My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant and a partner with a National Accounting Firm in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog are written solely in my personal capacity and cannot be attributed to the accounting firm with which I am affiliated. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned.

Monday, January 20, 2014

New Will Provisions for the 21st Century – Reproductive Assets

In my wildest dreams, I would never have imagined ten years ago I would be posting a blog on how you address reproductive assets in your will. Yet today, I have a guest post by Katy Basi on this topic. This is Katy’s third post in this series on New Will Provisions for the 21st Century.

Her first post in the series dealt with how you handle RESPs in your will and her second post discussed will provisions related to Digital Assets.

I thank Katy for this very informative and enlightening series. I have received excellent feedback on all of Katy’s posts.

Does your Will address your Reproductive Assets?

By Katy Basi

“My what?” you may ask. Do you have sperm/ova/embryos in a clinic somewhere? Have you banked cord blood for your child? (Okay, cord blood isn’t really a “reproductive asset” but I’m throwing it in as a two for one promotion). If so, what are your intentions with respect to these “assets” in the event of your death, and does your will tell your executor what these intentions are? If reproductive technologies were involved in creating your children or grandchildren, does your will adequately define “child” and “issue”?

Medical technology is able to leap tall buildings in a single bound these days, and estates law is hard pressed to keep up. For example, the drafting of most wills implicitly assumes that your ability to have children dies when you do, but medical reality tells a different story. If your DNA is banked in any form, your ability to reproduce may long outlive you, potentially creating “after-born children”. (In one of the few instances of the Canadian legal system addressing these issues, your written consent is required in certain cases for the use of your reproductive assets (see the Assisted Human Reproduction Act)). 

You may be able to have your estates lawyer deal with the possibility of after-born children in drafting your will, or you may have no reproductive assets banked and therefore not be very worried about this issue. If you fall in the latter camp, consider whether part or all of your estate may be inherited by your grandchildren. For example, if your son Clark predeceases you having his own children, should a grandchild conceived by your daughter-in-law after your death, using Clark’s banked sperm, be included or excluded from your estate?

Regardless of the after-born children consideration, what should happen to any sperm/ova/embryos banked in a clinic upon the death of the donor? The contract signed with the clinic in question may provide an answer, e.g. the donor may have given the clinic permission to donate or destruct these materials upon his or her death. Otherwise, does the residuary beneficiary inherit these materials? Is an embryo even capable of being inherited, i.e. is it property? Ideally these issues should be dealt with before the death of the donor, while his or her intentions can still be ascertained.

Clearly we are just starting to address this somewhat murky area of estates law. In my practice, reproductive assets currently come into play in three additional areas:

1) Parents have banked cord blood for their child. I often include a provision in the parents’ wills (i) directing the trustee of their child’s trust to continue paying storage fees for the cord blood until the child reaches a certain age, and (ii) instructing the trustee to transfer ownership of the cord blood to the child once he or she attains that age. We do not yet know the limitations of cord blood, and it may end up being the most valuable asset in your estate if a member of your family has certain medical issues (yes, potentially more powerful than a locomotive….)

2) A couple with fertility issues has found a surrogate or gestational carrier. There is usually a surrogacy contract in this scenario, and the contract often requires the couple to have properly executed wills providing for the child that may result from the surrogacy. This requirement can lead to last minute, faster than a speeding bullet wills, which may not be as carefully drafted as they need to be under these circumstances (see #3 below). Expert advice is strongly recommended!

3) A client has a child (or is planning to) where the child is not biologically related to the client, and the child has not yet been adopted by the client. Careful drafting of the client’s will is required to ensure that the child will inherit regardless of the status of any planned adoption. Often a will refers to “my child” generically, without naming the child, either because the child is not yet born, or the client intends to have additional children and does not want to revise his/her will immediately upon the birth of the next child. If not specifically defined in the will, “my child” refers to a person’s child by blood or adoption. If a client has not yet adopted a child, and is not related by blood to the child (e.g. a donor was used), a broader definition of “child” needs to be included in the client’s will. Conversely, if a client has donated reproductive material (e.g. sperm or eggs), his or her will should be carefully drafted to exclude any children related to the client only by virtue of this donation. (While other provinces have legislation clarifying that sperm and egg donors are not parents, Ontario currently does not.)

Clients who have been involved with reproductive technologies have often been through significant stress and, in some cases, heartbreak. Reproductive technologies are incredibly costly, so credit cards are maxed out and wills and estate planning are very low down the priority list. Once the time comes to address your estate plan, alert your lawyer to these issues if they pertain to you – protect that child you worked so hard for!

Katy Basi is a barrister and solicitor with her own practice, focusing on wills, trusts, estate planning, estate administration and income tax law. Katy practiced income tax law for many years with a large Toronto law firm, and therefore considers the income tax and probate tax implications of her clients' decisions. Please feel free to contact her directly at (905) 237-9299, or by email at katy@katybasi.com. More articles by Katy can be found at her website, katybasi.com.

The above blog post is for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Readers are advised to seek specific legal advice regarding any specific legal issues.

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