WhatsInaWill

A good Living Will should have:

1. Power of Attorney — Your Power of Attorney should be in effect immediately, NOT upon death or incapacitation. If you can't trust the person enough not to make bad decisions on your behalf while you are well and able, then why in the world would you trust that person to do the RIGHT decisions when you are dead or ill ? If you don't trust your power of attorney today in sound mind, then you haven't chosen the right person.
2. Designation of an executor and an alternate executor — if only one executor is named and for any reason cannot perform those duties, then a court will appoint a new executor. This situation can be avoided by naming an alternate. Keep in mind that your executor will be paid to execute your orders. In Nova Scotia, it is typically 5% of the total after-tax value of the estate.
3. Care Proxy — A health care proxy is not a power of attorney. Your health care proxy should identify the person, and an alternate, which will ultimately make health care decisions on your behalf should you become incapacitated. Things to include are organ donation, life support instructions, critical mental illness instructions, and simply old age and long term care whishes.
4. Joint Ownership and right of survivorship — List all jointly owned assets to avoid probate after first death. This should include real property, business interests, investments, and any other assets gathered jointly. If no right of survivorship on joint assets is specified, anyone has the right to challenge probate after the first death.
5. Designation of Beneficiary — Similar to previous for assets, or all remaining assets after second death. Insurance contracts with direct beneficiaries named don't go to the estate. Insurance contracts, segregated funds, mutual funds or other investment vehicles with individual beneficiaries named bypass the estate (certain conditions must be met). Careful attention must be given to this, otherwise the estate may be bankrupt (funds intended to be distributed fairly go directly to beneficiary instead of funding the estate.).
6. Last Will and Testament — Last instructions to be carried out on your behalf posthumously. It is your executor's duty to perform these instructions. In Nova Scotia, it is against the law to bequest gifts of any sort in your Last Will and Testament. Instructions can include charitable donations, public statements, distribution of assets not previously covered in items 4 and 5, instructions or conditions on distributed assets, special funeral or post-funeral arrangements, distribution of pets, distribution of family heirlooms (excluding gitfing), and generally any other frivolous last request. You may consider adding a non-disclosure clause to your Last Will and Testament. Under Nova Scotia law, your Will is a public document, available to anyone for consultation after your death.
7. Marriage Contract -- Important for same-sex marriages -- all parties involved should seek independent legal advice.
8. Inter Vivos Trust (Alter Ego Trust) -- Designation of trusts and trust instructions. Funds intended to be directed into an Inter Vivos Trust should have the TRUST named as beneficiary prior to death and bypass the estate altogether. A trustee and several alternate trustees should be named. Keep in mind that a trustee has the right to exercise a trustee fee to administer the trust after you die. A Segregated Fund named with a Beneficiary is the most tax preferential way to fund a trust or philanthropic society because these funds are not exposed to estate fees and are generally protected from creditors. Avoiding the estate also assures confidentiality.
9. Business Succession Plan (Buy/Sell Agreement) — Important for small business owners. A succession plan should be a clear blueprint that establishes who will run your business, as well as who pays how much for it and who gets it. Can you afford to simply transfer the business to your children? Will your retirement plans call for the new "family" owner to purchase an interest in the business? If so, will he or she pay fair market value for it and how will the transfer be financed? . For example, you'll need to determine the most appropriate sources of retirement income for you and your spouse. Would it be better to live on buy-out payments from the children, supplemented by investment income or income from your continued involvement in the business? A good plan should lessen the effect of taxes and probate fees on your estate and allow you to maintain control of your business until you are ready to turn it over to the next generation. It's equally important that your successors implement a fair buy-sell agreement that replaces yours.

A good Living Will should contain all the above items. If there is no will, the court will appoint an administrator on your behalf, not necessarily the executor you had wished. If this is the case, your assets will be frozen until the estate can be settled.

In Nova Scotia, if the deceased is survived by (only) a spouse, everything goes to the spouse. If the deceased is survived by a spouse PLUS children, the first 50 000 $ plus one-third the remaining balance goes to the spouse, and the balance (two-thirds less 50 000) is divided equally among the children.

This page is part of the GayFinance series.