On behalf of Sun Life, welcome to our "Where there's a will, there's a way" session. Today we'll review the key considerations and questions to address when creating a will. This is an overview only. To address your personal situation, we recommend engaging the expertise of a lawyer or, for the province of Quebec, a notary.
A proper will ensures that there is clear direction for: -Who will carry out your wishes when you are dead, -How your estate will be distributed, and -Who you want to act as the guardian for your dependents, if you have any. If you die without a will, your assets will be distributed according to the law. They could end up going to people that you would not have chosen. It's important to work with a legal professional because: Laws vary by province. Rules for acceptance of handwritten wills vary by province. Specific language may be required for proper estate distribution and protection of your loved ones. Only a signed, original will is legally valid. Generally, your lawyer keeps it, but it's also a good idea to keep a copy at home. Be careful about locking it up in a safety deposit box. This may make getting a copy of it hard for the executor.
An executor (or Liquidator in Quebec), is someone you select to carry out the instructions in your will. They deal with taxes, debts, investment, legal and other issues surrounding your estate. An executor may receive a small fee for this work. Approximately 5% of the estate is a general guideline. Here are some key considerations when choosing an executor: Choose someone trustworthy and who has good business sense. Ensure the executor is willing to act. If leaving everything to your spouse, it may make sense for your spouse to be the executor. You can name more than one. If you do, be sure to spell out how decisions get made. Name an alternate executor in case the person appointed cannot or will not act. Avoid choosing someone with a conflict of interest. For example, appointing one of several beneficiaries named under the will. It's good practice to include permission for the executor to seek professional advice. For example, with taxes, investments, and legal information.
A Power of Attorney or POA, is a legal document that allows another person to act for you. A common form of POA is an enduring, or continuing POA. This is the type of POA that grants the person you appoint, who is called the attorney, the power to act on your behalf, if you become incapacitated. It's very important that the POA is worded properly; otherwise, it's possible that the POA would end upon incapacitation. There are two types of Power of Attorney: A POA for property and a POA for personal care. The POA for property allows financial decisions to be made on your behalf. The POA for property has the authority to write cheques, manage your bank account and make financial decisions on your behalf. A POA for personal care provides instruction specific to your personal well being. For example, if you are in hospital, it helps ensure that you are receiving care that you would approve of. These are almost never set up in the same document. POAs deal with serious issues and are complicated. Use of a legal professional to prepare these documents is recommended. Terminology can vary province to province. For example, in Alberta the term Personal Directive is used. In Quebec, they are called "Mandates in the event of incapacity." POAs end at death.
It's a good idea to review your estate plan every three to five years, or when there's a big change in your life. Some life changes that should result in a review of your will are: - You move to another province. - Your appointed executor moves out of province or country, and so can no longer easily execute your wishes. - Your executors no longer get along. - You start a new business. - There's a change in your marital status. - The death of your spouse. - The birth of children, or - Changes in tax laws. Minor changes can be effected by a codicil or addendum. If changes are major, then you may need to execute a new will. A will can be revoked by destroying it, or revoking it in a new will. Depending on your province of residence, marriage may automatically revoke an existing will unless the will was written specifically "in contemplation" of marriage. A divorce or separation may alter the estate distribution but does not revoke the will.
Naming a beneficiary, or several beneficiaries, helps makes sure the institutions you deal with will pay the proceeds to the right people. There are 3 different types of beneficiaries: -Revocable beneficiaries are beneficiaries that you can change at any time. -Irrevocable beneficiaries must give their consent before you can change them; and -Contingent beneficiaries who will receive the benefits if your primary beneficiaries die before you do. In Quebec, your married or civil union spouse is automatically an irrevocable beneficiary, unless you specify otherwise. If you're naming a minor child as a beneficiary outside the province of Quebec, make sure you also appoint a trustee. They receive and manage the proceeds on the minor's behalf. Once the minor reaches the age of majority, the trusteeship will no longer apply. It is important to appoint beneficiaries for both individual and group products. For example, Registered Retirement Savings Plans, or RRSPs, and life insurance. When it comes to pension plans, or products derived from a pension plan, such as a Life Income Fund, or LIF, pension legislation may affect the beneficiary designation and/or how the benefits are paid upon your death.
As you plan for the future, you'll want to think about what your family would need if you should die.
<On the slide:> Financial protection <End slide>
Long-term survivor funding needs are addressed in a number of ways. Employee pension plans often provide a death benefit, and some provide a survivor pension option for the spouse. Canada Pension or Quebec Pension plans (CPP or QPP), provide a lump sum death benefit amount of $2500 to those who qualify. A monthly survivor benefit may also be available. The surviving spouse's income and investments, or other assets that can be sold, all help address long-term household needs. It's important to plan for the immediate cash needs your survivors may have upon your death, which can include: Funeral costs that can range from $10,000 - $20,000, or more. Household debt, An emergency fund to provide 3 to 6 months of income, Post-secondary tuition, and Other household needs. To work out the specifics of your own situation, complete a Financial Needs Analysis. This will give you a picture of what your survivors need when you die. The analysis looks at assets, debts, and your family's continuing need for income. Ensuring that your survivors are debt-free when you die would result in providing some security during a difficult time.
<On the slide:> A formula which could show a deficit or a surplus
Cash for immediate needs + Future revenue needs - Funds available
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Life insurance can be an excellent way to provide for your survivors. The two basic types of life insurance are Term and Permanent Insurance. Term insurance is like renting. It is for a set period of time, such as 1, 5 or 10 years. At the end of the term, you can renew for another term, usually at a higher cost. Permanent insurance is like buying. It is for life, and in time it can build equity in the form of cash value. Consider term insurance for meeting temporary needs. Consider permanent insurance to cover ongoing needs. Life insurance is not available as part of your Group Retirement Savings plan, but a Sun Life advisor can assist.
<On the slide:> There are 3 sections
#1: Financial protection – Life insurance
• Term – protection for short-term needs
• Permanent – protection for long-term needs
#2: Financial protection – Health insurance
• Long-term care
• Critical illness
• Disability
• Health & dental
• Accidental death & dismemberment
#3: Financial protection – Other
• Property insurance (house, condo, apartment)
• Vehicle insurance
• Emergency account
• CPP/QPP disability benefit
• Workplace coverage <End slide>
Structuring your will properly will ensure the protection of your loved ones, as well as the distribution of your estate according to your wishes.
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Speak to your lawyer:
We recommend speaking to your lawyer before drafting a will or power of attorney (Notary in the province of Quebec)."
Financial protection:
Review your short-term and long-term needs. Make sure you have enough coverage.
Plan for change:
Review your will every 3 to 5 years. Keep your beneficiaries up to date. <End slide>
Thank you for listening to the information provided. We hope you have found this recording helpful.
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Thank you! The information provided is of a general nature and can not be construed as personal financial or legal advice. Neither Sun Life or its affiliates guarantees the accuracy or completeness of any such information. This information should not be acted on without obtaining counsel from your professional advisors, including a lawyer, notary, tax professional, or financial advisor (registered as Financial Security Advisors in Quebec) as may be applicable to your individual situation.
Group Retirement Services are provided by Sun Life Assurance Company of Canada, a member of the Sun Life group of companies. <End slide>