Estate planning during COVID-19

The current COVID-19 pandemic has resulted in many pausing to reflect on their estate and incapacity planning. The barrage of news headlines about the health crisis and forced time at home have understandably led individuals to more thoughtfully consider the plans they have in place or plans they would like to implement. Legal professionals throughout Canada have noticed an increased interest in estate planning in recent weeks.

General requirements for signing formal wills and powers of attorney or protective mandates

Generally, formal wills and powers of attorney in most provinces throughout Canada require an individual to sign their documents in the presence of one or two witnesses who are physically present at the same time. In Quebec, formal wills and protective mandates are generally signed before a notary or in the presence of witnesses. The physical distancing measures imposed have made it more difficult to meet these requirements and complicated the execution of formal wills, powers of attorney and protective mandates. Some provincial legislatures and many estate planning professionals have come up with innovative ways to overcome the hurdles that have arisen as a result of this pandemic.

Signing wills, powers of attorney or protective mandates in our current climate

On April 7, an Emergency Order in Council was issued by the Ontario government authorizing the virtual witnessing of wills and powers of attorney for property and personal care during the declared state of emergency. In Saskatchewan, virtual witnessing was authorized on March 25 with respect to enduring powers of attorney, and on April 16 in relation to wills. Similarly, on May 14, Manitoba passed The Emergency Measures Act which temporarily permits the execution of wills, powers of attorney and health care directives with virtual witnesses, provided certain conditions are met. All of the emergency measures passed by these three provinces require the involvement of a lawyer or paralegal (Ontario only) in the witnessing process.

The Quebec government has temporarily permitted notaries, beginning April 1st, to sign notarial acts (including Wills and Protective Mandates) remotely through electronic means.

Provinces such as British Columbia, Alberta, Nova Scotia and New Brunswick, have not at this time invoked legislative changes to address the issues with executing Wills and Powers of Attorneys that have arisen. In some of these provinces, the legislation governing formal Wills and Powers of Attorney already include curative provisions that may be relied upon for such documents that do not comply with all legal requirements, including those surrounding witnessing. However, a court application to obtain an order or declaration may be necessary in order to validate such Wills or Powers of Attorney.

Handwritten wills

Wills completed entirely in the handwriting of an individual without the requirement of witnesses (holographic wills) may be considered by those who live in provinces in which they are recognized (e.g., Alberta, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Newfoundland and Saskatchewan). While holographic wills may be effectively executed during these difficult times of physical distancing, they may not be suitable for everyone, especially those with complex estate plans. Holographic wills should be undertaken with the guidance and oversight of a knowledgeable legal professional.

What should individuals do?

Given the continuously changing nature of the response to the pandemic, and the variety of approaches taken by legislatures and practitioners, anyone contemplating changes to their estate documents should consult with their trusted legal professional to determine the correct approach for them to finalize their estate documents. Although these difficult times present unique challenges for the execution of estate documents, rest assured that it is possible to move forward with estate planning without delay.

 

When to review your estate plan

It’s easy to think you can put off changes to an estate plan – the plan doesn’t even take effect during your lifetime. But it’s important to react in good time because many changes call for strategies best implemented sooner rather than later. Also, you make estate planning changes now for the same reason you made a will and purchased life insurance: to benefit your loved ones if you pass away prematurely.

Life changes calling for a review

Typically, you should review an estate plan whenever a new situation arises that potentially calls for an update. But if several years have passed without looking over your plan, it’s a good idea to conduct a review anyway.

Keep in mind that although a will is central to estate planning, much more is involved. Assets could be distributed outside of the will, through such means as life insurance and registered savings plans. Certain family situations may call for the establishment of a trust. Estate planning also includes powers of attorney for both financial matters and personal care. And you may require tax planning to help preserve the value of estate assets.

Here are key financial and life changes that are reason to review your estate plan.

Change in appointed individuals

In the process of estate planning, you name individuals as beneficiaries, attorney (for power of attorney), executor and possibly trustee. If your executor, alternate executor, trustee or alternate trustee passes away, moves out of province or is no longer capable or interested, you’ll need to name a replacement. You may also find that your estate has become more complex to administer, now requiring the services of a corporate executor.

If a beneficiary suffers a serious illness or disability, you may consider establishing a trust. You may also wish to add beneficiaries, such as grandchildren.

Marital or family status changes

You have quite a few changes to make in the event of separation or divorce, or a new marriage or common-law relationship. There’s the larger picture of revising the financial aspect of your estate plan and the details of changing beneficiary designations – from your will to a life insurance policy. If you’re newly married with a blended family, you may want to explore estate planning strategies to help provide for your new spouse and children from a previous marriage. You also need to update your will and estate plan upon the birth or adoption of a child, and may need to make changes when a child reaches the age of majority.

Developments in your financial life

There’s no need to update your will and estate plan every time there’s a routine change in your net worth. But you should review your plan if a major change affects distributions from your estate or calls for a new tax strategy. Such changes include receiving a significant inheritance, purchasing vacation or rental income property or any major business-related change – buying or selling a business, or deciding to hand over the business to your children.

If assets appreciate considerably, you may need to implement a tax strategy to manage capital gains tax payable by your estate. Also, consider digital assets. Assign your executor or another person the responsibility for online financial accounts and their passwords, any digital content on websites and social media, and related digital property.

If you’re in retirement and plan to leave a large balance in your registered retirement savings, without a spousal rollover opportunity, you may need to plan how the estate will cover the tax liability.

Changing distribution of assets

A variety of scenarios may arise when you want to change the way you allocate estate assets among beneficiaries. For example, say that vacation property was to be handed down to both children, but now one child moved out of province. Perhaps one child will inherit the property, and the other child will be made beneficiary of a permanent life insurance policy. Another example is if you decide to make a charity one of the beneficiaries of your will.

The timing of distributions can change. Instead of giving a beneficiary one lump sum, you might now have reason to make smaller distributions over time.

Help with your review

You’ll make many of these changes with us, and others with your lawyer, but please feel free to contact us to discuss any or all possible changes to your estate plan.