Importance of Wills and Power of Attorney Deepa

Importance of Wills and Power of Attorney Deepa Mattoo

TYPE OF WILLS • The Last Will and Testament which takes effect upon death • Living Wills o Powers of Attorney for Property o Powers of Attorney for Personal Care

Powers of Attorney, Living Wills and Advance Care Directives A Power of Attorney is a legal document that names a specific person to act on your behalf in case you become incapable of making your own decisions.

There are three kinds of Power of Attorney: 1. A Continuing Power of Attorney for Property covers your financial affairs and allows the person you name to act for you even if you become mentally incapable. 2. A Power of Attorney for Personal Care covers your personal decisions, such as housing and health care.

There are three kinds of Power of Attorney: • A non-continuing Power of Attorney for Property covers your financial affairs but can’t be used if you become mentally incapable. You might give this Power of Attorney, for example, if you need someone to look after your financial transactions while you’re away from home for an extended period of time.

“living will” The expression “living will” is sometimes used to refer to a document in which you write down what you want to happen if you become ill and can’t communicate your wishes about treatment. It is quite common, for example, for people to write a “living will” saying that they do not want to be kept alive on artificial life supports if they have no hope of recovery. The term “advance directive” is also frequently used to refer to such a document. Some people also use the phrase “proxy directive” to describe a document that combines a Power of Attorney and a “living will”.

Registration of Power of Attorney or “living will” with the government • Do I have to? No. There is no requirement that these documents be registered. The government does not keep a registry. It makes sense, however, to make sure that the people in your life who need to know about these documents – especially your attorney – have a copy or know where to get one if needed.

Power of Attorney or “living will” effective outside of Ontario or not • It depends on the law of the particular place where you want to use the Power of Attorney. If you are going to move or be out of the province for some time you may want to check with a local lawyer to see if you need to make new documents.

Do I have to use a lawyer to make my Powers of Attorney or ”living will? • The law does not require you to use a lawyer’s services, but you may wish to consider this, especially if your affairs are complicated.

Where can I get Power of Attorney and “living will” forms? • Your lawyer can draft a form for you. • Alternatively, some bookstores sell forms and there also some forms on the Internet.

WHAT IF YOU DIE WITHOUT A WILL? RULES OF INHERITANCE

If I die without a Will, does the Government automatically distribute my property according to their rules? • • • NO! The persons who inherits will have to go to a lawyer and the lawyer will have to go to the Court to make an application for an Executor to be named and that Executor will then transfer the property according to the Inheritance Rules A lot of information has to be provided including a list of assets and value of the estate – fees based on value* Suggested legal fees 3% on first $100, 000 on your estate, minimum $1000; if estate between $100, 000 - $400, 000 then 1. 5% over Suggested legal fees to make an uncomplicated Will - $200 person

PROBATE FEES • • • These are the fees the Court charges to validate your will and authorize the Executor to administer your estate The actual probate fees charges are different in each province Fees are based on the fair market value of your estate at the time of death Probate fees are quite high in Ontario: First 50 K of assets, $5 for every 1 K of assets or less = ~0. 5% After 50 K, the rate is tripled to $15 for every 1 K or less = ~1. 5% YOUR EXECUTOR Must be over 18 years old What an executor does? • • • Makes funeral arrangements Finds where bank accounts are Makes a list of things owned by you at death Cancels credit cards Files final taxes

Choosing an Executor • An Executor should be someone you trust • Knows you and will know and understand your wishes • Is able to deal with stress • Is capable and competent • Can deal with family members fairly • Knows where to look for help and support • Person who is not swayed by easily

WHAT I MUST REMEMBER WHEN MAKING A WILL • Succession Law Reform Act: o Support of minor children (entitled to if not adequately provided for in your will) o Other dependents (including parents, illegitimate children, spouse) • Family Law Act: o A spouse can elect for an equal division of matrimonial property

WHEN SHOULD MY WILL CHANGE? • Marriage and re-marriage • Separation – does not revoke a Will but if you no longer want your spouse to benefit it should be changed • Divorce – does not revoke your Will automatically but if your spouse remains the law assumes that you would no longer want your spouse to benefit • Acquired considerably more property • Upon the birth of new children or when children become the age of majority

OTHER THINGS TO CONSIDER WHEN MAKING WILL • Do I want my children’s spouses to inherit? • What should happen if there is a common disaster affecting you and your spouse together? • If I had property in another country could this Will be valid with regards to property located elsewhere?

