Topics of Interest

After you pass away, your Will determines what happens with your property. But in the meantime, if you can’t take care of your own affairs because of mental incompetence, say from a stroke or Alzheimer’s, your caregivers can be in a very difficult position. It’s good to have a joint account with your spouse or other caregivers.

But what about decisions regarding your medical care and accommodation? That situation and many others would be covered by an Enduring Power of Attorney. If you become mentally incompetent before you do an Enduring Power of Attorney your caregivers would have to go to court at a cost of thousands of dollars to get a “committeeship” to manage your financial, health, and accommodation issues.

With the Enduring Power of Attorney, all you have to do is sign it in front of a qualified witness. An Enduring Power of Attorney is typically done at the same time as a Will. Loss of a loved one or loss of competence is stressful enough without having to sort out legal issues at the same time.

Thinking ahead and being prepared for the inevitable is a very good idea.

DID YOU KNOW THAT:
If you get married your will made before marriage is no longer valid? But if it has a clause saying it is made in contemplation of marriage that can save it from nuptial extinction.

DID YOU KNOW THAT:
If you make your bank account into a joint account with your adult child, there is a presumption that you DID NOT intend that child to have that account as their exclusive property after your death? The presumption can be rebutted. One of the best rebuttals is to write your intentions into your will. Failing that a “To Whom It May Concern” letter left in the envelope with your will or given to the bank could do the trick.

DID YOU KNOW THAT:
Lawyer’s fees for probate matters are set by the Court of Queen’s Bench Rules and apply to cases “of average complexity”. QB Rule 74.14 sets lawyers’ fees as follows.

• 3% on the first $100,000 of the total value of the estate, subject to a minimum fee of $1,500;
• 1.25% on the next $400,000 of the total value of the estate;
• 1% on the next $500,000 of the total value of the estate; and
• 0.5% on the total value of the estate over $1,000,000.
  

DID YOU KNOW THAT:
A regular Power of Attorney, such as a PA giving someone authority to sign documents for a person who is out of the country for a period of time, is no longer valid if the person who made it becomes mentally incompetent? But an ENDURING Power of Attorney can be made which specifies that the PA remains valid even after the person has become mentally incompetent. This is just the kind of PA that is required to protect people in their old age and infirmity. Special rules apply to such PAs.

DID YOU KNOW THAT:
If you die without a will you are considered INTESTATE. Someone has to apply for Articles of Administration before anything can be done with your property. The Court of Queen’s Bench Rules and the Intestate Successions Act determine who can apply to be an Administrator and who your heirs are. If you have underage children they may end up being raised by people whom you would not have chosen for the job.

DID YOU KNOW THAT:
When you die, an Enduring Power of Attorney is of no use. All the property in your estate is frozen until your will is probated or someone gets Articles of Administration.

DID YOU KNOW THAT:
If you die without a will the rules of the Intestate Successions Act apply to your estate and those rules say that your spouse or common-law partner gets your entire estate unless you have children from previous relationships. So the children you have together don’t get anything. There is an underlying presumption that the surviving spouse or common-law partner will eventually pass the property on to your children. But there is no guarantee that this happen because she/he can change her/his will at any time.

DID YOU KNOW THAT:
If you die INTESTATE and have children from a previous relationship, your spouse or common-law partner gets half your estate and half of the other half. So your children get a quarter of your estate in equal shares. You may have an understanding that your spouse or common-law partner will leave her or his estate to those children. But there is no guarantee of that. If your spouse or common-law partner then also dies INTESTATE, your children from the previous relationship won’t get anything at all.

DID YOU KNOW THAT:
If you die INTESTATE and have no spouse or common-law partner or any children then your parents will inherit your entire estate in equal shares. If you have no surviving parents, then your brothers and sisters will inherit your estate in equal shares. If any of your siblings have passed away then his or her share goes to his or her children, in equal shares.

DID YOU KNOW THAT:
Once you become mentally incompetent you can no longer make a valid will. You will then die INTESTATE and the rules of the Intestate Successions Act apply to your estate.

DID YOU KNOW THAT:
You can no longer make a Power of Attorney once you become mentally incompetent. Anyone wanting to take over managing your affairs must then apply for Commiteeship through the court which costs thousands of dollars rather than the hundreds of dollars that a Power of Attorney would have cost before mental incompetence set in.

