With a will, power of attorney and personal care directive, you’re ready for anything
Nobody like to spend much time thinking about death or becoming disabled. But the consequences of putting planning off until it’s too late can be severe for you and your family.
Let’s start by looking at wills. As most people are aware, the primary purpose of a will is to distribute your assets according to your wishes when you die. Promises you make verbally or even in writing may not be effective without a will; you may wish to leave money to charity or specific items to people you love. A will ensures all of this happens without unnecessary costs and aggravation for your beneficiaries.
When you work with a professional, making a will also becomes an opportunity to do some important tax and succession planning. Spouses will usually want to ensure title to their home, and possibly other properties, is registered as a joint tenancy, so that when one spouse dies the other automatically becomes the sole owner. Often it also makes sense to name each other as beneficiaries for registered accounts like RSPs and TFSAs, again to ensure a simple, tax-optimized transfer when one partner dies.
In other cases, for example second marriages where the intention is to leave each spouse’s assets to their own children rather than to the other spouse, tenancy in common may be more appropriate. Business owners can set up structures to make succession smoother and more predictable.
You’ll also want to consider who will get what and how your plans will play out among members of your family. You may have good reasons for leaving one child more than another; taking the time to think through your plans and make some notes on them with a professional can help avoid upset when the time comes.
The point is to arrange your affairs so your estate pays the least amount of tax, your wishes are respected, and conflicts between your beneficiaries are avoided; some advance planning can make a huge difference.
Power of Attorney
This document allows someone else to sign your name for all kinds of purposes, in case you’re not able to do your banking, pay bills or sell your property when you need to. It’s not just for when you’re infirm – a power of attorney can be used if you’re on an extended vacation or otherwise unavailable. It can be restricted to allow the person you name as attorney to do only certain things, for example manage a single bank account. It can also be restricted to certain time frames, for example while you are out of the country.
People usually make powers of attorneys so that, if they become incapable of managing their affairs – through illness, mental incompetence or otherwise – someone else can do it for them. The critical element is this: once you are no longer mentally competent you cannot make a power of attorney. It’s too late, and your family with either have to manage without one or someone will have to apply to the province for guardianship on your behalf, a more complicated and expensive process than having a power of attorney.
Personal Care Directive
These are similar to powers of attorney, but instead of dealing with your property they come into effect when you are unable to make decisions about your own healthcare. They too can be restricted to certain time frames and activities, and just like powers of attorney, cannot be made once you are no longer mentally competent. The personal care directive allows you to name someone who will be empowered to make decisions on your behalf, and to specifically set out what kinds of decisions you would like them to make. Many people have strong opinions as to what kind of care they’d prefer – everything from living accommodations to end-of-life decisions. A personal care directive is crucial if you want to ensure your wishes are respected and that someone you trust is able to make decisions on your behalf. It’s common, for example, for people to include ‘no heroic measures’ in the event of terminal illness – if you don’t have this document, prepared well in advance while you’re still capable of deciding your care, your wishes may not be respected by medical professionals and institutions.
Having the right paperwork provides tremendous peace of mind that your wishes will be respected if you ever become incapable of making decisions, or if you die. Many people find the process a relief – we may not know how the future will unfold, but we can plan for it nevertheless. If you’d like to be sure you and your family are prepared, I’d be pleased to help you put your personal plans together.
This is not legal advice. Readers are encouraged to speak to a legal professional before making a will, power of attorney or personal care directive. These are important legal documents with serious implications.