Tag: Power of attorney

Estate planning to estate do-ing

Because you don’t have 9 lives to figure it out

Experienced estate lawyers will tell you that estate planning provides people with comfort, confidence and certainty. For some however, the mere mention of it causes anxiety.

Perhaps this comes out of a superstitious belief that by contemplating your mortality, you might somehow bring it about. Or maybe it’s the anticipation of having to deal with tough decisions that may have no clear right or wrong answer, where logic and emotion must be delicately balanced.

Whatever the reasons, it is an area where people tend to procrastinate, and that’s risky both for you and for the people you care about. By instead tackling the process with a constructive mindset, you are able to de-stress it, and can turn it into a positive, reaffirming journey.

A people perspective

Estate planning is more than simply ‘who gets what’. It gives you a chance to think about who you are, what matters to you, and most importantly who matters to you. That means taking care of yourself, both now and in the future, and taking care of the people closest to you: now, in future and when you are no longer around.

Viewed through the principal lens of benefiting people and only secondarily as a distribution of things, estate planning emerges from the cold shadow of legality into the warmth of personal relationships.

As you may expect, this adds complexity to the decision-making, often calling for input from professionals beyond a lawyer alone. Commonly these will be financial professionals, but also may include guidance of a spiritual nature. The key is to have such advice coordinated so that the people are kept in focus, and the ultimate plan is legally sound.

The estate planning process

At least part of the concern for those anxious about estate planning is the prospect of dealing with paperwork. Undeniably, material must be reviewed and documents eventually executed. Along the way, however, there is much to ponder, to appreciate and to learn from. To turn a phrase from Marshall McLuhan – who famously said that the medium is message – here, the method is the message.

The most effective estate planning involves you as a full participant. Just as your lawyer is an expert in the law, you are the expert … in you. Working cohesively, you will be able to uncover what is relevant, gauge significance, prioritize among issues, and explore options.

But the starting point is back with that candid look at where you are now, before you can decide where you are going. In a sense it is that simple, while at the same time not easy. It takes effort.

What’s up (with the) docs?

In due course, that effort leads to the creation of documents that make it clear who is to benefit from your planning, and who has responsibility to carry it out.

Most people are aware that a Will allows you to direct who is to receive your estate property: your beneficiaries – and who is to manage or ‘execute’ the instructions in the Will: your executor. The formal term for an executor varies across provinces, but the duty remains the same. This person is required to manage the property as a trustee who is legally bound to protect the best interests of your beneficiaries.

And while you’re still around to enjoy that property yourself, you can name someone as your attorney – meaning a decision-maker – to manage it for you if and when you can’t. Similarly, you can name someone to make personal decisions if you are incapacitated, like where you live, when you receive health care, or how you give medical consent. Again, the formal terms vary by province. The key point is that your decision to prepare these documents does not affect your ability to decide for yourself, but rather shares authority with someone you trust.

Shortcuts, and short circuits

Once you are confident that the intended plan fits your needs, your attention may turn to cost savings. But take care that you don’t short-circuit that plan in pursuit of a financial shortcut.

The classic cost savings target is the probate fee or tax, with each province once again having its own terminology, processes and costs. It ranges from a small filing fee of a few hundred dollars, up to about 1.5% of the value of estate assets.

Familiar techniques to reduce probate include keeping beneficiary designations on life insurance and registered plans current, holding property in joint ownership with right of survivorship, and making gifts to people now rather than later. While each of these may result in reduced probate tax, they are not without their own costs and potential drawbacks, so again professional advice is critical.

Getting it all going

The best of intentions can be the worst of planning if you don’t get started. That’s what’s meant by the title of this article, going from estate planning to estate do-ing. Make the commitment to consider and record what you have, who you care about, and how the two intermix.

While you are not required to use a lawyer, it’s the best way to be confident that you are operating with current legal information, guided by a professional who has the necessary expertise and experience. If you don’t know a lawyer, check with the referral service of the provincial law society regulating lawyers, or get a recommendation from someone whose professional opinion you respect.

Once underway, be sure that your lawyer is aware of all your professional advisors so their input can be included where and when appropriate. As well, to the extent that you are comfortable with it, it can be helpful to communicate with your family and others you care about that you are actively working on your estate planning. The decisions are yours to make, but their perspectives can help you determine if your plan will (or should) carry out as initially intended, or if adjustments may make sense.

Finally, once you have put the planning into place through the decisions and documents, you need to monitor it. That runs along three lines:

    • A prudent course is to schedule a follow-up with your lawyer no more than five years down the road to check whether changes in the law or other events outside your control might affect your plan.
    • As well, having made an inventory of your property, you will now have a better sense of the implications if there are changes to it.
    • Lastly, and most importantly, if there are changes in the people or your relationships with them, it may be time to revisit things to be sure you are taking best care of you and the people who matter most to you.

