In the first two parts of this series, we looked at why estate planning is important, what you need to think about when creating your plan, appointing executors and identifying beneficiaries. In this final part we will examine testamentary trusts, appointing guardians and power of attorney.
There are three main types of testamentary trusts that can be created by your Will – spousal trusts, trusts for minor children, and trusts for adult children. Each of these trusts has its own specific objectives.
• Spousal trusts – established for the benefit of the surviving spouse for his/her lifetime.
• Trusts for minor children – supports the children until they reach the age of majority, or some later age identified in the Will.
• Trusts for adult children – used to provide care for dependant adult children, to safeguard assets where the child is unable to prudently manage their own affairs or to protect an inheritance from potential creditors or a divorce settlement.
Trusts can last for a very long time – decades in some cases. So it is important to clearly outline what the purpose of the trust is, how it is supposed to operate, and what happens with any remaining funds when the trust terminates.
The role of a guardian
If you pass away leaving minor children behind and there is no surviving spouse, you will need to decide who is going to take care of your children. The guardian will be responsible for, and have legal authority over, your children’s care, education and welfare until they reach the age of majority. Often the child will live with the guardian though that is not always the case.
Since the guardian can in effect become the child’s surrogate parent, it is important to choose someone who is capable of taking on this responsibility physically, psychologically and financially. You will want to choose someone who you can trust to raise your children according to your moral, ethical and/or religious standards.
It is absolutely imperative that you speak to the person you want to name as a guardian before you name them in your Will. This is to ensure that they are willing to assume this responsibility and also to ensure that they understand what it will require of them. It is also advisable to name an alternate guardian who would assume the role if the original guardian is unable or unwilling to accept the responsibility at some future point in time.
It is possible for you to name the same person as the executor, trustee and guardian. However, each of these roles is distinct with different requirements and responsibilities, so you should consider naming different people to each role.
Establishing Powers of Attorney
Planning for possible illness, accident or other disability is part of a comprehensive estate plan. In many provinces, it is possible to establish two different powers of attorney.
A Power of Attorney for Personal Care allows you to name a person to make decisions concerning nutrition, shelter, clothing and consent for medical treatment, should you become incapacitated. Depending on the province, these types of documents are also referred to as Living Wills or Health Care Directives and can provide direction on the type of treatment you may or may not wish to receive.
A Power of Attorney for Property empowers a person or company to manage your financial affairs during your lifetime. The authority that you grant can be limited to specific activities or assets, called a Limited Power of Attorney or it can be general, providing your attorney with broad control over your financial affairs.
A power of attorney can be temporary or indefinite however, unless it contains a clause to make it enduring, the authority provided by this document ends if the donor becomes incapacitated. In all cases, it ends upon death of the donor. An enduring power of attorney may come into effect immediately or not take effect until the expiration of a stated time or after the occurrence or non-occurrence of a specified event (referred to as a ‘springing’ power of attorney.) Powers of attorney can be revoked at any time by the donor, so long as s/he has the mental capacity to do so. The appointment of a committee or guardian by a court order will also terminate a power of attorney.
When preparing a power of attorney, it’s important to engage a lawyer to ensure that you are fully aware of the powers and authority you are granting. However, when selecting your attorney for property it may be more appropriate, efficient and cost-effective to appoint a professional.
We have covered a lot of information over the past three weeks. If you have any questions about estate accounts at UCU or about obtaining estate planning advice, please feel free to call me.
Anna Procio,
Estate and Administration Officer
Ukrainian Credit Union Limited
416-763-5575 x200
[email protected]
www.ukrainiancu.com
Share on Social Media
