A digital world: how the pandemic has changed estate planning

From the way we work to the way we socialize, the global pandemic has resulted in seismic shifts across many walks of life. The traditional relationship between advisor and client has been no exception, with the emergence of new solutions that address both changing client preferences and the need easier for clients to complete transactions while complying with social-distancing measures.

The resulting trend toward electronic transactions has been a welcome consequence of the pandemic, limiting the need for face-to-face contact while ensuring that in-person meetings are not spent on time-consuming paperwork. In this article, we take a look at some of the most interesting changes resulting from the pandemic and consider what it means for the advisor-client relationship in future.

1. The rise of remote witnessing

Prior to the pandemic, most legal documents could only be executed in the physical presence of a person authorized to act as a witness. With COVID-19 making such arrangements difficult, most Canadian provinces have introduced emergency measures allowing for the formal signing of wills and powers of attorney to be witnessed remotely. While the arrangements vary from province to province, in most instances the signing of documents can now be witnessed by videoconference.

The majority of these new measures are temporary and intended to be in place only until the end of the pandemic. However, several provinces have confirmed plans to make these arrangements permanent, with British Columbia going as far as introducing electronic wills, which exist digitally and have electronic signatures.

2. Photographic evidence of policy changes

While not directly due to the pandemic, the Saskatchewan Court recently heard an interesting case that once again brought the growing use of technology to the fore. The case centred around Barry Golay, who purchased a $250,000 life insurance policy in 2011.¹ He originally named four policy beneficiaries: the children of three of his first cousins, Bonnie, Wendy, and Leanne. In 2016, Barry signed a will naming his cousin Leanne's husband, Larry Kontek, as executor and his brother, Mitchell, as an alternate. He also signed a power of attorney and appointed his cousin Wendy.

In October 2017, Barry was admitted to hospital with colon cancer, and died soon after. Wendy had visited him frequently in hospital and they discussed Barry's desired funeral arrangements. On one of those visits she noticed handwritten notes sitting next to his bed. She assumed they covered his funeral arrangements and, since Barry was asleep, she took photos of the notes, thinking she could refer to them when making funeral arrangements. The notes weren't formally signed or dated, and after the visit Wendy didn’t see them again.

When Barry died, Wendy provided the photos to Mitchell and Larry. The notes confirmed the appointed attorney under the existing power of attorney document, and also confirmed most of the distribution of Barry's estate under his will. It also outlined changes to his beneficiary designation for his life insurance policy, adding his cousin's children from the Bloudoff family, as well as Mitchell's son. In total, including the cousins originally listed, there were now 10 beneficiaries. This change altered the amount of the insurance pay out the originally named beneficiaries would receive.

While determining whether the photo of the notes could be relied upon, the court accepted that although the original could no longer be found, the notes had existed, that Barry wrote the notes in his own handwriting, and that the photograph was an accurate depiction as of the date that Wendy took the photograph. The case presents an interesting set of circumstances and issues never considered by a court before, and provides a glimpse into the legal view on incidences when camera phones are used to record notes that could have an impact on estate planning and beneficiary designations.

3. The impact of house prices on estate planning

For many people, their home is the most valuable asset in their estate, and across Canada, house values have steadily increased over the last several years – particularly during the COVID-19 pandemic. The result is that the value of an estate may end up being much greater at the time of the testator’s death than when the testator prepared and signed the last will and testament. This, in turn, may lead to unintended consequences with certain beneficiaries receiving more than the testator had in mind when the will was signed. One such recent case concerned the estate of Eleena Murray.² In 2013, and at the age of 95, Murray drew up a new will. That year, her Kitsilano, B.C. home had been valued at $1,007,900, with the total value of her estate at that time estimated to be about $1.2 million. In her 2013 Will, Ms. Murray left a number of legacies to her extended family, totalling $440,000.00. The remainder of her estate was left to one beneficiary: the BC Society for the Prevention of Cruelty to Animals (BC SPA).

When Murray died in 2017, her home was assessed at $1,978,700. In only four short years, the value of her home had increased by almost $1 million, and the gift to the BC SPCA, as sole residuary beneficiary, was now worth about $1.4 million. Although there was evidence to suggest that Murray did not intend for the BC SPCA to receive such a sizable gift, the court wouldn’t speculate on what Murray would’ve done with the remainder of her estate had she seen a professional to prepare a new will. This case highlights the importance of revisiting wills every few years to ensure the estate is distributed as the testator originally planned.

Necessity is often described as the mother of invention, and the last two years have shown how the finance industry has worked hard to keep advisor-client relationships running smoothly despite the pandemic. At Manulife Private Wealth, we believe these new technological advances can benefit everyone, and should be welcomed. However, we also believe in the importance of human interaction when making such important—but often complex— decisions concerning estate planning. When selecting a financial professional for you and your family, it's important to look for a trusted and experienced company you connect with to discuss your future and finances.