Estate Planning
What is meant by Estate Planning?
Wills
Joint Tenancy
Gifting
Trusts
Estate Freezes
Life Insurance
Powers of Attorney, Living Wills, Representative Agreements
TOP FIVE REASONS FOR NOT PREPARING AN ESTATE PLAN
- You like to pay taxes.
- Your family always gets along.
- The government will look after you.
- You’re not old enough.
- You will live forever.
WHAT IS MEANT BY THE TERM “ESTATE PLANNING” ?
Estate planning is about providing for others. Estate planning is part of the overall financial planning process and primarily deals with the succession of an individual’s life savings to their family and friends.
Fundamentally, estate planning is, and always has been the process of ensuring that your estate is passed on to the person, persons and/or institutions of your choosing on your death. Historically, in law, estate planning involved the simple matter of an individual making a Will leaving his or her possessions to his or her heirs. Governments and Courts had no say in the process. There was essentially total “testamentary freedom” to leave one’s assets to whomever one pleased.
But within the last hundred or so years governments began passing legislation to achieve two public policy goals. The first goal was to ensure that dependents were adequately provided for on the passing of a parent. Individuals, (usually men) died sometimes leaving their dependant spouses and children destitute while the deceased was able to leave, through his Will significant assets to others (for example, girlfriends). Legislation in various forms, generally referred to as “Dependant’s Relief” legislation, now embodied in British Columbia’s Wills Variation Act was passed in all provinces of Canada allowing Wills to essentially be “rewritten” by the Courts, after the death of a Testator so that a “fair” portion of a deceased’s estate was left to his or her spouse and children.
A second government goal has been government’s increasing desire to collect more taxes to pay for its programs. Inheritance taxes, income taxes, and ever increasing probate fees have all been used by the federal and provincial governments to try to obtain a greater share of a deceased’s assets, on his or her passing, despite the wishes of the deceased. Federal and Provincial governments are looking forward to your death. It could mean a large payday for them!
Thus, the battle between the private interest of having testamentary freedom versus the public interest has led to the evolution of estate planning from consisting of the simple process of making a Will to the more complex goals of avoiding paying too much tax and having social legislation sometimes inappropriately applied to one’s estate. Because governments are continually changing legislation in an effort to win this battle, even the best estate plans can be rendered obsolete shortly after they are set up. Worse still, even if an estate plan meets all current legal requirements Judges, especially in British Columbia seem very willing to use their power to overturn a plan deemed morally offensive to a particular Judge. As a result, planning with certainty is difficult, but it can still be worthwhile in most cases.
A second general area of estate planning is concerned with setting up legal structures, when you are younger and in good health, which will govern your legal and personal affairs for that period at the end of your life when, through mental or physical incapacity, you might be unable to take care of yourself and make crucial decisions regarding your life and death. Powers of Attorney, Representative Agreements and “Living Wills” are the common tools used in these cases and will be discussed in more detail below.
There are three general steps that you, your family (sometimes) and your lawyer will need to go through when you engage in estate planning.
- You must analyze your assets and beneficiaries. What assets do you have? How are they held? Are they in your name only, in joint tenancy with one or more others, in a company, in a trust? Are your assets subject to claims from others, for example, a spouse or a business partner? Who are your beneficiaries? What age are they? Is there a minor? What is their state of mental, physical and emotional competency?
- You must identify your succession objectives. Who do you want the beneficiary(ies) to be? How and when do you want them to receive their share of your estate? Do you want them to control their share when they get it or do you want a trustee to control their share? Is saving tax important to you? Is tax saving important to your beneficiaries? You may have to make a trade-off between tax savings goals and other goals such as those of keeping things simple, keeping fees down and ensuring your beneficiaries are actually better off in non-monetary ways as a result of your tax savings strategies.
- Implementation. Your lawyer can then review with you the range of estate planning legal tools that you might put into place (some of which are discussed in this paper) based on your unique circumstances. You may want to consult other professionals such as your accountant, financial planner and insurance professional to take full advantage of a range of perspectives and skills. Your lawyer can then ensure that the necessary legal documentation is prepared for your signatures.