Powers of attorney

Your capacity, care and continuity

When it comes to estate planning, most people are familiar with Wills, which are used to distribute property after death. But it’s equally important to address lifetime decision-making, should your mental capacity be diminished by an accident, illness or age-related decline. This complements your Will by taking care of yourself first, before you take care of others.

The naming of substitute decision-makers has been a recommended part of estate planning for decades, though rules vary somewhat among provinces. In this article, we’ll outline common principles and planning considerations, using the traditional term “power of attorney” (POA) which is still used in many provinces.

Readers are encouraged to consult an estate planning lawyer in their province to learn the appropriate terminology, and to discuss how the principles in this article apply in their situation.

Legal effect

Powers of attorney allow you to share decision-making power over your property and/or personal affairs with someone else. It is important to note that by doing so, you DO NOT lose your own ability to make those decisions. As the giver of the power, you are known as the grantor, donor or principal.

The person to whom you grant the power is called your attorney. Though that term can be a synonym for lawyer (mostly in American law), in this usage it simply means decision-maker. Other terms include representative, proxy, designate or agent. Whatever the official term, understand that you are giving that person significant legal powers, so your decision to grant a POA and your choice of attorney must be carefully thought through.

A brief history

The law of power of attorney has been around for centuries, with its origins in the judge-made common law. Those early POAs dealt exclusively with property (and related financial matters), and historically would cease to be effective if the person granting the power became mentally incapable of making such decisions him/herself.

Provincial legislation now supersedes most common law rules, including the option for an attorney to continue to act after a grantor’s incapacity, in which case it is known as a continuing, enduring or durable power of attorney.

These modern POAs still deal with property decisions, and may also extend to authority over the individual personally. Written authority is required, with some provinces allowing a single document for both purposes, and others requiring a separate document for each role, even if the same attorney is named for both purposes. For distinction in this article, we’ll call these the POA-Property and POA-Personal.

Capacity to execute the document

For POA-Property, the grantor must generally be at least age of majority, which is 18 or 19 according to province. As well, the grantor must know the extent and approximate value of his/her property, any legal or moral obligations to dependants, the nature of the power that is being granted, and the potential for its misuse or abuse.

For POA-Personal, some provinces allow the grantor to be as young as 16. Generally, the grantor must understand the kind of decisions covered, which may include medical consent, general health care, nutrition, shelter, clothing, hygiene and safety. In addition, some provinces require an acknowledgement that the grantor believes that the named attorney has a genuine concern for the individual’s personal care.

Coming into force

Each province has rules on the format, content and witnessing requirements for the execution of POAs.

It is possible to require that a POA-Property only takes effect once the grantor is incapacitated, but that would require a mental assessment of some sort, which could delay its use when time may be critical. Alternatively, a common practice is to have it effective on execution, with the stated intention on its face that it is expected to be used on a later incapacity. The document should remain in safekeeping, possibly in the lawyer’s office vault, which provides a degree of protection against its premature use.

A POA-Personal attorney will normally only act when the grantor is incapable, or otherwise unable to respond.

Scope of authority

A POA-Property attorney can generally do anything that the grantor can do, with the exception of making a Will or doing things that would alter testamentary/estate distributions. For example, the attorney can’t change the beneficiary of an RRSP, though some provinces allow continuation of a past designation to a new RRSP or RRIF.

A grantor may place restrictions on an attorney’s powers if desired, such as narrowing from all property to some specific property or stating a time limit. Instructions may also be given to an attorney, though this is most often in general terms. Absent that, an attorney’s first responsibility is to take care of the interests of the grantor, then any dependants, and possibly provide gifts, loans or donations, so long as it reflects the grantor’s habitual practice.

For a POA-Personal attorney, there may be a separate ‘living will’ or advance care directive stating the grantor’s wishes about medical treatment. This may not be legally binding (depending on province), but the attorney must consider any wishes expressed by the grantor while capable, whether in a POA, oral or in writing elsewhere.

Legal duties on incapacity

Acting as an attorney is a big responsibility, especially once a grantor becomes incapacitated. At all times, but especially at this point, an attorney must act diligently and in good faith. The attorney must explain decisions to the grantor and involve the grantor in making those decisions to the extent possible. As well, the attorney should consult with family, friends and caregivers as appropriate, and assist the grantor in maintaining contact with them.

For a POA-Personal attorney, there is a particular requirement to help the grantor live as independently as the person may wish. And when treatment or intervention is needed, it should be the least restrictive course of action.

Who to name as attorney, and how

An attorney must be mentally capable, and generally at least age of majority, though some provinces allow a younger age for a POA-Personal attorney. An attending health care worker or someone providing paid personal care services cannot usually be a POA-Personal attorney, unless it is a family member.

