Enduring Powers of Attorney and Personal Directives

An Enduring power of attorney and a personal directive deal with the instance where you are not able to make certain decisions but your wishes under your Will have not yet taken effect. Neither of these are to be confused with supported decision making, which can be a precursor to these documents taking effect as in supported decision making you will make the decisions in conjunction with another person or you are granting another person access to your information. Enduring Powers of Attorney and Personal Directives, in contrast, allow someone else to completely step into your shoes and are part of a comprehensive estate plan that should provide you with comfort that your affairs will be handled in an appropriate way if you are not able to handle them yourself.

Power of Attorney

A power of attorney is a legal document that gives one person (or persons) the power to make financial and legal decisions on another person’s behalf. Any competent adult or financial institution can be appointed power of attorney. Essentially this means someone else will be able to deal with your property in the exact same manner as you would and you should consider carefully who the most appropriate person may be. Many people find an independent party with experience, such as a trust company, is a good option.

The donor is the person who is creating the power of attorney document and is contemplating for the possibility that someone else will need to manage his or her financial and legal affairs. The attorney is the person or institution who will be making the decisions if the document comes into effect.

A person must have capacity when they sign a power of attorney, and the document will take effect upon the occurrence of a specified event within the document. A Power of attorney can take effect immediately, when the donor becomes mentally incapacitated or any other event specifically named in the document. For a determination of mental incapacity, it is recommended that the written opinion of two independent medical practitioners is used. Powers of Attorney that take effect upon the occurrence of a future event, such as incapacity, are referred to as ‘springing’ powers of attorney. Powers of Attorney that do not end unless they are specifically revoked or the donor passes, are referred to as ‘enduring’ powers of attorney. For estate planning purposes, we recommend a document that is both ‘springing’ and ‘enduring’.

An enduring power of attorney should not be confused with a general power of attorney, which may be used for a specific transaction such as the sale of real estate while a person is away. A general power of attorney is likely not sufficient for estate planning purposes.

Once invoked, a power of attorney can be revoked provided the donor has capacity to do so. Generally the same test for determining incapacity will be used to determine if a donor has regained capacity.

Personal Directive/Representation Agreement

A personal directive or representation agreement, occasionally referred to as a living will, is a legal written document that gives another person the authority to make non-financial decisions on your behalf such as health care treatments and living accommodations. Many people choose a family member or close friend as delicate decisions are made under a personal directive. Unlike a power of attorney, though, a personal directive only takes effect upon you ceasing to have the capacity to make a decision. Like a power of attorney, you can specify who will determine the point when you cease to have capacity. It is recommended that you use the determination of two independent medical practitioners. The same mechanism will be used to determine if you have regained your capacity, thereby ceasing the delegation of decision making authority.

The maker is the person who is creating the personal directive document and is contemplating the possibility that someone else will need to make personal decisions on his or her behalf. The agent is the person who will be make the decisions if the document comes into effect.

A personal directive can be drafted broadly, which basically gives full discretion to the agent to make the decisions the agent deems best in the situation or a personal directive can include information and instructions.

A personal directive can be registered with the Personal Directives Registry which is operated by the Public Guardian and Trustees Office, if a person so wishes.

Conflicts 

It is foreseeable that your personal directive and enduring power of attorney may come into conflict. For example, if your personal directive states that you would like to live at home as long as possible you may eventually need a live-in nurse to be hired. Your attorney is the one responsible for determining how much can be spent on a nurse and if it is financially feasible. Therefore, it may be prudent to include language appointing a third party tie-breaker (in case your agent and attorney are different people) or state which person’s decisions will take precedence in the event of conflict.

Liability

Both an attorney under a Power of Attorney and an agent under a Personal Directive must act in the best interest of the person for whom they are making decisions and must treat all information acquired in confidence. If an attorney or agent does not act in a person’s best interest, or it can be shown they acted in bad faith, they may be held liable for their actions.

