By Ken M. Kramer, Q.C., TEP, and Plan Institute
Developing a will is an important part of future planning, however it can be a challenging task that can be very easy to put off.
If you have a minor, adult child or relative with a disability, ensuring that your will is up-to-date is crucial. Not having a properly drafted and up-to-date will may necessitate that important decisions are made for you and may result in unintended costs and consequences—often with results that you would not have wanted.
A well drafted will gives you peace of mind, ensuring that you have made prudent decisions and have adequately provided for your family, and ensure that your son or daughter with a disability continues to be entitled to provincial disability benefits. Proper planning can also protect those with disability who may also be vulnerable and susceptible to undue influence by others, especially where their capacity may be in question.
We recognize that getting started may be challenging given the great number of competing priorities we all face. So, in order to make the process a little less daunting, we’ve compiled a few tips you’ll likely find helpful.
Determine assets. A good starting point for an estate plan is to complete the Will Planning Worksheet from Safe and Secure: Six Steps to Creating a Good Life for People with Disabilities. (https://planinstitute.ca/wp-content/uploads/2019/01/Plan-Institute_Will-Planning-Worksheet.pdf) This worksheet will give you and your legal advisor a better understanding of your assets, liabilities, family circumstances, and your wishes which will greatly assist in developing your estate plan.
Decide how you want your estate distributed. Determining how your estate will be shared upon your passing is one of several important elements of any plan. For example: should your estate be distributed entirely to your spouse upon your passing? Furthermore, if your spouse predeceases you, should it be equally divided among your children? Adding further complexity, what legal and/or moral obligations might you have to your spouse and children under the provisions of British Columbia’s Wills and Estates Succession Act (“WESA“) or equivalent legislation in our provinces. Specifically, in British Columbia, a person who has a spouse or children, has a legal and moral duty to provide to these individuals when considering the distribution of their estate. A failure to consider a spouse and/or children in your estate plan may result in estate litigation.
Finally, if you don’t develop a will to outline how your estate will be distributed upon your passing, such a distribution may then be determined based on the provisions of WESA or other guidelines which may not reflect your wishes. Accordingly, it’s important to have a will that accurately reflects your current wishes. It should also be noted that you can change your will at any time as long as you have sufficient capacity. Such changes to your will may reflect a repositioning of your assets, legal and moral obligations, and family circumstances.
Consider a discretionary trust. It is common for parents of children living with disability to set up a discretionary trust within their will. A discretionary trust has multiple purposes. Initially, it is a method to shelter money so that any inheritance received by a person with a disability does not impact their entitlement to provincial disability benefits. Funds held within such a discretionary trust are considered an ‘exempt asset’ pursuant to the provisions of disability benefit legislation and regulation and therefore, will not result in your son or daughter with a disability losing their benefit entitlements.
There is no dollar limit on the amount of funds that can be held within a properly developed discretionary trust. However, all decision-making associated with the administration of such funds held within this type of trust are the responsibility of the Trustee, and hence, the beneficiary traditionally has no legal input in such decision-making.
A secondary, and sometimes equally important purpose for setting up a discretionary trust is where the beneficiary may lack sufficient capacity to make decisions and/or be susceptible to undue influence.
An important decision in setting up a discretionary trust is determining who will be the Trustee of the discretionary trust? It is very important to choose the right Trustee not only today, but in the future as well. Careful consideration must also be given to circumstances where the Trustee may be unable or unwilling to act. A discretionary trust may have a very long life, i.e., the expected life of the person with a disability, and hence, choosing a Trustee not only today but possibly 50 years from now may be necessary.
There are many factors to consider in choosing the right Trustee and ultimately, there must be confidence that this individual understands and appreciates the complexities of trust administration along with the unique elements of a person with a disability. The Trustee may be a sibling, family member, friend, or possibly, a corporate trustee. However, the Trustee must be someone that you deeply trust.
Choose a guardian. If you have children under 19 years of age, it is important to consider whom you will appoint as their guardian in your will should you predecease. A failure to appoint a guardian in your will may result in the Ministry of Children and Families and/or the Public Guardian & Trustee having conduct of the affairs of your minor children. This may not be your wish.
Consult with a lawyer. Working with a professional who has experience and great knowledge of wills and estates law and its interrelationship with provincial disability benefits will be fundamental to developing a well-designed estate plan. Your lawyer should be experienced in this area and be able to explain the tax and legal implications of your decisions and specifically, the impacts of receiving an inheritance on your son or daughter’s entitlement to provincial disability benefits.
Developing a will can be a challenging matter in itself but is further complicated where there is a loved one with a disability. Accordingly, it is important to develop your will with regards to the specific laws in your province, otherwise it may have an unintended negative impact.
Regularly review and update your will. It is recommended that you review your will every few years or whenever there has been a significant development in your life. For example, a new addition to the family, a change in marriage status, a change of province, your trustee’s personal circumstances and their prospective move out of province, and/or your health changes. Reviewing your will regularly will ensure that your wishes reflect your current circumstances and intentions.
We hope that this preliminary overview will help you get started with your will planning and encourage you to consider developing and/or updating your existing estate plan.
This article is a collaboration by Ken M. Kramer, Q.C., TEP, and Plan Institute. Ken is the Founder and Principal of KMK Law and has worked with Plan Institute as a facilitator of the Wills, Trusts, & Estates workshop and webinar.