Death is something no one likes to think about; however, like taxes, death is inevitable. Therefore, like any aspect of your financial life, you should plan for it to ensure your loved ones are well taken care of.
The following is summary of the documents you should have in preparation of your death: a Power of Attorney, a Representation Agreement and a Will.
What is a Power of Attorney?
The grant of a General Power of Attorney means that you are giving another person the ability to deal with your affairs while you are not incapacitated. It has the benefit of being relatively inexpensive and, of course, it can be revoked at any time. On the downside, it gives the other person significant control over your assets and, therefore, a high degree of trust is required. The granting of a Power of Attorney does not protect your assets from the claims of creditors or other parties; it simply gives your attorney the power to deal with those assets on your behalf.
What is an Enduring Power of Attorney?
An Enduring Power of Attorney is similar to a General Power of Attorney; however, it is a Power of Attorney that survives your mental incapacity. To be an Enduring Power of Attorney the document must specifically provide that it is meant to continue after you become mentally incapacitated. It cannot be revoked following incapacity, and there is no statutory monitor to keep track of what the attorney is doing. Again, the need for a high degree of trust in your attorney is paramount. Both documents should include the name of one primary person and one substitute.
What is a Representation Agreement?
A Representation Agreement is a relatively new concept in British Columbia. It arises out of the Representation Agreement Act, which came into affect in early 2000. There are two levels of Representation Agreement:
- A basic Section 7 agreement gives limited powers to a representative to deal with certain aspects of a person’s estate and their personal needs. The Section 7 agreement can be granted by a person having diminished capacity.
- 2. A Representation Agreement made under Section 9 can go into great detail as to how you want your financial affairs and your person cared for during any incapacity or other event occurring which prevents you from making those decisions yourself. The Agreement can spell out under what circumstances your representative is empowered to act, and what input he or she must seek from you and others in making those decisions. The Representation Agreement Act provides for a very specific manner in which Representation Agreements must be executed and we would encourage you to seek legal advice if you are contemplating a Representation Agreement.
Joint Registration
Where possible, make sure that all assets that have a registration are jointly owned. This includes large items such as homes and vehicles. This accomplishes two things:
- It keeps these assets out of probate thereby saving probate fees.
- It allows for much less disruption of the surviving spouse’s life. It allows the surviving spouse to continue to live in the family house and drive the family car without the hassle of having the assets unavailable and tied up in Probate Court.
Did you Know?
Secondary or Corporate Wills are wills drawn up to specifically deal with the shares you own in a private company. Private company shares are not subject to Probate Fees. In addition, the corporation survives the death of the shareholder and can continue on with the surviving spouse as the significant shareholder.