After three years of cohabitation, a relationship becomes common law. Each partner then has rights and obligations towards the other partner virtually identical to those in a marriage, including rights to family property, pension benefits, homestead rights, and spousal support. This happens even if one or both parties are still married to someone else.

SO WHAT HAPPENS IF ONE OF THE PARTNERS PASSES AWAY WITHOUT A WILL? And what if one or both partners have children from another relationship? Quick answer: the surviving partner gets 75% of the estate. But there would likely be complications, as well.

A Co-habitation Agreement in combination with wills and powers of attorney for both parties can protect against undesirable outcomes. Couples in a second/subsequent marriage can avoid similar problems with a Pre-nuptial Agreement plus wills and powers of attorney.

Thinking ahead and being prepared for possible developments is good for peace of mind.

Most couples own their homes as joint property. When one partner dies the other becomes the sole owner. When both partners are gone their wills determine who gets the property and the value of the property determines the probate fee payable to the court.

Jointly owned property isn’t part of a person’s estate. Ownership passes directly to the other joint owner and the value of the property is left out of the calculation of the probate fee. To avoid the fees, a parent can put a child on title as a joint tenant, especially if the parent is well into her/his “golden years”. But if the child passes away first, the parent is left as the sole owner and the property will be back in the parent’s estate.

The parent could instead change the ownership to a life estate, making the child a “remainder man”, who inherits the property after the parent dies. The parent remains as owner during her/his lifetime. However, if the parent wants to sell the property, then the child likely must agree to sell as well, because the parent can only sell her/his interest in the land, which only lasts as long as the parent is alive. Who in their right mind would buy a property which reverts to the child when the parent dies? Yet for some people, this arrangement could be the right fit.

Most of us don’t want to think about dying and avoid making arrangements. That can lead to problems. It’s a wise move to have a will and power of attorney in place before a life-threatening event occurs and your judgment is clouded. That can also avoid problems for your heirs after your passing.

Some traditional men like to keep the title to the family home in their name only, relying on the will to divide everything up after their death. Where the family home comprises most of the value of the estate, and there is only a small amount of cash in the bank, the probate fee can be quite substantial, depleting the estate’s liquid assets. It is far wiser to put the intended heirs on title as joint owners before the death of the testator, so the property automatically passes to the other joint owners and does not become part of the testator’s estate. This reduces the cost and hassle of probating the will. The Property Registry will simply remove the deceased’s name from the title for a modest fee. If the family home is the only property in the estate, then the will need not be probated at all. Lawyer’s fees will also be significantly reduced if real property is in joint ownership, as fees are calculated as a percentage of the value of the estate (3% of the first $100,000, 1.25% of the next $400,000, and 1% of the next $500,000, 0.5% on the total value of the estate over $1,000,000.). Probate often takes a long time, tying up the sale of the property and distribution of the estate.

SCENARIO 1: Dad leaves everything to Mom in his will. The farm and house are only in his name. Both Mom and Dad only have income from OAS. There’s only enough in the bank to cover funeral expenses. As the quarter along with the house are a part of the estate, the legal fees for probating the will, based on the value of the property are high. Without enough money in the bank, Mom struggles to scrape together the cash. Mom wants to sell the house, but she doesn’t have the authority to do that until the will is probated. Due to other complications with the will, this takes months to accomplish. What to do?! Take out a mortgage so that she can pay for probate and sell the house? That costs extra money overall.

SCENARIO 2: Dad puts a title to the quarter and family home into joint ownership with Mom. When Dad passes away, Mom submits a transfer form to the Property Registry, and for a modest fee title issues in her name only. There is no need to probate the will because Mom and Dad had a joint bank account which automatically reverts to her name only. Mom immediately has the legal authority to sell the property and buy a condo in town. No fuss, no muss! This simple scenario leaves out many potential variables eg. “what about the kids”? Anyone contemplating such a move should consult a lawyer to make sure it is the right thing for them.

A Living Will is a written statement in which you give direction to your family and healthcare providers about what kind of medical treatment you would like to receive when you are at the end of your life. This is wording that can be found in a Living Will:

If the situation should arise in which there is no reasonable expectation of my recovery from physical or mental disability, then I request that medication be mercifully administered to me to alleviate suffering and that I be allowed to die and not be kept alive by artificial means or “heroic measures”. I do not fear death itself as much as the indignities of deterioration, dependence, and hopeless pain.