WHAT COULD I DO TO PROTECT MYSELF FROM DEATH TAXES (PROBATE FEES)? • Transfer property prior to death in the form of a gift slowly • Transfer property in trust and keep a life interest • Hold property as joint tenants (unless spouse) • Name beneficiaries (life insurance, RRSP’s) • Buy life insurance to cover probate fees • Before doing your Will you should meet with a Financial Advisor!

Does the government also provide a “Will Kit “ or similar forms that I can use to make my Last Will and Testament? • No. It is difficult to make one form that would adequately cover the many diverse situations that people may want to reflect in their Wills and provide all the information that people need to plan properly. However, there are forms available on the Internet or at bookstores that people with very simple situations may find useful.

POWER OF ATTORNEY FOR PERSONAL CARE • There is no special form required. Power of Attorney for Personal Care (“POAPC”) • But to be valid, the document must: o • Name one or more persons to act as your attorney for personal care in the event that you become mentally incapable. o • Be signed by you and dated. o • Be signed by two witnesses who saw you sign the document.

People who cannot be witnesses: • your spouse, partner, child, or someone you treat as a child • your attorney or your attorney’s spouse or partner, anyone under the age of 18, anyone who has a “Guardian of Property” (someone appointed by a court because they are mentally incapable of managing their property), or anyone who has a “Guardian of Person” (someone appointed by a court to make personal care decisions for them because they are not mentally capable of making their own

Note: A person is your “spouse” if: you are married to them, you have lived together common-law for at least a year, or you have had a child together A person of either sex is your “partner” if you have shared a place to live with them for at least a year and you have a close personal relationship of primary importance to both of you.

Who can make a Power of Attorney for Personal Care? • Anyone who is 16 years of age or older and who is mentally capable of making a POAPC can do so. o 49. What level of mental capacity is needed to make a valid POAPC? • In this situation mental capacity means that you: • understand whether the person you name as your attorney is truly concerned with your wellbeing, and • • • understand that you may need this person

What types of decisions will my attorney for personal care be allowed to make? • Unless you restrict your attorney’s powers he or she will be able to make almost any decision of a personal nature that you could make yourself if you were capable, such as decisions about medical treatment, housing, food, hygiene, clothing and safety.

. Who can I appoint as my attorney for personal care? • The person you appoint must be at least 16 years of age and mentally capable. You can name someone who lives outside Ontario. You cannot name someone who you pay to provide services to you unless that person is a relative. • Give your choice very careful consideration. If the need arises, your attorney will be making profoundly important decisions about your health and quality of life.

Can I name more than one person as my attorney? • Yes. If you do this they will have to agree on every decision that is made for you unless you write in your power of attorney that they can act “jointly and severally”. If you include this phrase, either one of your attorneys will be able to make decisions on their own if the other is unavailable for some reason. But think carefully before naming multiple attorneys – it can make things more complicated if difficult decisions need to be made quickly.

What Happens When Beneficiaries are Minors? • Testamentary guardian is someone who manages a minor’s property and financial interests. • Minors cannot legally own property. They cannot be the registered owner of property; it must be held in trust for them. A minor becomes entitled to property (1) from a will that fails to set out a trust (2) by intestacy of deceased (3) named beneficiary of life insurance policy What Happens When Money/Assets Are Left To A Minor? • Money is paid into court until minor is 18. If the minor needs money, application is made to Office of the Children’s Lawyer, who has the authority to manage child’s money • Individual brings application to be appointed guardian of property of minor. If court finds individual is able to properly manage property of the child, will name him guardian of the property, and provide details of responsibilities. Notice given to OCL (who can challenge the application) • Subject to account periodically for the balance, transactions, investments on account etc.

