of distribution of your estate is fixed by statute, irrespective of your intentions or the beneficiaries’ needs;
- all amounts are paid out to the heirs as soon as they turn 18 years of age;
- trustees are limited in the scope of the investments they can choose to make on behalf of the estate; the share for a minor child will be administered by the Children’s Lawyer, a government appointee.
There are at least two reasons why jointly owned property does not necessarily avoid the need for a Will:
- When one person dies owning property jointly with another, the survivor does not necessarily get the whole of the property by right of survivorship. That right applies only if the property is owned by the parties as "joint tenants". In order to determine whether that right of survivorship applies, the nature of the property must be considered and any title documentation must be closely scrutinized.
- Even if the property were held by a husband and wife as joint tenants, the right of survivorship would not address the case of the joint tenants dying simultaneously. In that case, one-half the property in question would be owned by the estate of each spouse, to be distributed either according to that spouse’s Will or, if there is no Will, according to the applicable in testate succession rules. This may not produce the result you would want.
8) If my Will is going to contain instructions that everything I own is to be dealt with in the same way, why does my lawyer have to know what I own, where it is located and how much it is worth?
Your lawyer needs this type of information for several reasons:
- knowing the types of property you own will allow your lawyer to decide the questions to ask which will enable him or her to assess your legal ability to deal with each such property under your Will (for example, a shareholder’s agreement may restrict your right to transfer private company shares on your death);
- having information as to the type and value of your properties will assist your lawyer in assessing the exposure of your estate to income taxes on your death and whether steps can or should be taken to address that tax liability;
- having an idea as to the value of your net estate will facilitate discussions between you and your lawyer as to the timing and quantum of income and capital payments made to a beneficiary over an extended period of time; where some of your property is located outside of Alberta, the laws of succession of that "foreign" jurisdiction may have application, restricting your right to deal with it in your Will; moreover, there may be income (or other) tax laws of the foreign jurisdiction which must be considered.
Any income taxes you owe as a consequence of earning income during your lifetime represent a continuing liability of your estate. Whether your estate will have significant additional income taxes arising as a result of your death depends on the assets you own at the time of your death and the persons to whom they are given under your Will. Currently there are no succession duties in Alberta. If you have assets located in a foreign jurisdiction, there may be death or succession duties or estate taxes imposed by that jurisdiction. Sometimes, life insurance represents an effective means of satisfying such liabilities and protecting your estate for your beneficiaries. A lawyer who is experienced in tax and estate planning can give you good advice in minimizing exposure to income tax on your death, whether through your Will or by taking appropriate steps during your lifetime.
10) I have a Power of Attorney naming my spouse. Can it be used after my death to deal with my property instead of having a Will?
The general rule is that the authority bestowed on the attorney named in a Power of Attorney terminates on the death of the grantor. If there is a Will, the executors of the Will would have the requisite authority to deal with the deceased person’s property from the time of death. Where neither the named attorney nor a third party has any knowledge of the grantor’s death, the authority contained in the Power of Attorney will continue for the purpose of the transaction between the named attorney and the third party.
It is important to review your Will whenever there have been changes in family circumstances (for example, births, deaths, disabilities, marriages, separation or divorce) or if there has been a significant change in your net worth, whether an increase or a decrease. But even if no such changes have occurred since you last made or changed your Will, it is still a good idea to review your Will with your lawyer on a periodic basis (say, every three years). If there have been changes in income tax or other laws in the interim, your lawyer will be able to determine whether any of those changes in the law necessitate amending your Will.
In Alberta, you can make what is known as a "holograph" Will. This is a document written entirely in your own handwriting. (It is not a stationer’s form with the blanks to be completed, nor is it a document prepared on your typewriter or word processor and signed by you.) No witnesses are required for execution of a holograph Will. However, there are many traps for the unsuspecting person who makes his or her own Will. Those traps can result in estate assets passing to persons not intended to receive them, either because key Will provisions are invalid (possibly giving rise to intestate distributions) or because the person’s choice of words runs afoul of a legal rule or principle of which he or she is unaware. The best advice which can be given is to rely on a lawyer to take your instructions and translate them into legally effective provisions in your Will.
13) I had my Will prepared by a lawyer. I have the original executed copy and I would like to make a few changes. Can I make those changes myself?
Your ability to change your Will, even if the changes are made on the original executed copy, is limited by statute. While you can make deletions by completely obliterating the portion in question, changes or additions require the same formalities as were necessary for executing the Will in the first place. You should consult your lawyer to ensure that the changes you want to make will be legally effective.