- There are many legal tools you can use to achieve estate planning goals. They are best coordinated and used in combination. Some of the most common vehicles include the use of a Will; holding property in Joint Tenancy; Gifting; the use of Corporations; the use of Trusts; Insurance Policies; naming beneficiaries in your registered investments (RSP’s, RRIF’s …etc.;) and Life Insurance Policies; Powers of Attorney, non-legally binding “Living Wills” and Representative Agreements. The choice of which tool(s) to use and how to use them will be very specific to each individual. This paper is meant to be of introductory use only and is not to be relied on. Everyone’s situation is different. Legislation is constantly changing.
If you die without making a proper Will you are considered to have died “intestate”. In that case the Estate Administration Act of BC sets out a formula that determines who gets your estate. If you die with no children and a spouse survives you, your spouse gets everything. If you predecease your spouse and leave children, they get everything in equal shares. If you die leaving a spouse and one child, your spouse gets the first $65,000.00 of your estate and the balance is divided 50/50 between your spouse and your child. If you die leaving a spouse and more than one child, your spouse gets the first $65,000.00 and then 1/3 of the balance of your estate and your children share the remaining 2/3 in equal shares. If you die leaving no spouse and no children your parents get your estate and if your parents predecease you, your siblings get your estate. You can have more than one “spouse” share your estate by way of the Estate Administration Act. The term “spouse” in the Act includes a common law spouse. So, for example, you could be separated but not divorced from your legally married spouse and have a common law spouse at the same time. The term “Children” in the Act includes adult children. The Estate Administration Act provides for other situations and, ultimately, if you die leaving no relatives, or they can’t be found, the provincial and federal governments get your estate.
A Will is a legal document, the provisions of which take effect upon one’s death. A Will deals primarily with you controlling the succession of the property in your “estate” following your death. Not all of your property will necessarily form part of your “estate”. Your Will has no bearing over property held by you in joint tenancy (unless the other joint tenant dies first or a successful constructive trust claim can be made); or held by you as a trustee; or property held by you which is subject to a claim by a third party (a spouse for example by way of matrimonial law).
A Will must be prepared in strict compliance with the requirements of the Wills Act, a British Columbia statute, failing which all or part of the Will can be invalid and of no effect. Homemade Wills or Wills prepared by non-lawyers are often the subject of litigation mostly because making a Will involves much more than simply filling out a standard form. A Will should be made taking into consideration a testator’s overall financial and legal situation including consideration of their matrimonial history, what assets they have and in what legal way they own the assets and what their goals are. Even in relatively simple situations, because there is absolutely no room for technical error when making a Will, litigation can arise. For example a simple failure to properly sign and have a Will witnessed in a technically correct manner can result in the Will being invalid.
As a presumption you can leave your estate to whomever you want by way of your Will. However, if you do not make “adequate provision” in your Will for your spouse and your children, the Wills Variation Act of BC will enable a Court, to in effect, rewrite your Will after you die to ensure that those persons are properly taken care of.
The history of the Wills Variation Act and the Courts’ interpretation of it over time is quite interesting. As noted above, the Act was originally enacted many decades ago, in an earlier form, to ensure that dependent wives and children were not left destitute when an uncaring husband/father died leaving his estate by way of his Will to someone else. The “dependency” of the spouse and children was originally the reason for the Act but, particularly in British Columbia, Courts have tended to interpret the Act in order to ensure that a spouse or a child receives a portion of a deceased’s estate, even if no dependency is proved. Pursuant to the Act, a judge has a great deal of discretion to decide how much of your estate should be left to your spouse and/or child. So for example, in British Columbia it is not uncommon for the Will of a person who dies in her 80’s to be successfully attacked by her estranged “child” who is in her 60’s when that child is, at the date of the parent’s death, independently wealthy, perhaps wealthier than the parent. This “forced heirship” can sometimes be avoided, if desired, by the careful use of other estate planning vehicles.
A Will also can do more than simply deal with property succession. Your Will determines who your executor will be (“executrix” if female). An executor is a person who, or institution that will be charged with ensuring your estate is distributed according to your wishes. It is a position of great responsibility. Your executor should be someone you have absolute trust in. The most common choices for executors are family members, usually a spouse or adult children. If you do not have a spouse or child or think there might be conflict at the time of your estate distribution you might appoint a professional executor such as a lawyer, accountant, or a trust company. Trust companies can be a good choice for an executor in the case where a trust set up in your Will might be in existence for a long time. People within the trust company may come and go but you can be relatively certain the trust will continue to be professionally managed.
