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Update Your Estate Plan

Lawyer Michael Klaray, who does estate planning litigation with Duncan & Craig LLP in Edmonton, once told of issuing a $65,000 bill for legal work that could have been avoided by $1,500 worth of planning.

Lawyer Michael Klaray, who does estate planning litigation with Duncan & Craig LLP in Edmonton, once told of issuing a $65,000 bill for legal work that could have been avoided by $1,500 worth of planning. "My job as a planner is to eliminate problems, so your estate will go where you want it to go and you won't spend it on lawyers," said Klaray. "But there's actually a saying, 'why waste an estate on beneficiaries?'"

New Year is an apt time to update your estate planning. Make sure you have a valid will; dying "intestate" can incur unnecessary costs, prolong the distribution of assets through the public trustee and have them go to unintended beneficiaries. Update your will, reflecting changes in your family situation plus current assets and liabilities, and talk to family members about their roles in your estate planning and how you want your assets distributed. Marvin Toy, an Edmonton tax and estate planning lawyer, identifies the biggest threats to your estate as: taxes, family conflict, choosing the wrong representatives, legal fees and divorce – particularly that of your children.

Estate planning involves three major documents: A personal directive allows somebody to make personal decisions for you if you become incapable, such as whether you should be resuscitated; an enduring power of attorney allows someone to make financial decisions for you, and can take effect when signed or can be "springing" and start when you lose capacity, and a will divides your property, administered by whomever you name as your Personal Representative, called an executor or executrix in other provinces.

Your personal directive agent should be readily available to make personal decisions for you on the spur of the moment. Your attorney -- not necessarily a lawyer -- should know where your financial assets are and have access to them. And your personal representative (executor) should live nearby, have the time and motivation to get the estate distributed, be financially responsible dealing with lawyers and accountants, and be good at avoiding or resolving conflict. To avoid possible conflict of interest, it's suggested your personal representative not be a beneficiary, such as a child.

Inform your personal representative of where your will is and what it says. Provide a list detailing location of all your assets including registered and non-registered investments, insurance, real estate and personal property, plus your liabilities including mortgages, loans, credit cards, outstanding bills and personal debts. List your household operations, such as utility connections and newspaper subscriptions. Also list all your electronic online accounts, including numbers, user words and passwords. Set up distribution of your assets in your will. Be aware of benefits and costs of estate freezes and trusts, and note that recent federal government changes in taxation reduce the advantage of some types of trusts and insurance products. Also check out the 2012 changes in the Alberta Wills and Succession Act, involving survivorship rules, marriage and divorce, dying intestate, temporary possession of a family home, maintenance and support of dependants, plus advances before death. Klaray suggests having a clause in your will detailing whether loans or grants given to beneficiaries before your death, such as giving one child a down payment for a house, should be considered advances of inheritance, or be excluded from the will before equalizing estate dispositions.

You can hold some assets in joint ownership with right of survivorship, like owning your house with one child. That keeps the house out of your estate, but can skew the intended sharing among beneficiaries, causing kids to hate each other and you. Attaching a Deed of Gift form to your will can outline whether joint ownership was set up merely to avoid the cost and delay of probate, but probate fees are only a maximum of $525 in Alberta.

Assets like registered investments, pensions, life insurance and certain non-registered investments allow you to name individuals rather than your estate as beneficiaries, thus reducing or avoiding the cost of probate, deferring tax and allowing a quicker and easier transfer of assets. Gifting assets to charity also reduces taxes, especially donating publically-traded securities, and with an increased federal tax credit for high-income earners as of 2016.