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Digital estate planning tips and Canada’s privacy laws

July 28, 2016/in Estate Administration & Probate/by gartonandharris

In the digital era, Canadians have more and more “digital assets” stored online. These digital assets could be photographs on Facebook, they could be reams of email messages between family and friends, and they could be your blog content. Digital assets can also be found on online investment accounts, online banking statements and more.

Digital assets may have monetary value, or they might just have sentimental value. Either way, estate planners may have a specific person in mind to give these assets to, and it will be the job of the estate executor to transfer access to the digital assets over to heirs. The estate executor may also need to access digital financial accounts in order to complete his or her charge as executor.

So how do estate planners prepare their “digital estates” for the day they die to make the process of navigating so many internet accounts easy for their executors and heirs? Via a “letter of direction,” it is possible to specifically tell the executor of an estate what will happen to different digital assets after the estate planner dies. This letter of direction will also include information about each and every online account the individual uses, in addition to the passwords and login information for those accounts.

Estate planners need to remember that privacy laws in Canada make things difficult for executors who want to access the digital accounts of an estate. Most online accounts make it impossible for anyone other than the account holder to access the information contained in the accounts. Therefore, pictures on Facebook and other social media-type account information may be inaccessible to family members who do not have your name and password. By making a list of social media accounts, and passwords, and giving it to a trusted family member who shall have access to this information, estate planners can make things easier for family members who want to access pictures and other information.

For the complete picture regarding digital estate planning strategies, British Columbia residents may want to bring up the topic with their estate planning lawyers. The law is always changing when it comes to the internet and estate planning, and a lawyer will be able to inform estate planners how digital estate planning is affected by the most up-to-date laws.

Source: The Star Phoenix, “McBride: Digital estate planning,” Terry McBride, accessed July 28, 2016

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Powers of attorney and represent agreements: How they differ

July 21, 2016/in Power of Attorney/by gartonandharris

British Columbia residents have no doubt heard the terms power of attorney and representation agreement discussed in the context of estate planning. They may even know that they should consider drawing up a power of attorney and representation agreement as a part of their estate plans. However, they might not know how these two legal documents differ from one another.

An “enduring power of attorney” as it is formally referred to is a document that gives an “attorney” — or specifically trusted individual — the ability to make legal and financial decisions on another individual’s behalf. The document will usually go into effect in the event of mental incapacity as a result of an illness or accident. The enduring power of attorney is important to have on file because, if an individual becomes incapacitated, he or she will definitely need someone to make these kinds of decisions. Without such a document, time-consuming and sometimes costly court documents must be filed in order for someone to assume control over the incapacitated person’s affairs.

A “representation agreement” is equally important to have on file because a power of attorney alone will not give the “attorney” the ability to make decisions regarding health care on behalf of the incapacitated person. In order to give someone this power, it is necessary to create a representation agreement. Just as was the case with the enduring power of attorney, without a representation agreement, costly and time-consuming court procedures are necessary to assign someone with this power.

Clearly, both a representation agreements and a power of attorney should be included in every British Columbia estate plan. In fact, these documents are the most important documents for the individual him or herself to ensure that important decision can be made swiftly, when they need to be, and without unnecessary delays in the event of an individual’s unexpected incapacitation.

Source: People’s Law School, “Power of Attorney vs Rep Agreement,” accessed July 21, 2016

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Estate planning solutions for country cottage owners

July 15, 2016/in Wills/by gartonandharris

A lot of Canadian families enjoy the luxury of having a country cottage, and sometimes these cottages have been in their family for generations. When it comes to bequeathing that cottage to loved ones in an estate plan, however, you’ll want to do it right in order to ensure that this beautiful property is protected for future generations.

When planning your estate to include the family cottage, there are a few things you will want to keep in mind. First, consider the capital gains costs of passing the property down to the next generation of your family. Let’s say you purchased the cottage for $100,000 in 1971. That’s when capital gains taxes would begin to toll. Now, the property is worth $2 million. This represents a capital gain of $1.9 million — and it will create a high tax bill when the property is passed down to your children. This tax bill needs to be planned for, especially if the heir’s financial situation is not such that he or she could afford to pay it.

Second, consider where your children live in relation to the cottage and whether they want to use and own the cottage. For example, what if your cottage is in British Columbia? One child lives in BC and is excited to use the cottage and spend money on its upkeep, but the other lives in Nova Scotia and doesn’t ever plan to use it. It’s is important to note whether all of your children will use the cottage equally. If not, then the child who does not plan to use it could force its sale.

If one child wants the cottage and the other child doesn’t, then the estate planner will want to make sure that both children are somehow treated equally by the estate. Perhaps the other child will receive cash or other assets to balance out the first child’s receipt of the cottage. If the estate’s assets cannot support this kind of balance, then it may be necessary to take out a joint last-to-die life insurance policy to cover the difference. Regardless what solution is chosen, speaking with an estate planning lawyer beforehand can help British Columbia residents weigh their options and choose the most appropriate estate planning solution for their situations.

Source: Financial Post, “How to pass on the family cottage without destroying your family in the process,” Ted Rechtshaffen, June 30, 2016

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Canadians to inherit $750 billion from baby boomer generation

July 8, 2016/in Wills/by gartonandharris

As the baby-boomer generation approaches old age and eventually passes away, an enormous transfer of wealth is set to occur. One of Canada’s biggest banks, CIBC, predicts that the amount of money to be inherited by the next generation will be approximately $750 billion. The CIBC says that approximately 2.5 million Canadians 75 and up hold a net worth of about $900 billion. It believes that the beneficiaries who will receive inheritances from this wealth are between the ages of 50 and 75.

The CBIC claims that they cannot estimate exactly how much money is to be transferred but, based on previous inheritances, they have arrived at the estimated figure of $750 billion to be transferred. The average size of inheritance passed on to 50- to 75-year-olds during the last 10 years is $180,000; however, the average size inheritance should be even larger than this based on the increasing rise in value of assets.

The massive wealth transfer is expected to have an impact on the economy with regard to savings, wealth distribution, participation in the labour market, real estate markets and business start-ups.

British Columbia residents who hope to leave a legacy to their children will want to review and/or complete their estate plans to ensure that their wishes will be carried out to the letter after they are gone. A lot can go wrong in the estate planning process, which could result in costs, litigation and frustration for family members and heirs later on down the road. For this reason, British Columbia families preparing to transfer their wealth to the next generation may wish to discuss their plans with a reputable estate planning lawyer.

Source: BNN, “Canada’s Boomer generation to inherit $750-billion over next decade,” July 07, 2016

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