The value of preparing an estate inventory during an estate planning initiative cannot be underestimated. In general it:
1. is a starting point for your estate trustee (executor) or attorney under power of attorney;
2. supports your decisions enabling defense against a claim that you were not in your right mind at the time you made a will or other estate planning document;
3. is a start for your executor or attorney in terms of knowing what you had at the time you signed an estate planning document;
4. provides context for your lawyer to be able to give you sound information and advice about your overall financial situation, how you hold title to assets, your rights and obligations with respect to your estate and claims that may be made against it.
A more specific advantage is that reviewing your inventory will remind you to ensure that you have recorded valid beneficiary designations with the institutions holding your RRSPs, RIFs, Tax Free Savings Accounts, Pensions and/or Life Insurance and that these designations reflect your current wishes and intentions.
By designating a beneficiary to receive residual plan benefits on your death, you are enabling relatively quick distribution of the plan or insurance proceeds to the individuals who you intend to receive them and also avoiding estate administration tax and creditor claims on those assets in most cases.
Unfortunately, Carrigan v. Carrigan Estate, 2012 ONCA 736 (CanLII) — 2012-10-31 was a case in which the meaning of a beneficiary designation for a pension plan came into question. In the case, a member of a pension plan predeceased his common law spouse (“CLS”) and his legally married spouse (“MS”) from whom he was separated. He had designated MS and their daughters as beneficiaries of his pension plan. The trial judge found that both spouses fell within the definition of “spouse” in s. 1 of the Pension Benefits Act (Ontario)(the“PBA”) but that only one spouse can be entitled to a member’s death benefit under s.48(1) of the PBA which gives the “spouse” priority over the designated beneficiary. The Ontario Court of Appeal found, however, that the PBA provides that the designated beneficiary is entitled to the death benefit if either of two circumstances exists: 1. The member does not have a spouse on the date of death OR 2. The member is living separate and apart from his or her spouse on that date. The Court noted that it makes no sense to conceive of a common law spouse living separate and apart from the member. The Court, therefore, concluded that the statute was in fact stating that the designated beneficiaries were entitled to the death benefit.
In common sense terms, the beneficiary designation should have had priority without going through a statutory analysis before a court. If the deceased intended otherwise, he should have updated his designation to reflect this. This, once again, underlines the reason why an estate inventory and implementation of the changes that one feels are warranted upon its review are essential.
Simply put, these steps are the foundation for a solid and effective estate plan. You should ensure, then, that your lawyer thoroughly reviews an estate inventory with you at the relevant time.
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Andrea Kelly, Lawyer, has extensive experience in wills, trusts, powers of attorney and estate administration matters. She provides clients with a high standard of timely professionalism and expertise, incorporating a very thorough fact finding process. This is quite often enlightening for her clients and facilitates individually tailored services. If you would like to know more, feel free to use the easy contact form or read Andrea’s bio.