In the meantime, if you can’t take care of your own affairs because of mental incompetence, say from a stroke or Alzheimer’s, an Enduring Power of Attorney gives your caregivers authority to take care of your financial affairs AND make medical decisions. This is wording that can be found in an Enduring Power of Attorney:

I authorize my attorney to make all necessary decisions concerning the care of my person while I am in any personal care or medical facility, including any medical decisions that may require my consent. If I am still mentally competent my attorney must consult with me before authorizing any important changes in my care, but if I am no longer mentally competent my attorney may make such decisions, taking my best interests into consideration.

If you become mentally incompetent before you do an Enduring Power of Attorney your caregivers would have to go to court at a cost of thousands of dollars to get a “committeeship” to manage your financial, health, and accommodation issues. However, an Enduring Power of Attorney only costs a few hundred dollars and is typically done at the same time as a Will.

Kudos to those who have a will! Waiting until you are at death’s door is risky. You can make things even easier for your Executor. If you intend to leave certain personal items (heirlooms, a vehicle) to specific persons, do the list up NOW and keep it with the will or in a place known to your Executor. Keep it updated. Make sure your preferences for funeral arrangements are known, if not specified in the will. Create a master list of the financial institutions you deal with, investments, life insurance policies, and related account numbers. Make a list of your social media accounts and passwords to be closed down or turned into memorials.

Also important for those who survive you is KNOWING that you are no longer with us! Many of us will want to attend your funeral. Prepare a list to contact upon your passing (close and distant relatives, friends, and acquaintances) with recent contact info (address, phone, email). They will appreciate being informed. Remember that embarrassing time you asked someone how their mother was doing only to be told she had passed away three years ago?

After you pass away your Will determines what happens with your property. But what if you have a stroke or come down with Alzheimer’s and can’t take care of your own affairs?

I have personal experience with such a situation. My father had the foresight to put the house, farm, and bank accounts into joint ownership with my mother and me. But he had one rather large GIC in his name only. My parents had made out wills but did not have Powers of Attorney. When my father had a massive stroke and became mentally incompetent, we couldn’t touch that GIC because there was no Enduring Power of Attorney. The GIC matured and the proceeds were deposited into a chequing account earning next to no interest. We would have had to go to court and get what is called a “committeeship” to have the legal authority to do anything with that GIC while my father was still alive. That would have cost a couple of thousand dollars.

On the other hand, all my father would have had to do to get an Enduring Power of Attorney was to sign it in front of a qualified witness for a fraction of the cost. For some reason, that didn’t happen. My father lingered for a year and passed away before we could get a committeeship. We didn’t need a committeeship or a power of attorney anymore at that point, because there was a will that took care of all the property issues in my father’s estate. All in all, those were not pleasant times and it would have been easier if we had had a power of attorney to take care of everything.

That is shy lawyers these days advise their clients when they do their wills to also draw up an Enduring Power of Attorney which gives authority to a trusted person to take care of their affairs should they become incapacitated.

This is Gin’s story, not mine. Gin hated practicing family law because of how badly people behaved. But she did have one positive experience in her practice. A middle-aged couple came to her to finalize the division of family property. Their children were grown up and for whatever reason, they had grown apart and were divorcing. The negotiations had been adversarial and emotional. Gin anticipated a difficult conversation in the meeting, as both parties had dug into their positions.

The tension was palpable as both sat in the law firm waiting room. A young woman with a baby was also in the waiting room. She hadn’t found anyone to mind the baby, so had brought her along. The baby was lovely, broadcasting smiles at everyone. The couple offered to mind the baby while the mother was in her meeting, taking turns holding the baby and keeping her entertained. The mother returned, retrieved her charming daughter and the couple went into their meeting with Gin.

Much to her surprise and relief, Gin was able to get the couple to agree to reasonable terms for the separation. It seems that relating to the baby softened the attitude of both husband and wife in their own proceedings. So Gin suggested –tongue in cheek – that we family lawyers should add to our toolbox the technique: “bring in the baby”! It isn’t just knowledge of the letter of the law that makes for successful advocacy!