The same person could be attorney under both POAs, as is common with spouses, or separate attorneys could be named for each POA role. There could be a primary attorney, with an alternate if that first-named person cannot serve or continue in the role. Two or more people may be concurrent attorneys for either POA, though it can get logistically and emotionally challenging the more who are involved. If it is intended that multiple attorneys be able to act independently of one another, the POA document must state this as “joint-and-several”. Otherwise every decision, instruction and permission, for example signing a cheque, must involve all attorneys “jointly”.

In evaluating candidates, a grantor should think about the length and depth of their relationship, as the attorney will be making intimate decisions as if in the grantor’s shoes. Knowledge and capability with financial matters are important, as well as practically whether they can devote the time and are physically near enough to do the job. And don’t forget organizational and communication skills, diplomacy, confidentiality and general trustworthiness – all of which might be soft skills in other situations, but are at the core of what is needed in this sensitive role.

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APPENDIX – Provincial reference material

Below are provincial government websites or resources referenced from those sites. Underlined text in the PDF version of this article are hyperlinks. Full text of the links are on the next page. This is intended as a starting point for resources in each province. Consult an estate planning lawyer in the province for further information.

British Columbia

Alberta

Saskatchewan

Manitoba

Ontario

Québec

New Brunswick

Nova Scotia

Prince Edward Island

Newfoundland and Labrador

Personal directive to be followed irrespective of grantor’s best interests

At issue

For a few decades now, we have witnessed the introduction and modernization of laws dealing with powers of attorney and personal health directives (or similar terms according to the particular province).

These documents enable a person (as grantor) to give instructions to be carried out and wishes to be respected after that grantor has lost his or her own capacity to express those views personally.  They generally also allow the naming of one or more individuals who have the legal responsibility to act under these documents.

Still, this area of law is in its infancy, with case law just starting to emerge to interpret the very challenging issues that can give rise to conflict.  In particular, just how far will the law go to enforce a grantor’s earlier instructions that may arguably not be in the grantor’s best interests at a later date when mental capacity has been lost?

Sweiss v. Alberta Health Services, 2009 ABQB 691

After Samir Sweiss suffered severe irreversible brain damage, his treating physician put in place a do-not-rescuscitate order (DNR).  The effect would be to discontinue mechanical ventilation support, which conflicted with Mr. Sweiss’ previously signed declaration requiring that “all Islamic law be followed” in his care.  After a lengthy consideration of the law and facts, the judge upheld the DNR.

It was determined that the signed declaration did not meet the requirements of being a personal directive under Alberta law.  However, it was also noted that “in cases where a personal directive is found to exist, it would appear that, pursuant to the authority in the Personal Directives Act, the wishes, beliefs and values of the patient “must” be followed.” [Judge’s own emphasis]

B.M. v. K.S., 2015 NSSC 105 [March 2, 2015]

J.L. was 94 years old, living alone in her home with the assistance of full-time paid caregivers, 7 days/week and 24 hours/day.  The annual in-home care cost was between $240,000 and $250,000, with about $493,000 available in savings.

J.L.’s son B.M. was her delegate under a personal directive.  J.L.’s friend K.S. and BMO Trust Company were co-attorneys under a general power of attorney.  Evidence showed that J.L. had become mentally incapable, activating both the personal directive and power of attorney.

The personal directive included a specific provision with respect to “Home care”, which read: “I express the wish that my delegate (in conjunction with my attorney) ensure that I am able to live in my house for the remainder of my life, with appropriate care arranged, including the assistance of a full-time caregiver to allow me to remain in my house, no matter what my physical or mental condition might be.”

B.M. testified his belief that his mother “spends her days with very little stimulation or interaction with others, and that she spends her time watching television, “disconnected” from what she is watching.”  In that light, he submitted to the court that it would be in J.L.’s best interest to be relocated to a local nursing home.  K.S. opposed moving J.L., and offered a contrary view that she was content with her home life.

The direction for the delegate and attorneys to work together was viewed by the judge as being J.L.’s acknowledgement of the financial constraints to remaining in the house.  At present, there were sufficient financial resources to support the home care.

The judge held that “the greatest weight is to be given to Mrs. L.’ Personal Directive”, and specifically commented that it was not for the court to determine whether or not that would fulfill her best interests.  It was ordered that J.L. would “remain in her home under the present caregiving and financial arrangements, for so long as it remains possible.”

Practice points

  1. Given the serious implications of these documents, legal advice can be beneficial, even though generally they may be executed without a lawyer’s assistance.
  2. Naming more than one person in these key decision-making roles can provide a useful check.
  3. As the B.M. v. K.S. case makes clear, the grantor’s own words can hold great sway.  While this may provide solace to a grantor, it also emphasizes the need for clear language that properly reflects the informed intentions of the grantor.