Managing Your Money

The tripod effect and your estate plan 

The tripod -- from cameras to easels, you’ll find that ancient and famous three-legged support holding up a lot of everyday items.  That’s because the tripod is one of the most stable and versatile bases ever devised.   

The tripod effect can also be an effective way to stabilize your estate planning, while providing the versatility you want in assuring that your legacy will be passed on as you wish.  These are the three essential ‘legs’ of any estate plan. 

Leg One – your Will 

A Will is a legally binding document which sets out how you would like your assets to be distributed after your death.  Every adult Canadian who has dependants or assets needs one.  

In many jurisdictions, if you die without a Will, your spouse will not necessarily receive your entire estate, especially if you have young children or grandchildren who will become entitled to a part of your estate. Young children may also become entitled to your estate if you and your spouse were to pass away suddenly in an accident. The Public Trustee in your province may then end up managing those monies until they reach the age of majority when those children or grandchildren will become entitled to all of it directly.  This can result in young adults receiving large sums of money when they are not mature enough to manage it.   

If yours is a blended family, without a properly worded Will, your step-children may be inadvertently disinherited.  

If yours is a common-law union, you may or may not be treated the same as a married couple at the time of death, depending on where you live. 

If you make a disabled child a direct beneficiary, the government may discontinue social assistance payments.  You can usually avoid this by leaving your inheritance to the disabled child in a testamentary trust.  

Leg Two – your Power of Attorney 

A Power of Attorney (or in Quebec, a Mandate in Case of Incapacity) for finances is a vitally important document that authorizes your attorney (any competent person you wish to name) to make financial decisions on your behalf should you become incapacitated.  You need a Power of Attorney even if you have a Will because the personal representative(s) named in your Will do not have any authority to manage your affairs while you are still alive.   

Leg Three – your Healthcare Directive 

You also need a Power of Attorney for Health Care (sometimes called a Healthcare Directive, Mandate in Case of Incapacity or Living Will) naming someone to make medical decisions on your behalf. This should be a separate document from your Power of Attorney for finances because you may not want your financial institutions to have access to a document which also discusses health concerns. 

A professional advisor with the assistance of a lawyer can help make your estate tripod – and every other aspect of your financial life – as stable, versatile and rewarding as possible.

This column, written and published by Investors Group Financial Services Inc. (in Quebec – a Financial Services Firm), presents general information only and is not a solicitation to buy or sell any investments.  Contact  a financial advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.