o Who will look after your personal and financial affairs if you are unable to do so?

o Who is responsible for the administration of your estate?

o Who is to receive your wealth either before or after you die?

Estate planning does not necessarily refer to what happens after you die. It includes arrangements you make during your lifetime to: establish a gifting program for children and other beneficiaries so that your proposed beneficiaries receive assistance before you die; and arrange what happens if you become incapable.

Estate planning involves more than just executing a Will. It includes the following tools:

Power of Attorney for Property: Most individuals prepare a Power of Attorney for Property (PAP) to take effect if they become incapable. As individuals are living longer and often are unable to make their own decisions due to dementia or Alzheimer’s or other health reasons, this should be a priority. Without a PAP, there may be a need to have a court finding of incapacity and the appointment of someone to act as the guardian of your property. A PAP permits you to select the person or persons to make decisions on your behalf.

Power of Attorney for Personal Care: Individuals who may be unable to make their own personal care decisions also execute a Power of Attorney granting decision-making authority to an individual. This would include decisions regarding where they live should they no longer be able to care for themselves. Powers of Attorney for Personal Care (PAPC) are sometimes called “Living Wills.”

Many individuals execute a PAPC simply to make their wishes known regarding whether or not their life should be artificially sustained or whether heroic measures should be taken. There has been considerable litigation lately on the meaning of the phrase “artificially prolonging life” and the term “heroic measures.” These instructions need to be carefully drafted.

A PAPC is most often used to arrange care for an individual who may become unable to take care of themselves. You need to make your wishes known regarding whether you want to be in a retirement home or remain in your own home with assistance from family members or third-party caregivers. These issues should be discussed with family before making decisions.

This area of the law, however, is becoming very complex and much litigation has ensued from the granting of a Power of Attorney to an inappropriate individual. It is also common for family disputes to arise regarding the authority granted in Powers of Attorney. These issues ought to be discussed with family and great care taken in selecting the individual to act on your behalf.

Alter Ego Trusts and Joint Partner Trusts: These vehicles permit an individual or a couple to transfer their property to a trust while still alive and to provide for the disposition of property if he or she becomes incapacitated or upon death. These trusts have special tax status and can be amended. These tools, which combine the benefits of Powers of Attorney and Wills, are often expensive and are not often used in Ontario. They do, however, have the advantage of avoiding probate tax. Another advantage is privacy. A Will which has to be admitted to probate becomes public record, whereas trusts of this nature are private.

Gifting Programs: Many individuals want to benefit their children or other beneficiaries while they are alive. This is admirable if you have enough money. However, you should take care not to impoverish yourself. It is not uncommon to see elderly individuals run out of money for their own care if they live long. Gifting programs for significant amounts should always be discussed with your financial advisors, accountants and/or lawyers.

Charitable Pledges: Most individuals have favourite charities. Tell your attorney if you have any pledges that are outstanding. As well, ensure your attorney knows to either discharge or continue your charitable pledges if you become incapacitated.
Life Insurance and Disability Insurance: You should have a list of all forms of your life, accident and disability insurance, and all the benefits to which you are entitled. If your estate is insufficient to take care of your family, consider increasing your life insurance. Additionally, you should have some form of disability insurance if you become unable to work. Finally, if you are responsible for part or all of the care of an aging parent, consider increasing your life insurance to discharge these obligations.

Funeral and Burial Arrangements: Unless you specify details as to where you wish to be buried, your estate trustee will have the authority to decide on your funeral and burial arrangements. You should let your family and your estate trustee know your wishes.

Organ and Tissue Donation: The Province of Ontario has forms for organ donation. Make your wishes known to family members and carry your donor card with you. You can register your consent online or in person. Even if you sign a donor card, it is more efficient to also register your consent as this information will then be registered with the appropriate health network.

Loyalty and Rewards Programs: Many individuals collect points and other loyalty rewards. These can either be transferred during your life or after death or donated to charity. Your estate trustee or attorney should be aware of these.

Passwords: It is often impossible to remember all one’s personal and business user names and passwords. Give some thought to maintaining a list of user names and passwords or obtaining a program to automatically record them.

Will: The Will is the basic tool. It appoints your estate trustee and provides for the disposition of most or all of your property.

Multiple Wills: To reduce probate tax, many individuals prepare two Wills. The first Will disposes of property that requires a Certificate of Appointment of Estate Trustee before the property can be dealt with. This typically involves real estate, bank accounts and investment assets. The second Will disposes of property that does not require probate. This typically involves shares in private companies. The theory behind multiple Wills is that only one Will gets admitted to probate, and probate tax is paid only on assets that flow through that Will. Preparing and administering multiple Wills is obviously more expensive. So unless there are significant assets for which probate is not required, multiple Wills should be avoided.

Jointly Held Property: Jointly held property is property owned by two persons with right of survivorship. On the death of one, the interest in the property automatically devolves to the survivor. The Will does not operate on jointly held property.

Many individuals use jointly held property improperly to avoid probate tax. Probate tax is a tax levied by the province on all property passing through a Will when it is admitted to probate. Probate tax is currently 0.005 per cent for the first $50,000 of the estate and 0.015 per cent for the value of the estate in excess of $50,000. To avoid this, individuals often use jointly held property but rely on the surviving joint tenant to dispose of the property in accordance with wishes expressed to them. Estate litigation is caused frequently when an individual who acquires jointly owned property keeps it rather than distributes it in accordance with an individual’s wishes.

Designation of Beneficiaries: Certain specific types of assets can be disposed without the formalities and expense of a Will. They can be designated by use of a form specifically provided to dispose of these assets. These forms include the following: life insurance proceeds, pension benefits, RRSPs, RRIFs, RHOSPs, Tax Free Savings Accounts, interests in a deferred profit sharing plan, and a myriad of other benefits usually provided by an employer.

When deciding how to leave other property, make sure you have taken into account all the other property that will pass according to the above designations. You should also check to make sure that these designations are current. Finally, if you want any of the proceeds above held in trust (as would be the case if distributing these to children), you need to address this specifically, and not assume your Will applies to these special assets.

Appointment of Guardianship by Will: A person who is entitled to custody of a child may appoint by Will one or more persons to have custody of the child after his or her death. Many individuals use Wills to express who they wish to have custody of minor children. However, this appointment is effective only if the person making the Will is the only person entitled to custody, or who is the guardian of the property of the child, or if there is a common disaster and both parents die at the same time, where two or more persons are appointed to have custody. These appointments are only valid until 90 days after the appointment as the Court has the ultimate jurisdiction as to who is entitled to custody of a child or guardianship of the property of a child.

(Rocchi is a partner in Miller Thomson law firm’s estate planning, trusts and succession law group and pension group.)