We often hear that we should work on our estate planning, but what does that really mean?
It is important to recognize that estate planning is about more than just making a will. There are actually a number of factors that go into the creation of a successful plan. There are a few key issues that come up often when working with estate planning clients.
Adding adult child to bank account
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Consider this situation: June is 80 years old and has three children. One of her children (Sally) lives near her and helps 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 to 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 three children?
The Supreme Court of Canada released a series of cases on this issue to clarify the “presumption of resulting trust” doctrine.
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 the 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 before 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.
Here are a few things you can do to prepare for an estate planning meeting:
- Gather your current will, power of attorney and 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, such as shareholders’ agreements and cohabitation or prenup agreements.
- Make a list of your current advisory team, such as your banker, your financial adviser, your accountant, your lawyer, your bookkeeper and 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 have 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 because 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 every couple of years to make sure that they still match your wishes.
Amanda Doucette is a lawyer and partner with Stevenson Hood Thornton Beaubier LLP in Saskatoon. She is the creator of The Tax Chick Blog and The Tax Chick Podcast, which can be found at www.thetaxchick.ca.
The information in this article is not legal advice. We encourage you to consult with your legal adviser for advice specific to you.