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Enduring Powers of Attorney and Personal Directives

The Effect of a New Relationship or Divorce on Your Will

In February 2012, the Wills and Succession Act was passed in Alberta and with it came a reversal of the previous law in relation to new marriages and divorce. Prior to February 2012, a new marriage would automatically revoke an existing will unless that will had been in contemplation of the marriage. Under current law, the existing will is still valid even if it does not include your new spouse and your new spouse will have to make a claim to your estate under the matrimonial property rules.

Previously, a divorce did not affect a person’s will and there were several instances in Alberta where an estranged former spouse inherited an entire estate because the deceased had not thought to change his or her will. Now, however, gifts given to a former spouse or adult interdependent partner as well as the appointment of a former spouse as executor will be automatically revoked. If you wish to leave a gift to a former spouse or have that former spouse act as executor, your will should state that you are divorced from that person but will wish to leave a gift or have them act.

A separation does not affect a will. Therefore, if a person passes away while separated, but not divorced, any gifts to that person may still be valid.

Lastly, a divorce or new marriage does not affect beneficiary designations on RRSPs, RRIFs, life insurance or other investments. If you are experiencing a change in your relationship status, it is important to revisit all of your estate documents.

The Effect of a New Relationship or Divorce on Your Will

Which Assets Will be Covered by My Will and the Importance of Knowing.

It has come to our attention that quite a few Albertans are misinformed about which assets their Will will actually cover. The general rule is that everything you own will be covered by your will except for assets that you own as joint tenants with another person (such as your home if you and your spouse are joint tenants on title or joint bank accounts) or assets with a designated beneficiary such as RRSPs or life insurance unless you have named your estate as the beneficiary.

There are subtle nuances to this though. The first being that technically your will can override an existing beneficiary designation. The most recently dated document will be the one that governs so you can bring assets back into the scope of your will by making a new beneficiary designation in the prescribed form.  However, the due diligence of the institution holding the asset (such as the life insurance company or bank where the RRSP is held) ends with what they have on record so they will pay out the proceeds to the name on record and it is up to the more recently named beneficiary to bring an action to get the asset back.

The second nuance is that not all property that is owned by more than one person is owned as joint tenants.  Many pieces of property are held as tenants in common, which means that each owner owns a specified portion of the property and that specified portion will form parr of their estate.  It is especially important for you to know how your property is held if there is more than one name on title so that you know if it is covered by your will or not.

In my past practise as a lawyer, I often ran into the instance where business associates had their names on title as joint tenants.  Because of the right of survivorship in joint tenants, if one person passed away, the other would automatically receive the entire property which was often not the intention as they would prefer their families receive the property, not the business associate.  It is very important to know how your property is held.

Which Assets Will be Covered by My Will and the Importance of Knowing.

Changing your Will When Going Through A Separation

Ideally an estate plan is reviewed every few years, or when a major life event occurs. Such a life event may be the birth of a child, a marriage, or loss of a spouse either through separation or death. A list of the major items that should be reviewed in your estate plan when going through any of the major life events are discussed below.

Guardianship

When you have children, who will care for them if you are unable can be the most difficult decision to make. As is often the case, people will name the other parent as the primary guardian but the alternate guardian can require a bit more care in decision making. In addition, sometimes the other parent is not the ideal choice, particularly in the case of blended families. Identifying your choices for guardianship and codifying them in your Will is an extremely part of your estate plan as it is one of the few ways of ensuing your wishes are known. Further, not providing a guardian can result in the Public Guardian getting involved.

If you have a blended family, you will want to ensure any half-siblings or step-parents and grandparents can have access to the children, if they so desire.

Child Support

The law in Alberta is fairly clear that a person’s estate is obligated to provide for his or her children while they are dependants. A child can be a dependant for his or her entire life if they have a disability, or until the age of twenty-two if they are attending school. In certain situations grandchildren and great grandchildren may claim support. This obligations continue past death and your will should contemplate this event if you are currently paying child support.

Spousal Support

Unlike child support, spousal support obligations are not binding on an estate unless the Separation Agreement or a Pre-Nuptial Agreement provides for it. However, if you lose capacity you may still be liable for spousal support payments.

