Spring cleaning your estate plans

Do you spring clean your home? I’m more of a January and June tidier but if spring cleaning is part of your routine consider adding your estate plans to your list. It is an important task that can help ensure that your wishes are properly documented and up-to-date. Here are some steps to consider when doing a spring clean of your estate plans:

1. Review your estate planning documents: Gather all of your estate planning documents, including your will, powers of attorney, and healthcare directives. Review each document carefully to ensure that it accurately reflects your current wishes and circumstances.

2. Update your beneficiaries: Check the beneficiary designations on your life insurance policies, retirement accounts, and other financial accounts. Make sure that the beneficiaries listed are still appropriate and up-to-date.

3. Consider changes in your life: Think about any major changes that have occurred in your life since you last updated your estate plans. For example, if you have gotten married, divorced, had a child, or experienced a significant change in your financial circumstances, you may need to make updates to your estate plans.

4. Consult with an estate planning attorney: If you have questions or concerns about your estate plans, consider consulting with an estate planning attorney. An attorney can help you navigate the legal complexities of estate planning and ensure that your plans are properly drafted and executed.

5. Organize your documents: Finally, make sure that all of your estate planning documents are organized and easily accessible. Consider storing them in a secure location, such as a safe, and letting your loved ones know where to find them in case of an emergency.

6. Enjoy the outdoors and other activities with the change of season knowing you have everything in place!

Going away for March break? Read this first!

If you are going away for March Break it is important that you have proper estate plans in place to ensure your children and assets are protected in the event of an unexpected event or emergency. Here are some important things parents should know regarding estate plans:

1. Guardianship: If something were to happen to both parents, who would be the legal guardian(s) of their children? Parents should have a plan in place to designate a guardian and ensure that their children will be taken care of in accordance with their wishes.

2. Will: A will is a legal document that outlines how a person's assets will be distributed after their death. Parents should have a will in place that specifically addresses the distribution of their assets and the care of their children.

3. Trusts: Parents will need to consider setting up a trust to hold their assets and ensure that they are distributed according to their wishes. A trust can also provide ongoing financial support for their children.

4. Powers of Attorney: Parents should consider appointing someone to act as their power of attorney in the event that they become incapacitated and are unable to make decisions for themselves.

5. Life Insurance: Parents may want to consider purchasing life insurance to ensure that their children will be financially supported if something were to happen to them.

6. Digital Assets: Parents should consider how their digital assets, such as social media accounts and online banking, will be handled in the event of their death.

It is important for parents to work with an experienced estate planning attorney to create a comprehensive estate plan that addresses all of their concerns and ensures that their wishes are carried out in the event of an unexpected event or emergency. Our office is here to help as always.

Our firm in the news! Globe and Mail Advisor article by Deanne Gage “Here’s what to consider when making a will to avoid family disputes”

Laroux was interviewed for a Globe and Mail Advisor article detailing examples of how we as a firm go the extra mile with clients.

Two main examples were featured. The first is ensuring we confirm with clients that they have properly designated beneficiaries, if applicable, on relevant assets. We deal with countless estates where mom or dad dies, is the last parent to die leaving adult children, and the will names the kids as joint beneficiaries but the RIF or TFSA or life insurance don’t have beneficiary designations on them, and this is only discovered on death. There are times where designations to the estate make more sense but often the question is not even being raised when parents of adult children are going to get their estate plans updated. This can make a big difference when it comes time to probating the estate as more Estate Administration Tax can be owing for assets that, if properly beneficiary designated, would fall outside the estate.

The second is taking the time to go through the client’s family tree. Many who hire us ask “do I really need to give you a list of my siblings and parents?” The answer is yes! Often through this process our firm discovers that a relative is on Ontario Disability Support Program benefits and then additional considerations (as we discussed here) need to be considered when making the estate plan.

Please click here to see a full version of the article - happy reading!