Your Will can also determine who will be the guardian of your dependant children. If you die without a Will, leaving young children with no surviving parent (for example, both parents might die in the same accident) the Public Trustee might take control of your estate and your child might spend the rest of his or her childhood with a government appointed foster parent. You can ensure that your child is brought up by a person or persons of your choosing by your appointment of a guardian and trustee in your Will. It is a good idea to name at least one alternate executor and one or more alternate guardians in your Will in the event that your first choices are unwilling or unable to assume, or continue to assume these roles.
Making a Will is important. You may not want your estate to be distributed according to government legislation. You may not want the government to take a large share of your estate in taxes. You may want part or all of your estate to be held in trust for a minor or incompetent person. You may want to be the person who chooses your executor and your child’s guardian. Dying without a Will can lead to delay, increased legal costs, anguish and potential conflict amongst your surviving family.
Statistics show that less than 50% of adults in BC have a Will. Many of the Wills that do exist have been prepared in a way that undermines a person’s actual intentions or have not been prepared in strict compliance with the requirements of the Wills Act and could become the subject of very expensive estate litigation. Your Will is probably the most significant legal document you will ever sign. Given that it may be the primary legal vehicle to transfer your life savings to your family and friends on your death it is worth the time and effort to make a Will and to make it properly. (Did you hear the one about a man who did not want to make a Will because he wanted his death to be “a real tragedy”?)
A Will is one vehicle of transferring ownership of your assets to your family and friends upon your death. Another way to accomplish this is by holding ownership of an asset as a “Joint Tenant” with one or more other persons.
Many people do not realize that when they hold a bank account or title to their property as a joint tenant, they are engaged in estate planning. While holding assets this way presumes that the joint owners own equal shares in these assets, it also means that if one of the owners of the account or land dies, a legal presumption has been created that the surviving joint tenant will automatically become the full owner of the account or land, regardless of what the deceased’s Will states, and sometimes regardless of what the deceased actually intended.
There are some very good reasons to hold an asset in joint tenancy. If it is your intention that on your death you want the asset to become fully owned by the other joint tenant(s) then holding title as joint tenants is the most efficient and cost effective way to do this. On your death there will be an instant transfer of ownership. The asset will not form part of your “estate” and as a result the asset will not be subject to a time-consuming probate procedure (six months to a year and often much longer). In a famous (among lawyers) legal case from England, the probate process lasted over one hundred years! In the end, nothing remained of the original multimillion dollar estate. It all went to legal fees. Your heirs can also avoid government probate fees (at maximum thresholds 1.4% of the gross value of your estate), potential inheritance taxes, the claims of creditors, legal fees (they can add up) and executor fees (up to 5% of the gross value of your estate). It is not uncommon for a person to die leaving hundreds of thousands of dollars in assets to a loved one, without the necessity to have their estate probated because they owned all of their major assets as a joint tenant.
This does not mean that if you own all of your assets in joint tenancy, with your spouse for example, that you should not have a Will. The surviving spouse should have a Will. What happens if you and your spouse die in a situation where it is not known who died first? The Survivorship and Presumption of Death Act states that it will be the youngest who will be presumed to survive the oldest. Then, all jointly held assets will transfer to the youngest, and be transferred to the youngest’s beneficiaries by way of their Will. If you both die leaving behind one or more children and your Wills ultimately leave your entire estates to your children then you need not worry. But if you have no children, or your children die in the same accident as you and your spouse, you may want to ensure that both Wills provide for this “common disaster” scenario should the oldest not wish his or her entire estate to be left to the youngest’s side of the family.
There are serious problems that holding assets in joint tenancy can create. Legal presumptions are created which you may not desire. They sometimes can be overcome, often after a prolonged and expensive legal battle that can break up your family. Jointly owned land can not be sold unless all owners agree. Jointly held bank accounts can be accessed by any of the account holders. Jointly held assets are subject to the creditors of any of the owners. There are many potential income tax consequences. Estate litigation can arise, for example, when an elderly parent’s care giving child holds the parent’s bank accounts in joint tenancy “for convenience” during the parent’s lifetime, and on that parent’s death the other children find that the care giving child has become the legal owner of all of the money in a parent’s bank accounts because they were a joint account holder. The consideration of whether to hold an asset as a joint tenant is not always as simple as it may seem.
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The use of a Will and/or holding assets in Joint Tenancy are vehicles to transfer the ownership of your property after your death. Making a gift to take effect while you are alive is another estate planning vehicle.
