Why You Need a Will and Powers of Attorney Arranging Your Affairs Responsibly

Why You Need a Will and Powers of Attorney Arranging Your Affairs Responsibly

November 18, 2019
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Studies and surveys indicate that more than fifty percent (50%) of Canadian adults do not have a Will, and about seventy percent (70%) of Canadian adults do not have a signed Power of Attorney.

I believe that number would drop significantly if people truly understood the significant consequences of dying or becoming incapacitated without these legal documents.

Why Is A Will Important?

Let us start with a situation when a person dies in Ontario without a Will, what will happen to your Estate and family members?

Under the law that governs this situation (which is called an “intestacy”), your Estate assets will be frozen until the courts appoint someone to administer your Estate, known as an “Estate Trustee Without a Will”. This involves making a formal application to the court, and always involves a certain amount of delay that is inherent in the process. This in turn could cause financial hardship for your family.

Eventually, your Estate will be distributed by the Estate Trustee according to provincial intestacy laws, which vary by jurisdiction. Typically, they provide a set dollar-amount to a surviving married spouse (in Ontario it is the first $200,000.00), with the balance divided in line with a graduated formula amongst your spouse and each of your biological or adopted children.

If you have no surviving spouse or children, then your assets would go to your next-of-kin, in a prescribed order that is set out by legislation. In contrast, common-law-spouses and step-children may not be recognized by legislation as having any entitlement at all.

In these various scenarios, the Estate Trustee has very little discretion in how to distribute your assets. This means that – without a Will that expressly directs the distribution of your Estate in the most tax- advantageous manner – you will have missed many opportunities to reduce and or eliminate taxes both before and after your death. Similarly, without a Will any preferences you have concerning the guardianship of your minor children or dependents may not be recognized. Payment to minor children would be held in trust by the courts, but only until the child reaches the age of majority. At this point, the child would have a legal right to the money to spend as he/she wishes – a thought that many parents find disconcerting and even abhorrent!

If you do not have a Will, these are just a few of the ways that your family and next-of-kin could be subject to delays, additional expenses, angst and even potential conflict amongst themselves at an already stressful and emotional time. In the event of disputes that cannot be resolved, this may ultimately result in litigation which will possibly cost the Estate significant legal fees which will reduce the amount of money available to be paid out to those parties entitled to share in the assets of the Estate.

Why Do I Need Power Of Attorney?

Like Wills, a Power of Attorney is an often-overlooked legal document that you can have drafted, so as to dictate the manner in which various matters will be dealt with in the event you become mentally and/or physically incapacitated (for example due to an accident or illness) and therefore unable to make decisions on your own; or maybe become incapacitated to a degree which prevents you from carrying out certain actions you are to complete.

There Are Three Kinds Of Power Of Attorney In Ontario:

  1. General Power of Attorney for Property (to manage your finances and property, usually on a short-term or temporary basis):
  2. Continuing Power of Attorney for Property (for managing your property on an ongoing basis); and,
  3. Power of Attorney for Personal Care (for appointing someone to make a decision about your current and future medical and personal care).

 

If you have the appropriate Power of Attorney document in place, then you can choose who will act on your behalf. If you do not, then someone has to apply to the court to be approved to act as your Power of Attorney. This appointment may be contested by your family and/or other interested parties. This may result in potential expensive litigation, and the court appointing a Power of Attorney for you. This means you may be leaving important decisions in the hands of family or others who are not fully familiar with your situation or your wishes, and more importantly may not want to take on the responsibility of handling your affairs.

Even worse: Without written guidance in place as to your preferences and expectations, your family’s ability to arrange for your appropriate medical, shelter, nutrition and clothing needs might be impaired, to the point where costly and time-consuming litigation may have to be resorted to. This is especially undesirable in cases where you have become suddenly and unexpectedly incapacitated and need prompt and proper costly medical care.

What You Should Do

People often resist turning their minds to drafting a Will for many reasons: they consider themselves “too young”, or feel that they are not wealthy enough to need to bother with having a Will drawn up, are lazy or are superstitious that having one drawn up will actually hasten their demise. The need for a Power of Attorney is often dismissed for similar reasons. However, the truth is that it is never too early, and an Estate is never too modestly-sized, to make a Will unnecessary or premature. As long as you own real estate, investments (regardless of size), vehicles, a business, or any valuable personal property, then you have an Estate that should be properly dealt with by way of a Will. Likewise, there is never a downside to formally choosing a trusted family member or friend
who will deal with your assets and arrange for your medical and other personal needs in the manner that you wish, in the (hopefully unlikely) event that you become mentally or physically incapable of doing so.

I would be happy to meet with you to prepare a Will and Powers of Attorney making life simpler and less costly for those you leave behind. Give our office a phone call.