The Importance of Basic Estate Planning
Many people acknowledge the importance of a Last Will and Testament, yet many of those same people do not have a Will in place. What is equally troubling is that there is very little concept of how important a Power of Attorney is, and what the difference is between a Power of Attorney and a Will. At Cohen Highley LLP, we encourage each of our estate planning clients to sign both a Power of Attorney for Personal Care and a Continuing Power of Attorney for Property, as well as a Last Will and Testament, to ensure that their most basic estate planning is complete.
A Power of Attorney gives a person or persons who you appoint to act as your “attorney” the power to make decisions with respect to your personal care or your property while you are still living, but ceases to have effect on your death. A Will, on the other hand, is your instructions with respect to the distribution of your property after your death. It is important to have a Will as the lack of a Will only makes things more complicated for those you leave behind, and the distribution of your property will be in accordance with a pre-determined set of rules, and not at all in accordance with your wishes. The absence of valid Powers of Attorney will impact you during your lifetime and your care may suffer as a result.
A Power of Attorney for Personal Care allows your appointed attorney to make health care decisions on your behalf when you are incapable of doing so yourself. Situations for the use of a Power of Attorney for Personal Care might include when the person giving the Power of Attorney for Personal Care (the grantor) is suffering from Alzheimer’s or dementia, or is in a coma, or is otherwise unable to lucidly communicate his or her wishes. Only then will the appointed attorney be able to, for example, instruct the health care providers regarding consenting to or withholding treatment, or selecting a long-term care facility. Should someone become incapable without having executed a valid Power of Attorney for Personal Care, then the Health Care Consent Act governs to determine in what order next-of-kin have decision-making authority. Sometimes this works out just fine, but sometimes next-of-kin aren’t necessarily close to the incapable party, or don’t know his or her wishes or, in the case of children, may not be able to reach a consensus decision. In such circumstances, an application might be required to apply to the Ontario Superior Court for an Order for Guardianship of the Person, but the person applying would have to convince a Judge that he or she would be the best person for that duty. This can be time consuming, expensive and may lead to family discord. Having a proper Power of Attorney for Personal Care in place to decrease the likelihood of such application is highly recommended.
A Continuing Power of Attorney for Property is different from a Power of Attorney for Personal Care in that it deals with property matters rather than matters affecting the person, such as health care. It can allow the appointed attorney to do anything the grantor can do with his or her property (real and personal, including bank accounts, investments, land, etc.) with very few exceptions (such as making a new will). The Continuing Power of Attorney for Property is valid and effective at the time it is signed, and usually provides that it will continues to be effective even when the grantor becomes incapacitated. This means that the grantor does not need to be mentally incapable before the document can be used to assist him or her. The grantor may be physically unable to attend at the bank to pay bills, or may not be able to be present when and where important business needs to be conducted on his or her behalf. Should someone become incapable without having a valid Continuing Power of Attorney for Property, then someone else willing to accept responsibility for the care and management of that person’s property would have to apply to the Ontario Superior Court for an Order for Guardianship of Property. Even in simple situations, obtaining such an Order can be costly and time consuming. What complicates matters is that often the person applying will be required to post a guardianship bond, which is a pledge of his or her assets as security for the proper management of the incapable person’s estate (property). Where the person applying has insufficient assets, a bond will not be issued and guardianship may not be granted. This costly and complex problem can be avoided by having a valid Continuing Power of Attorney for Property in place.
As with most things in life, a small amount of planning can save a lot of time, money, aggravation and perhaps suffering. The wills and estates lawyers at Cohen Highley LLP have the expertise to assist you with all of your estate planning, whether simple or more complex planning involving family trusts, spousal trusts, or multiple will strategies. Our wills and estates lawyers also have the expertise to assist with estate administration after someone has died. If you have any questions regarding any estate planning or administration issues, it would be our pleasure to assist you.