Estate planning: “I’m dead. What do I care?”

An executor is the person or people you appoint in your Will to administer your estate and distribute your assets*. This is not an easy "job". This could involve, among other things, creating an inventory of your assets, probating your Will, filing appropriate tax returns, and administering assets until final distribution to your loved ones. This sounds like a full-time job, doesn't it?

If you pass without a Will, someone must act as executor and a court appointment will be necessary, which may in turn lead to more unwarranted legal complexity and stress for those you care about.

^{* In Quebec, an executor is referred to as a liquidator.}

It's generally recommended that you appoint someone who is not likely to predecease you. However, predicting someone's life expectancy is not a bullet-proof plan. You should always name an alternate executor who may take on the role in case your primary one cannot due to death, incapacity or even refusal to act.

Before appointing someone as your executor, you should always verify whether they would be willing to act in this role. However, an acceptance now may mean a refusal later based on life's twists and turns, hence the importance of naming an alternate executor and verifying their willingness to act, as well.

If an alternate executor is not named, court intervention is generally required to appoint someone to step in if your first choice cannot act.* Keep in mind that the court appointed executor might not be the one you would have preferred. It's best practice to avoid the unknown and name an alternate executor of your choice in your Will.

If you're reading this and worry that you cannot think of someone close to you who is suitable for the role, there are other options. An executor can be a professional trustee or a corporate trustee. Although there may be extra costs for their services, they are generally equipped with expertise, independence, impartiality, objectivity and longevity.

^{* In Quebec, if no alternate liquidator is named, the heirs may become the liquidators, or the majority of heirs may designate a liquidator. If the heirs fail to agree, the court may appoint a liquidator.}

If you have a Will with a chosen executor, considering asking yourself:

• How is your relationship with your executor?
• How is their relationship with your loved ones?
• Have they moved or plan to move to another country or province?
• Is their health still intact?
• Do they still have time to administer your estate with all that's going on in their lives?
• Are they still as financially responsible as you remember them to be?
• Have you recently confirmed with them whether they would be willing to take on the role of executor?

 If you do not have a Will yet, the above questions can guide you when naming your executor(s).

It's common to want to leave an inheritance to younger generations to help them with the earlier-year pressures of getting an education, building a career, starting a family or buying a home.

First and foremost, it's important to keep in mind that minors cannot directly receive their inheritance until they reach the age of majority, which may be 18 or 19 years old depending on the jurisdiction. Whether your Will provides for an outright inheritance to a minor or you do not have a Will and a minor might receive a portion of your estate, someone will need to administer a minor's inheritance until they reach the age of majority. With a Will, you can generally choose that person ahead of time. Without a Will, you cannot. Many mistakenly believe that the surviving parent will automatically gain authority to manage their minor child's inheritance until they reach the age of majority. However, that is not the case, and a court appointment is generally necessary if the parent has not been named trustee in a Will.

It's equally important to review the beneficiary designations you've made on registered accounts and insurance policies*, which can bypass your Will's distribution terms. Have you perhaps named a minor as a beneficiary? If so, you should consider verifying whether you formally accounted for someone to manage those funds on their behalf until they reach the age of majority.

The section below can provide you with additional considerations when choosing to leave an inheritance to a younger person.

^{* In Quebec, direct beneficiary designations are limited to insurance products. As a result, some of the information discussed in this article may not apply to Quebec residents, who may need to address certain accounts in their wills.}

If you are considering providing an outright inheritance to a loved one that is a minor, you should also consider whether it is appropriate for them to receive an inheritance upon reaching the age of majority.

Whether you wish to provide for a minor or young adult, you should always keep in mind every recipient's particular situation and their ability to manage an inheritance responsibly. Think to yourself, is your beneficiary financially mature enough to inherit a significant sum of money, a house to care for, an income producing property or a business? If you have concerns about a younger adult receiving a significant inheritance outright, you may want to provide specific distribution terms of an inheritance using a testamentary trust in a Will. Remember, you need a Will to do this and assistance from a legal professional to ensure your Will outlines distribution wishes appropriately.

What is a testamentary trust?

A testamentary trust is established in a Will and takes effect upon death. A testator can decide which assets will be included in the trust and outline specific administration and distribution terms, providing control over when and how the assets are distributed.

Also, keep in mind any beneficiary designations you've made on registered accounts or insurance policies, which can bypass your Will's distribution terms*. If you feel uncomfortable with a beneficiary receiving a significant amount from a registered account or insurance policy upon reaching the age of majority or before you think they will be mature enough, you may want to revisit this designation and instead decide to provide for them through your Will by outlining additional conditions for their receipt of the funds using a testamentary trust.

Financial maturity beyond just age

Age might not always be a determining factor when it comes to evaluating financial responsibility. Some heirs might not be the best at managing money due to a variety of factors. For instance, some might not be good savers while others may be facing personal challenges. Having this in mind, you may want to account for specific concerns for certain heirs in your estate plan and a Will can help you achieve this.

^{*In Quebec, direct beneficiary designations are limited to insurance products. As a result, some of the information discussed in this article may not apply to Quebec residents, who may need to address certain accounts in their wills.}

When it comes to estate planning, great care should be taken when it comes to providing for loved ones with disabilities. Among other things, ask yourself: Are they capable of managing their inheritance? If not, have you thought of someone who could assist them and are they the best suited individual for that role? You might also want to consider how an inheritance could impact any income-tested disability benefits they receive. On that note, you may also wish to reflect on whether an inheritance could ultimately help enhance their quality of life as opposed to being limited to disability assistance. If you have a Will, you might want to revise it to account for your specific wishes for a loved one living with disabilities. If you do not have a Will, you may need one to address any concerns and wishes.

Many assume that the effects of a relationship breakdown are long behind them once they receive a court document pronouncing a divorce or get separated, but there can be a lingering impact on their estate plan if not properly addressed where necessary. A marriage can also have effects on an estate plan and updating it may be necessary to avoid any unintended outcomes. Every province and territory has their own set of rules on how marriage, common-law relationships, divorce and separation affect estate distribution.

These rules are complex, and legal advice should be sought to further understand the impacts on your estate plan and whether an update to your Will and other estate documents such as beneficiary designations on registered accounts or insurance policies are necessary.

If you've found a new life partner after a relationship breakdown, ask yourself:

• Do either or both of you have children from a previous relationship?
• Are you planning to have more children together?

If you answered in the affirmative, there are more questions for you to consider:

• If you have a Will, are new family members taken care of in the way that you wish?
• Would you want to provide an inheritance for your new spouse as well as children from your previous and/or new relationship?

When a surviving spouse receives an outright inheritance, they are generally free to spend or gift it as they please. This freedom applies during their lifetime, and upon their death. In other words, they may redraft their own Will after your death to provide for a distribution of whatever is left over from their inheritance according to their last wishes. However, their wishes may not always align with yours.

If you are part of a blended family, you may want to consider a testamentary spousal trust if you want to ensure that the remaining balance of your new spouse's inheritance ultimately flows back to your children from a previous and/or new relationship. Testamentary spousal trust terms are included in your Will and require careful implementation with the assistance of a lawyer to ensure that it fulfills all requirements to be effective.

What is a testamentary spousal trust?

A testamentary spousal trust is a specific type of testamentary trust that is created at the time of an individual’s death, for the benefit of their surviving spouse or common-law partner and is commonly used to provide for the needs of one’s surviving spouse during their lifetime, while maintaining control of the estate assets. Spousal trusts can be employed with blended families in which one’s estate is to first provide for their surviving partner with the residual balance to then flow to the intended children or other specific beneficiaries of the estate.