Testamentary Custodian • Testamentary custodian is someone charged with the authority of having custody of children. – HOWEVER courts can overrule the appointment in keeping with the best interests of the child. – Person with custody/guardianship can appoint one or more persons to have custody of child/guardians of property by will. – Both parents have the right to appoint custodian of the child. However, if appointer parent dies before surviving parent, the appointment is overridden by surviving parent. – If both parents pass away and their appointments conflict, neither are valid. – The appointee must consent. • The appointment only valid for 90 days after it becomes effective (death of parent). The court must ratify the appointment to come into effect permanently. – The appointed person can apply to the court formal appointment to be permanent guardian of property /custodian of child

Planning for Beneficiaries with Disabilities • It is important to consider any beneficiaries with disabilities when creating your estate plan • Some important points to think about are: – The age of the beneficiary, which is important in determining how long the beneficiary may require support – The type of disability which the beneficiary and the potential needs they will have in the future – The beneficiary’s past and current sources of disability-related income (incl ODSP)

Planning for Beneficiaries with Disabilities • More important points to consider: – The beneficiary’s future goals such as education – The ability of the beneficiary to manage money and property – Whethere any other people who will be also making a provision for the person in their wills

What Happens When Beneficiary with a Disability Receives a Gift from a Will? • It must be determined whether the beneficiary is able to manage their own assets and property, in other words, whether they have the capacity • There are 3 principles to consider when thinking about capacity – First, an individual assessment is required to determine he impact of a mental disability on a person’s capabilities. While a specific diagnosis (such as schizophrenia, down syndrome, or brain injury) can provide guidance as to the impact of the disability, a thorough assessment is required to determine capacity (or incapacity). A capacity assessor conducts the assessment and makes a finding.

Capacity • Capacity (con’t) – Capacity and incapacity refer an individual’s ability to make decisions in a specific areas of their life • A person may be capable of managing spending money on a day to day basis but incapable of managing investment property – There is a presumption that adults are capable, however this can be proved as false in a court • Presumption of capacity for financial decision making at age 18 • Presumption of capacity for person decision making at age 16

Trusts for Beneficiaries with Disabilities • Where there are significant limitations on the ability of a beneficiary to manage money or property, a trust is a means of ensuring that these assets will be managed • Trust are also important in order to maintain the beneficiary’s eligibility to receive ODSP. The estate plan can be designed in a way to allow ODSP to continue while providing additional security for the beneficiary with a disability

Choosing a Trustee • Choosing a trustee when your beneficiary has a disability – Where the beneficiary will not be capable to manage assets and property that are befitted to them, a trustee will be necessary to administer – Trustees should have a genuine personal interest in and respect for the beneficiary – Where there is a beneficiary with a significant disability, it is advisable to consider choosing two trustees who can administer the trust together – Where the beneficiary is young, consideration should be given to providing that the trustees can appoint further trustees from the beneficiary’s own generation at a later time

Capacity Issues – Creating a Will • Can Individuals with Disabilities Create Wills? A valid will requires – Formal requirements as per legislation PLUS – Testamentary Capacity • Age • Mental state

Can Individuals with Disabilities Create Wills? • TEST of testamentary capacity – T must have a “sound disposing mind”, which requires: – An appreciation of the nature of the will and its effects • Does he understand what the will is and what effects it will have when he dies? – An appreciation of one’s assets and liabilities • Does he know what he owns and the value of it? – An appreciation of any and all possible legal and moral claims that might be made against the estate • Is he aware of his moral obligations? – The absence of mental illness that might in some way influence the terms of the will

Sources: Advance Care Planning: The glossary project Health Canada report published in August 2006 seeks to bring clarity to the concepts and terms used in advance care planning across Canada. Advance Care Planning Guide An online resource published by the Government of Ontario. Continuing Power of Attorney for Property (A pamphlet published by Community Legal Education Ontario (CLEO). Power of Attorney for Personal Care Brochure produced by St. Joseph's Health Care, London. Powers of Attorney and Living Wills: Some questions and answers A publication produced by the Office of the Public Guardian and Trustee. Power of Attorney for Personal Care Brochure produced by the London Health Sciences Centre, London Regional Cancer Program. Estate Planning for Beneficiaries with Disabilities in Ontario: Inheritances, Trusts and the. Ontario disability Support A publication produced by ARCH Disability Law