A “gift” can be defined as a voluntary transfer of property to another made without an expectation of anything in return. There are two essential requirements to make a gift legally enforceable. There must be evidence of the donor’s (gift giver’s) intention to make a gift and there must be a physical act of some sort to give effect to the intention. So for example, you could give a piece of jewelry to your daughter and make it legally binding by saying, “I am giving you this as a gift.” and then handing it over to her.
The giving of gifts is common. Unfortunately it is also common for disputes to arise after a donor dies about his or her true intention. In order to avoid any later challenge to the legality of the gift, it is best to create a written record at the time the gift is made by the use of a legal document such as a gift deed or declaration. (This is generally the case for all important legal transactions. Have you heard the saying: “An oral contract isn’t worth the paper it is printed on.”? A bit cynical, perhaps. Unfortunately lawyers are constantly involved with agreements that are in dispute, often because the terms of the agreement are in dispute.)
When a gift is made it is presumed to be final and that all rights of ownership will vest absolutely in the beneficiary. However it may be that the donor wishes to retain some form of care and control over the gift. One example would be the case of a parent giving property to his or her minor child. The creation of a Trust, (see below) is one way to do this. The parent retains control of the property but must exercise that control in the best interest of the child. On the happening of an event, say the death of the parent or the child turning 19, full ownership rights can pass to the child by way of the trust document.
In addition to the joy of giving, there are also tax advantages to gifting. The term, “Planned Giving” is often used to describe making gifts to a charity, foundation or similar organization while you are alive or by way of your Will. If the organization is recognized by Canada Revenue Agency(CRA, formerly called Canada Customs and Revenue Agency and before that Revenue Canada), it can issue you or your estate with a receipt for a charitable tax credit that could amount to immediate tax savings to you while you are alive.
Generally speaking, by making gifts to your family, friends or favourite charity(ies) to take effect before you die you may be able to reduce the overall tax burden to your estate. When you sell an asset, or gift it, capital gains tax might arise. When you die, any asset you have will be deemed, by CRA to have been sold at its fair market value in the year of your death. If all of your assets make capital gains in one year your estate may pay more tax (more of the gain would be taxed in a higher tax bracket) than if you spread the gains over a number of years (paying tax in lower tax brackets) before your death by way of the timely gifting of your assets.
Finally, gifting your assets before you die is one way to meet a fundamental estate planning goal which is to minimize the size of your estate. By doing so you may be able to avoid probate fees, possible future inheritance tax, executor fees, legal fees and potential creditors and ensure that more of your hard earned assets go to your beneficiaries.
Additionally, you get the enjoyment of seeing the beneficial results of your gift while you are still alive.
A trust arises when a person (known as the settlor) transfers legal title to property to another person (known as the trustee) with instructions as to how the property is to be used for the benefit of a named person (known as the beneficiary). The settlor and the trustee can be the same person. A trust can be created while you are alive (called a “living trust” or “inter vivos” trust) or on your death (called a “testamentary trust”). The essence of the trust relationship is that the trustee has control of the property while the beneficiary is the real owner. In contrast, by making an outright gift or creating a joint tenancy, the gift giver loses control immediately.
Trusts are widely used in many areas of law with estate planning being just one such area. Trusts are used to obtain the goals of centralized asset ownership and management, flexibility in determining the method of future wealth distribution, enhanced asset protection from third-party claims including potential creditor, matrimonial and inheritance actions, increased confidentiality, to minimize and defer tax and potential avoidance of probate procedure and government probate fees.
For estate planning purposes trusts are used most frequently to provide for and to protect beneficiaries, who, by reason of inexperience, mental illness or incapacity are unable to manage property themselves.
The most common form of trust people will encounter is a “testamentary trust” in a Will which states that property a parent wishes to give to a minor child will be held in trust for that child until he or she turns age 19 (or older).
A testamentary spousal trust is also common. A parent (settlor) may want to ensure that their child ultimately inherits their estate but they want their spouse to be taken care of during his or her lifetime. The settlor would leave assets in the care of a trustee for the benefit of their spouse during their spouse’s lifetime and on the spouse’s death the asset would pass to the child.
A testamentary “spousal trust” can be used to defer income taxes on a settlor’s estate, as this trust, like the spouse, can take advantage of “spousal rollover” provisions in the Income Tax Act. That act allows capital gains taxes otherwise payable by a deceased’s estate to be deferred until the surviving spouse dies or sells the assets.
