ESTATE PLANNING FOR THE SURVIVING SPOUSE

Most couples have most of their property in the names of both spouses so that on the death of one, property will transfer to the surviving spouse. Often transfers can be made to the surviving spouse without payment of taxes or land transfer fees. Examples of this would be transfers of RRSPs and transfers of jointly held property in the Land Title Office.

Through legislation, the definition of spouse may include common-law and same sex spouses. The definition of who is a spouse is dependent upon specific legislation and should be checked for specific situations. Under many British Columbia laws relating to estate matters couples are considered spouses of a common law relationship after two years. Federal legislation is often one year.

Most joint bank accounts can be transferred to the survivor by presenting a certified copy of a death certificate to the financial institution. As original death certificates are quite expensive it is wise to obtain a number of certified copies from a lawyer or notary. These copies will be cheaper than obtaining copies from the provincial government. A financial institution may also take their own copy of the original death certificate.

In order to transfer real estate, application is made to the Land Title Office. Along with the application, an original death certificate needs to be sent to the Land Title Office. The Land Title Office will send back the original death certificate if requested.

Surviving spouses will often have rights under either private or public pension schemes. The most common public scheme in Canada is the Canada Pension Plan, which provides a spousal benefit if the deceased spouse was a contributor. There may also be a death benefit and child benefit available.

Life insurance should be applied for immediately. This will normally require a certified copy of the death certificate, an application, maybe a doctor's report, plus any other information required by the life insurance company.

A surviving spouse should also review his or her estate plan to ensure that it is still current. Obvious areas of review are the choice of executors and alternates; review of beneficiaries and distribution of assets; confirmation that powers of attorney for property and health care representation agreements are appropriate. Commonly spouses will only have powers of attorney for each other so somebody else will have to be appointed as an attorney. Likewise, health care representation agreements become more important because in the absence of a health care representation agreement all children would have an equal say in a surviving parent's health care decisions if the parent became incompetent.

It will be necessary to update beneficiaries of insurance policies, RRSPs and perhaps pension benefits. One must be careful though in changing RRSP beneficiaries. Upon the death of the surviving spouse the RRSP will be collapsed and the amount of the RRSP will be added into his or her income at the date of death. The estate will pay the tax on this income. This means that a designated beneficiary of an RRSP may receive all the cash from the RRSP but the estate may pay the tax. This could be inequitable.

Medical insurance requirements through public and private plans should be reviewed.

Proper estate planning between spouses will minimize the cost and paperwork of property transfers upon the death of the first spouse and will hopefully alleviate the need to obtain probate. Although it is a difficult time for the surviving spouse, using appropriate legal, tax and investment advice will make the best of a poor situation.