Review Your Beneficiaries
When it comes to estate planning, it is recommended you review your Will and estate plans every five years or when there is a change in your family or situation. As you grow older, maybe review every two years. Once someone loses their mental capacity, for example dementia, you can no longer make any changes to your legal documents.
What does that mean, “review your Will”?
First review the individual(s) you have named as your executor in your Will and as your attorney in your Power of Attorney document and your medical decision maker in your Health Care Directive. I refer to all three of these positions as your “legal representative” or “legal rep”. They can and often are the same person, but they do not have to be.
Are these individuals still alive? Are they still capable of looking after your assets while you are alive or your estate after you die? Do they still live in Manitoba? Have you named a primary legal rep and one or more alternates?
Living in the same province is not a requirement, but it does make it easier for your legal rep to look after you and your assets if they don’t have to travel far. In this digital age it has become much easier to be in touch with organizations by phone and email, but there are times when the legal rep does need to physically be near you or your assets. If you decide to name someone from farther away, be aware that this individual can and should have their travel expenses paid by your estate. And your estate may take longer to be administered and could potentially cost more.
If you have named joint executors, why? Normally naming only one makes more sense. From my experience when dealing with executors, if you name joint executors, one often does all the work, and it makes it more complicated and takes more time for the second executor to cosign everything. Often, naming just one qualified executor makes more sense. An executor can still ask others for help. Other family members can help with some of the administration of assets. And the executor is still accountable to all the beneficiaries.
Review the beneficiaries you have named in your Will. Are they still appropriate for your wishes?
First, are they still alive? If not, you should replace your Will with a new one, or add a codicil (attachment) to the Will removing them as beneficiaries and potentially adding new ones. If you do not, it is not terrible, just one more item the executor needs to do: get proof of death of these beneficiaries.
If you don’t want a particular beneficiary in the Will anymore (you have changed your mind), it’s recommended you get a new Will to replace the existing one so there is no confusion about what your intentions are.
Have you listed specific bequests (dollar amounts)? Are the individuals or charities still appropriate and reflect your wishes? Are the amounts still appropriate?
Review your residual beneficiaries. These are the individuals and/or organizations that share in the rest of your estate after debts are paid and specific bequests are paid. Are they still appropriate? Is the percentage for each of them still reflective of your Wishes?
If you have a charity listed as a bequest or as one of your beneficiaries, is it still the charity of your choice? If you are not sure, you can name an organization such as Link Charity to receive your charity’s share. By using Link Charity, you can change your mind about the charity(ies) without changing the Will; just change the letter of direction with Link Charity.
Life Insurance, RRSP or RRIF, TFSA
In additional to the beneficiaries in your Will, take a look at some of your assets that you may have named beneficiaries. These can be your life insurance, your RRSPs or RRIFs, or your TFSA (tax free savings account).
You may want to change the beneficiary or alternate beneficiary if you have a spouse, to “the Estate”. Then the assets can be distributed according to the wishes in your Will. You may have one or more beneficiaries named that do not match what your intentions are in your Will.
I assisted some executors in the past two years where the deceased (the mother) had only one child named as beneficiary in the RRIF or TFSA instead of both of the children. Fortunately, the named child acknowledged that mom didn’t intend them to have the money and cut out the other child, so the family harmony remained, and the named beneficiary agreed to share the asset with the other child(ren).
I have seen other situations where the named child did not “share” with the other children and now the relationship is strained, and the children do not talk to each other.
This could have been prevented if the parent had changed the asset to name the estate as the beneficiary. Then the asset would be pooled with all the assets of the estate and distributed according to the Will.
With changes to the probate fees in Manitoba, there is less reason to have a named beneficiary on these assets (other than your spouse). October 2020, the probate fees in Manitoba were changed to zero. If the Will needs to be probated (authenticated by the Court of Queen’s Bench), the fees are zero. If a lawyer assists you with having the Will probated, you will still pay lawyer fees (which are negotiable).
There may be reasons you do want to have a named beneficiary on your specific assets. For example, you may want to leave a RRIF to a charity to offset the taxes on the asset when you die.
Or you may want to leave the RRIF to your spouse in a second marriage, but the rest of the assets you may want to leave to your children from your first marriage.
Joint assets other than with a spouse are considered as estate assets and are distributed according to the Will; unless you have a signed document that states this asset is intended to be paid to the joint account holder. Make sure your executor and beneficiary know your intentions with any joint assets. Of course, this is treated differently than assets that are joint with spouses.
Personal Property Memorandum
If you have personal items that are not worth significant values (like some family heirlooms), you can state in a signed and dated document who should be receiving some of these prized items. You can list them in detail and provide names beside each item. A copy of this document should be given to your executor and maybe the beneficiaries and the original should be with your Will.
If you are a widowed spouse, check your Will to see if there is a mutual clause in the Will that may prevent you from making any changes in beneficiaries in your Will. A mutual clause is more common with second marriages to ensure the surviving children of both parents receive the estate after the second parent dies. It ensures the surviving spouse cannot change the Will and “remove” the deceased spouse’s children from the Will. It is a legal contract that comes into place when the first spouse dies. The spouses can change their Wills while both are still alive, and both agree to the changes.
With a mutual clause, changing your executor is allowed with a codicil, just the beneficiaries cannot be changed or removed.
Take this month to review your documented wishes and make sure they match what you would like to have happen. You may need to review with a lawyer so that your wishes are documented properly.
Anni Markmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact Ste Anne Tax Service at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or firstname.lastname@example.org