We often hear about how we should be working on our “estate planning”. But what does that really mean? It is important to recognize that “estate planning” is about more than just making your Will. There are actually a number of factors that go into the creation of a successful plan. This article highlights a few key issues that come up often when working with estate planning clients.
Should I add my adult child onto my bank account?
Consider this situation: June is 80 years old and has 3 children. One of her children (Sally) lives near her and helps her with day-to-day tasks. The other two children live in another province. June decides that she will add Sally onto one of her bank accounts so that Sally can help with paying bills and dealing with daily expenses.
It is important to ask June what her intention is in adding Sally onto the bank account. Does she intend for Sally to get the remainder of the money in the account when June dies? Or is the account to be split between the 3 children?
The Supreme Court of Canada released a series of cases on this issue to clarify the “presumption of resulting trust” doctrine. What is the “presumption of resulting trust”? If this doctrine was applied to the example above, it would mean that Sally was holding the bank account “in trust” for herself and her siblings. In other words, on the death of June, Sally would not receive the rest of the proceeds in the account. Instead, those proceeds would be split between all three children.
It is very important to have a written statement setting out the intention of the person who is adding the second person onto the account. For example, you might want to include a statement in the will itself stating the specific bank account at issue, and whether such account is to be transferred to the surviving account holder or divided between the beneficiaries. It is also helpful to find out whether any written statement of intention was made at the financial institution at the time of the transfer – it is critical that a consistent intention is stated across all documents. In addition, it is important to consult with your accountant prior to making the decision to add a name to your bank account. Recent changes to the income tax rules in Canada might require disclosure of certain joint ownership arrangements in conjunction with your tax filings.
How do I prepare for a meeting with my lawyer on estate planning?
Here are a few things you can do to help prepare you for your estate planning meeting:
- Gather your current Will, Power of Attorney, Health Care Directive. This is a great time to locate these documents and review them. What do you want to change? What do you want to add?
- Make a list of your assets.
- Make a list of your debts.
- Make a list of the people you want to benefit (full names and current locations).
- Locate all your current insurance policies – get a summary of each policy from your broker, including written confirmation of the beneficiary.
- Obtain a current investment statement – for any investments where you can designate a beneficiary, confirm who you have designated.
- Make a list of worries – if you were to die tomorrow, what is worrying you?
- Gather up any other relevant documents (i.e., shareholders’ agreements, cohabitation or prenup agreements).
- Make a list of your current advisory team (i.e., your banker, your financial advisor, your accountant, your lawyer, your bookkeeper, your insurance broker)
- Start a list of your “digital assets”: what accounts do you have online? What computers/ipads/phones/hard drives are in your possession? Do you have a place where you store all your passwords and security questions?
You certainly do not have to do all of these things before your first meeting, but you will likely end up gathering most of this information by the time you are completed the estate planning process. And keep in mind that once you have accomplished the tasks initially, it is so much easier the next time around – you only have to add/subtract/amend what you have started!
Estate planning is not meant to be a “one and done” activity – you should be dusting off your estate planning documents ever couple of years to make sure that they still match your wishes. Happy Estate Planning!
The information in this article is not legal advice. We encourage you to consult with your legal advisor for advice specific to you.
This article was originally published in The Western Producer.