Protection mandates
What will happen to Michel’s spouse?
At the time
of Michel’s accident, his spouse was financially dependent on him.
Fortunately, he had specified in his protection mandate that his
mandatary could use his money to take care of her. Without this
precaution, obtaining this support would have been a long and
costly process.
Definition: A protection mandate is a document that specifies who will take care of you and your property if you are no longer able to do so yourself.
You can choose one or more people to carry out these two roles, based on their skills and availability. “A protection mandate allows you to decide what you really want,” says Geneviève Coupal, Senior Advisor at National Bank Trust. “If you don’t have one, the law provides for certain basic measures that aren’t always suitable for everyone.”
Wills and estates
Which grandchild has been left out?
Josée wants to leave a symbolic amount to each of her
grandchildren and names them in her will. However, she doesn’t think
to include a clause providing for any grandchildren who may be born
after her will is written.
Definition: A will is a document that specifies what you want to pass on after your death, to whom, and when.
For example, a person might want to pass on a family business, or belongings with sentimental value, like a wedding ring. Then they would decide who should receive the rest of their property. “Review your will and update it whenever there’s a significant change in your family life or your finances,” says Geneviève Coupal.
In addition to choosing the heirs, you must also appoint a liquidator. This is the person who will carry out all the procedures required and distribute the property according to the wishes expressed in the will. However, some assets in an estate may be complicated to manage (e.g., a condo in Florida). “It takes time and may require travel. They must also be impartial and know how to manage potential family conflicts tactfully,” says Geneviève Coupal.
Testamentary trusts
How can you prevent heirs from wasting their inheritance?
Claudia is worried that her impulsive son will squander his
inheritance after she dies. To avoid this, she sets up a trust that
will pay him a monthly sum from investment income. It also allows
the trustee to release additional funds for important projects, such
as going back to school or buying a home.
Definition: A testamentary trust is a tool that can be used to manage and distribute an inheritance flexibly after the person’s death.
One or more trustees manage the assets and distribute the money according to the wishes expressed in the will, much like directors of a company. While there is a cost to setting up a trust, they offer a lot of flexibility in deciding how and when the money will be distributed. “Trusts are useful in a variety of situations. For example, they can be used to provide for an heir with special challenges, a second spouse, or children from an earlier marriage, or to bequeath assets over several generations,” says Geneviève Coupal.
Some pitfalls to avoid
What didn’t Claude know?
Claude wrote his will by
hand, naming his child from a previous relationship as the
beneficiary of his pension plan and leaving everything else to his
new wife. However, he didn’t know that, depending on the applicable
law, pension plans often go directly to the eligible surviving
spouse and aren't included in the inheritance. As a result, Claude’s
child might not receive anything.
People who think they know how everything works and don’t speak with professionals may miss out on opportunities or make costly mistakes. “There are lots of inheritance rules that are important to know to avoid unpleasant surprises and maximize the value of your estate after taxes,” explains Geneviève Coupal.
Estate planning isn’t just for the wealthy. Everyone should draw up a plan and review it on a regular basis. “When an estate is liquidated without a will, the process can end up being more expensive than drawing up a clear estate plan that makes it simple for your loved ones to carry out your wishes,” says Marie-Soleil Lemieux.
Choosing the right people
For the roles of mandatary, liquidator and trustee, choose people you trust who will be able to work with your loved ones while carrying out your wishes. “These are important responsibilities, and it can be a heavy burden,” stresses Geneviève Coupal. “To avoid any unease, it’s a good idea to have a discussion beforehand with your loved ones and the people you’ve chosen.”
“Above all, the first step should be an open conversation with your loved ones,” adds Marie-Soleil Lemieux. “These discussions can help clarify what’s really important, both for them and for you.” This will help ensure that your family and friends are more united and better prepared to respect your last wishes.
1 Investor Economics, Household Balance Sheet Report 2023