 

Jointly Held Property

Property that is held as joint tenants will automatically transfer to the other name on title upon the death of own owner. In the event of marital breakdown, it is important to determine if you will switch to tenants in common (whereby each party owns a specific percentage and can therefore bequeath that percentage) or if one name will be removed.

Beneficiary designations

When a major life event occurs, it is important to review the beneficiary designations you have on your investments such as RRSPs, RRIFs, LIRAs or even life insurance. You may want to add your children or remove a former partner from the designation as these assets will fall outside of your estate and will therefore not be included in any matrimonial property or support obligations.

Changing your Will When Going Through A Separation

My Children are Young – What Happens to Their Inheritance?

For many people with minor children, a large concern is when their children will inherit their property and if the children will be able to responsibly handle that property. After all, I remember when I was eighteen and while your kids are likely much more responsible than I was, it would have been a disaster for me to have received a large sum of money at eighteen!  The quick answer to this conundrum is for your Will to set up a trust for your children.

children

Trusts are used in a variety of a situations, but specifically in your Will, they generally are used when your children are young and you are concerned about them receiving their entire inheritance at too early an age.A trust can be set up whereby the executor of your will holds and manages all the assets designated for your kids for the benefit of your kids until they obtain a designated age. Essentially it is separating legal ownership, and the obligations that go along with that, from beneficial ownership. The beneficial owners are the persons who are ultimately entitled to receive the assets.

A trust carries with it a very high standard of care, as the person holding legal title has a fiduciary responsibility to the beneficiaries. This means the trustee (or executor as is usually the case in a will) can be held liable for his or her actions if the beneficiaries do not believe the trustee is acting in their best interests. A trustee is not permitted to use any of the assets held in trust for his or her own purposes.

Alberta Wills

Naming a trustee for the trusts set up for your children can be a very big decision and you need to make sure you consider both the length of time the trust may run as well as the capabilities of the person named. Ideally, that person would be able to manage the assets in such a way that your children actually end up inheriting more than they would have received if they received the assets outright at your passing!

At Alberta Wills Online, we can set up very basic trusts in your will.  For more complicated estate planning, we are happy to connect you with a law firm in your area.

My Children are Young – What Happens to Their Inheritance?

First Steps After a Loved One Passes

Losing a loved one is a horrible experience and grief can be compounded by the uncertainty of what needs to be done to ensure the loved one’s estate gets dealt with appropriately, particularly in the first few months after the death. Below is a list of items that should be done in this timeframe. This list can be provided to clients to help them and their loved ones through those first awful months by eliminating or reducing the uncertainty. Also included are two checklists- one outlining the items below in point form and one outlining the information needed to begin a probate application.

First-Step

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Likely the first item you need to do is to obtain a death certificate. Any joint assets or assets with specified beneficiary designations attached will require a death certificate in order to remove the deceased’s name from title. You will need to obtain the certificate in the jurisdiction where the death took place. In Alberta, you can go to www.servicealberta.gov.ab.ca and complete the Application for Ordering Death and Legal Change of Name Documents. This then needs to be dropped off to a registry agent with a government issued form of id. Outside of Alberta, you need to complete the Registry Connect Application for Certificate/Documents and then see a Notary Public to complete the Statutory Declaration of Proof of Identity part of that Application. Your completed application is to be mailed to Registry Connect at Suite 202, 1003 Ellwood Road, SW Edmonton, AB T6X 0B3.