A spousal trust might be used to reduce ongoing annual income tax payable by the surviving spouse during his or her lifetime by effectively “splitting” income received from a deceased’s estate with income the spouse might generate from their own investments. So if, for example, $100,000.00 a year in income is earned from investments by a surviving spouse and half of those investments are in a spousal trust, then two lower tax bracket tax payers exist ($50,000.00 and $50,000.00), thus saving thousands of dollars a year in income taxes that might be payable on income earned in a higher tax bracket. The same annual tax saving goals might be achieved for one’s surviving children by setting up similar testamentary trusts for them.
“Inter vivos” trusts take effect while the settlor is alive. As discussed earlier, the Wills Variation Act can be used by spouses and children to,in effect, rewrite a Will, if a Court finds that they have not been “adequately” provided for. However, that Act only can affect assets of an “estate”; not the previously transferred assets into a trust. Inter vivos trusts are often used in the case of second or subsequent marriages. This often occurs where there is a disparity in wealth between the about-to-be-wed spouses, and there are children from a previous relationship of the wealthier spouse. The new wealthier spouse may wish to ensure a large portion of their estate goes to their children from a previous marriage. By creating an inter vivos trust for the benefit of their children before their new marriage, their assets are insulated from claims under the Family Relations Act and the Wills Variation Act by their intended spouse.
Trusts vary in degrees of complexity and cost. A child’s educational trust is one of the simplest trusts to create and can provide great benefits. A parent would create an investment account, with the parent being the trustee, for the benefit of their child to be used for the child’s educational purposes. The asset is protected from the parent’s creditors. Any future income and capital gains arising from the asset is taxed in the hands of the child who would normally be in a lower tax bracket. This needs to be set up very carefully to avoid “anti-avoidance” provisions in the Income Tax Act that might thwart such a trust. One popular version of an educational trust is a Registered Educational Savings Plan (RESP) having its own set of CRA rules.
Estate freezes are aimed at reducing the tax liability that arises on death by technically (on paper only) reducing the size of a taxpayer’s estate long before they die. There is a presumption that the asset being transferred will have a significant growth in taxable value between the time of the freeze and the time of the death of the taxpayer.
An estate freeze is done by allocating taxable asset value growth from the time the freeze begins to the taxpayer’s children and/or grandchildren. Without an estate freeze, the value growth would normally be subject to capital gains taxes on the death of the person setting up the freeze. Therefore, an estate freeze is a mechanism to potentially defer some of the tax that would otherwise be payable on a taxpayer’s death until the death of his or her children and/or grandchildren (or the later sale of the shares by your children and/or grandchildren).
An estate freeze can take place in many ways and can concern different types of assets. It is commonly used in the case of a family run business. A person who owns shares in a family run business, anticipates that one or more of the person’s children or grandchildren will continue to run the business or at least hold the shares long after the person’s death. That person wants to defer capital gains taxes as long a reasonably possible. They transfer some or all of their growth (common) shares of their business, from the date of the freeze, to the children/grandchildren, who, presumably will die long after the parent/grandparent (or at least not sell those shares for a long time). Tax payable on the capital gain from the date of the freeze can therefore be deferred until the shares are sold by the child/grandchild or until the year of their death.
Estate freezes and “family trusts” are often used in conjunction. A family trust is a trust where a parent is usually the settlor and the trustee. The children/grandchildren are the beneficiaries. When the estate freeze is set up the family trust will end up owning the appreciating asset (usually new common shares). The parent who wishes to freeze the value of his or her shares can continue to control his or her business by being the trustee of the family trust.
An example of a very simple estate freeze would be a case where a parent owns a family recreational property that is expected to remain in the family, long after the death of the parent. The property is also expected to continue to rise significantly in value. The parent might transfer the title of a family recreational property to their children (or to themselves in trust for the children) and pay the capital gains tax, if any, as a result of the transfer (perhaps at a relatively low tax bracket). The capital gain that then arises after the time of the transfer and tax that would otherwise be payable can be deferred until the children ultimately sell the property.
