Putting estate planning documents in place can be a daunting task, but it does not end there. Estate planning is an organic process that requires ongoing attention and revision. Circumstances in your life will continue to change and your main objective is to ensure that your wishes and intentions are properly reflected in your plan and documents, both upon incapacity or death. What meets your financial and personal needs now may not do so in the future, so it is important to continue to review your documents, in particular when your circumstances change.
As we enter the summer season, and the pace eases, here are a few situations that would warrant a review of your estate planning documents:
1) Changes in the Law
Continually reviewing and updating your estate documents allows for changes to be properly addressed including any adverse tax implications for your estate. Although your goals may not have changed, ensuring that your estate is protected is important for future planning.
2) Finances
Throughout your lifetime you may receive inheritances, gifts, acquire new assets, or see a significant change to your financial situation, which require you to revisit your planning. With a change in your finances, it is important to consider the impact this will have on your beneficiaries and whether further estate planning is required, such as setting up a testamentary trust or integrating charitable giving in your estate plan.
3) Family Dynamics
Significant changes to your family circumstances necessitate a review of your estate planning documents. If you or your beneficiaries separate or divorce, have children, are involved in a family dispute, or remarry creating a blended family situation, you will want to ensure your documents accurately reflect your present intentions. When estate planning documents are drafted, they take into consideration the important relationships you had at the time. However, this may no longer be the case, as the individuals you appointed as executors or guardians for your children may no longer be the appropriate choice, if they move elsewhere, you are no longer as close, or are deceased.
The same considerations should be given for your attorneys appointed under your powers of attorney. You should consider who you select as attorneys and the dynamic of their relationship to ensure that these individuals are capable of making decisions jointly with respect to your property and end of life care.
4) Gifts and Beneficiary Designated Assets
Another important reason to revisit your estate planning documents is to ensure your gifts, particularly to your spouse, are correct. Under the Ontario Succession Law Reform Act (SLRA), a gift to a former spouse is automatically revoked. However, any gifts to separated spouses and common law partners will continue unless a new will is executed.
Similarly, beneficiary designated assets, such as RRSPs, TFSAs, RRIFs, and life insurance, should be continually reviewed and updated if necessary. Unless you make such changes during your lifetime or address such designated assets in your Will, Courts in general are reluctant to change beneficiary designations. This is crucial in the context of a marital breakdown, as you want to ensure your beneficiaries are not faced with litigation, while still complying with the terms of any separation agreement.
5) Jurisdictional Issues
Whether you move to, hold assets in, or purchase property in another province or country, you should revisit your estate planning documents to ensure they are compliant with the laws of that jurisdiction. Although many Canadian provinces and territories, and some U.S. states, will recognize valid powers of attorney that are compliant with the laws of their home jurisdiction, there may be issues with relying on documents in these circumstances.
You may also want to consider if your children or other beneficiaries of your estate have relocated to the U.S. or abroad, or have become a U.S citizen, as this will impact your estate planning, particularly with respect to gift or estate tax on their inheritance.
6) Business Interests
During your lifetime you may decide to incorporate your own company, acquire shares in a corporation, or become a partner in a limited liability partnership (LLP), to name a few. Although this is exciting professionally and financially, your business succession plan and potential estate liability concerns should be considered. Reviewing your estate planning documents and consulting with an advisor will allow you to contemplate more effective estate planning methods to assist in providing the most protection for your estate.
We recommend reviewing your estate planning documents on a regular basis to ensure your intentions are accurately reflected and your wishes and objectives will be carried out. Over your summer holidays, why not put this on your summer reading list.
The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.