Many of the programs run by the government need to be notified within a certain time frame of the date of death. While the estate is entitled to Old Age Security (OAS) and Canada Pension Plan (CPP) payments for the month of death, Service Canada needs each to be cancelled within 30 days to avoid a clawback[1]. You can cancel OAS and CPP by contacting Service Canada with the full name, date of birth, date of death, social insurance number, previous address and name and address of the person responsible for handling the deceased’s affairs (if known) at any Service Canada office or it can be done by mail. If the death occurred in Canada you do not need to prove the date of death, but if the death occurred outside of Canada you will need proof of death such as: official death certificate issued under the authority of government where the death occurred, death certificate issued by a court, funeral home or medical practitioner, or a statement by a doctor last in attendance with appropriate identifying letterhead.

writing a will in alberta

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When a person dies, employment insurance (EI) benefits payable to that person up to and including the date of death may be paid to the estate. However, these benefits must also be cancelled by completing a Request for Payment of Benefit on Behalf of a Deceased Person found at http://www.servicecanada.gc.ca/cgi-bin/search/eforms/index.cgi?app=prfl&frm=ins2882&ln=eng.

Any EI benefits paid after the death must be repaid. It should also be noted that an estate can apply for EI benefits on behalf of a deceased person, particularly if that deceased person had not been able to work in the weeks leading to his or her death.

For most other CRA notifications, such as GST, Canada Child Tax Benefit, etc. you can complete an Information Sheet RC4111 and send it to your tax services office or tax centre. RC4111 is found at http://www.cra-arc.gc.ca/E/pub/tg/rc4111/README.html. CRA will also require a certified copy of the death certificate. If the deceased was resident in Vancouver the documents should be sent to 9755 King George Boulevard, Surrey BC V3T 5E1 and if the deceased was resident in Calgary, the documents should be sent to 220 4th Avenue SE, Calgary, AB T2G 0L1. For all other cities, the addresses can be found at http://www.cra.arc.gc.ca/cntct/tso-bsf-eng.html

Personal Bank Accounts

Most banks will require a certified copy of the death certificate to remove a deceased person’s name from a joint account or to transfer accounts to an account registered in the estate’s name. Some banks will simply freeze the accounts until a grant of probate is obtained. Most banks are also fairly accommodating in suspending mortgage payments or line of credit payments that are due for a few months following death. National Bank offers asset repatriation free of charge if a client wishes to consolidate all the deceased’s assets into a single account. Further, for National Bank Private Banking 1859 clients, the designated private banker can arrange the paperwork to effect the transfers.

Land Titles

If land is held as joint tenants with another person, then all the Land Titles Office needs is a notarized copy of the death certificate to remove the deceased’s name from title. This is not a step that needs to be done right away, but can be tackled when people are more prepared to deal with estate matters.

If land is held by the deceased personally, land titles needs a notarized copy of the death certificate in order to transfer title into the name of the estate, and then a certified copy of the grant of probate to transfer the asset into the name of the beneficiaries.

Probate Wills

Insurance Companies

It is important to know who is named as beneficiary on the life insurance policies held by a person at his or her death. Every company is a little bit different, so the beneficiary should contact the insurance company’s local agent or check the company’s website. You can also notify the company in writing, requesting the forms and instructions on how to proceed. A certified copy of the death certificate will likely be needed. This is the same for annuities.

Tax Returns

Fortunately people have some breathing room with regard to tax returns. If a death occurred between January 1st and October 31st, the personal representative has until April 30th of the following year to file the final tax return. If the death occurred between November 1st and December 31st, the final tax return is due six months after the date of death. This final tax return will show any capital gains owed on the deemed disposition of all assets that occurs at death.

Feel free to contact us or You Can Email at admin@albertawillsonline.com
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First Steps After a Loved One Passes

The Definition of Child in Your Will

Write your will

Under the Wills and Succession Act, which came into force in February 2012, the term “child” as used for estate purposes means a biological or adopted child of yours.  As such, if your will states that your estate is to be divided among your children in equal shares, only your biological children or adopted children will be included in the distribution.  This is the same result as if you passed without having a will and the intestacy rules came into play.  So if you have children who are not biologically yours, but are still very much your own children, you must have a will and you must state within that your will that you wish those children to be included.

An example of this would be to name those children specifically by name, or to simply state that for the purposes of your will, the term “child” shall include children of your spouse.

Family is important. Your wishes are important.  Make sure they are known and respected.

Alberta Wills
Feel free to contact us or You Can Email at admin@albertawillsonline.com

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The Definition of Child in Your Will