What has been discussed above has been concerned with planning based on the assumption that one would die at a relatively predictable age, hopefully at the end of a long and rewarding life! Life insurance is usually purchased to offset the risk that one might die unexpectedly at a relatively young age leaving dependants. It would provide financial support for children and/or a surviving spouse. Other common uses of life insurance include:
You want to ensure that your children from your current marriage or former marriage are provided for by you. You might be worried that after your death your spouse may remarry, may squander your estate or may not have much loyalty to your children from a previous marriage. Setting up a trust or using other legal tools to ensure they are provided for on your death may prove too costly or uncertain. So you name your children as beneficiaries or partial beneficiaries of one or more of your life insurance policies.
To pay off your debts including your mortgage, taxes, and probate fees on your death so, for example certain assets will not need to be sold (a family cottage for example) to cover these costs.
To provide cash so your business partner can afford to pay your estate for your share of the business.
Here are three common types of life insurance:
Term life insurance
This pays a specific death benefit for a particular period of coverage (the Term). It provides the highest benefit for the lowest premium. The price of the insurance increases each time the term expires because as you age the likelihood of you dying increases. The policy may or may not guarantee you the right to renew at the end of the term.
Whole life insurance
This is permanent insurance that combines insurance for your whole lifetime with a savings/investment component. Premiums and coverage are constant and guaranteed throughout your life but the amount of insurance coverage is less than that provided by Term life insurance.
Universal life insurance
This combines the “term” element of Term insurance with the investment/savings element of Whole life insurance. A Universal life policy is marketed as one that provides the flexibility to increase or decrease the amount of insurance and savings/investment components as your situation changes.
Generally speaking it is best not to name your estate as the beneficiary of your life insurance policy. By naming an individual or individuals as your beneficiary(ies)the death benefit is protected from your potential creditors, probate and administrative fees are avoided, and payment is made quickly (probate can take six months to many years if the estate is contested). You should also name alternate beneficiaries in the event that your first choice beneficiary predeceases you. As well, you should name a trustee of your life insurance proceeds if your beneficiary is a minor.
The other fundamental types of personal insurance you should consider getting are disability and critical illness insurance to provide you with income while alive and disabled or seriously ill.
Any kind of insurance should only be purchased if it is needed and you should spend considerable time consulting with a professional insurance agent determining whether you need insurance and if you do, what type and how much insurance is appropriate in your particular circumstances. Your insurance professional may also be able to advise you of other uses and benefits of insurance.
POWERS OF ATTORNEY, LIVING WILLS & REPRESENTATIVE AGREEMENTS
A Power of Attorney, a Living Will and a Representative Agreement are legal documents which can allow you to have some measure of control over your financial and personal affairs should you become temporarily or permanently mentally or physically incapacitated, usually toward the end of your life.
A Power of Attorney is a document by which you give full legal power to another, or others, to deal with your financial affairs. It can take effect immediately or it can state that its use is conditional upon an event occurring (for example upon mental incapacity). The person giving the power is called the “Donor” and the person given the power is called an “Attorney”. A Power of Attorney is often prepared at the same time one prepares a Will. It is a very powerful document and can be used to buy and sell property, manage all bank accounts, pensions, …etc.. To avoid the possibility of the document being abused it is often provided to a lawyer to be held on the trust condition that it not be released unless requested by the Donor or on condition that proof of incapacity be presented to the lawyer. A Power of Attorney can be revoked at any time as long as the Donor still has mental capacity.
Should you become mentally or physically incompetent to deal with your financial affairs and you do not have a Power of Attorney a costly court application might be necessary. Sometimes people, not necessarily those you would choose, including the Public Trustee may fight over who should be your Trustee.
A “Living Will” is a written statement by you to your family, friends and Doctors about whether you wish to be kept alive by active life support measures (machines) or just want be kept comfortable until you pass away in the event that you are terminally ill or physically alive but your brain no longer functions. It has no legal binding effect but can be of great moral assistance to those who must make that very difficult decision.
Representative Agreements are all encompassing documents that would allow you, in effect, to set up a private bureaucracy to ensure that you are taken care of during your subsequent incapacity in the way you want. Standard provisions in the Agreement would deal with such things as where you will live, who you will live with, your health care and all routine financial and legal matters. The extent to which you can set up the details of how you and your financial affairs will be taken care of will only be limited to your creativity. Representative Agreement were to replace Powers of Attorney and Living Wills and do much more but all documents continue to be effective mainly because Representative Agreements are expensive and really only of value in situations where a person has no family they can trust to look after them in the case of mental or physical infirmity. They can also be expensive to administer when ultimately used.