Estate Income Tax Filings - An Introduction

As we look ahead to 2023 with anticipation and we set a few new goals or habits, it may have dawned on you that the second most exciting season of the year is approaching. What season is that you may ask? Tax season of course! Doing taxes every year can definitely be stressful, there is no doubt about it.  If you are named as an estate trustee, your responsibility now includes filing estate income taxes and you may be surprised to discover that tax season is different compared to the usual tax filing deadlines for your personal taxes. Even if discussions around tax make you snooze, keep reading for some helpful tips. 

Income tax law of estates is a specialized and complex field and I always recommend you seek the advice of an accountant who works with estates regularly when it comes to specific cases. This article will provide some general information about the responsibility of an estate trustee when filing estate income taxes. If you are named as an estate trustee in someone’s will you will want to check this out.

Tax Returns from Previous Years

The Canada Revenue Agency (CRA) has many special regulations to collect debts and to impose liability on an estate and on the estate trustee. Generally speaking, one thing you as estate trustee  must turn to when your friend or loved one dies is to determine whether or not the deceased filed all past tax returns. Tax returns must be filed if the deceased taxpayer had taxable income during the year. Any tax owing on returns that were not filed but were supposed to have been filed become a liability of the estate. It is therefore the responsibility of the estate trustee to file all past due returns and pay all taxes, interest and penalties accruing under those returns. If one or more years are missing it is up to the estate trustee to make reasonable inquiries into the deceased’s financial affairs to determine whether the deceased earned enough income during those years that a filing a return is required.

Terminal T1 Tax Return

Another task to be dealt with by the estate trustee is filling the final T1 tax return. This important return covers the period of January 1 in the year of death to the date of death.

For example, if the deceased died on June 1, 2022, the final T1 return would cover any income earned between January 1, 2022 and June 1, 2022. This tax return is called the Terminal T1 Tax return. The terminal T1 is completed using an ordinary T1 tax return form and is signed by the estate trustee.

Filing the terminal T1 is one of the most important steps with respect to estate income taxes because it involves special rules for calculating income. It usually means that the deceased’s entire circumstances as they relate to income tax must be examined.

The deadline to file the final T1 return is the deadline that would have applied if the deceased had lived the full year- that is April 30 of the following year. Let’s take a look at the above-mentioned example, if someone passed away on June 1, 2022 the deadline to file the terminal T1 would be April 30, 2023. However, If the deceased died in November or December of any year, the CRA has determined that forcing the Estate Trustee to file the Terminal T1 by April 30 of the following year may be too burdensome. The rule then for estates in which the person died in November or December is that the terminal T1 must be filed within six months of the date of death.

All of this is especially important to make note of before an estate trustee makes any distributions to beneficiaries of the estate. You as estate trustee want to ensure you have satisfied all tax liabilities or that you withhold enough funds to satisfy tax liabilities before any final distributions. Speak to your accountant about a Tax Clearance Certificate to learn more about your liability and how to protect yourself.

Consulting a legal expert like our firm who specializes in Wills & Estates can assist in navigating the estate administration process during such challenging and emotional times. If you need assistance with the process of estate administration, or a referral to accountants who prepare estate tax filings, send me a message. Happy to help as always.

November is “Make a Will Month” in Ontario

Every November is “Make a Will” month, a campaign emphasizing that having a will in place is essential to ensuring that your last wishes are followed. While I don’t need to tell you how important this is, surveys continue to indicate that over half of Canadians do not have valid wills. This month we are encouraging you to speak with those around you about making a will & powers of attorney to achieve the same peace of mind you have. Also, in many cases, it may directly impact you depending on whether we are talking about your mom or dad or brother or sister. I would appreciate it if you passed on this month’s newsletter to anyone you think I can help. 

Why Make a Will?

• Let’s you decide who will administer your estate

• Let’s you determine who will inherit your estate

• You can create trusts for minors or disabled relatives

• Establishes guardianship of minor children

Wills clearly indicate who will be responsible for administrating the estate; you want to choose someone that is responsible and trustworthy. Most importantly, your will highlights exactly who you want to leave your residue to. This can be as general or as specific as you want. Without a will, your estate is considered “intestate” and your residue is subjected to provincial legislation which may not necessarily be what you want. There could also be many hardships and legal battles placed on your loved ones when there is no will. For example, in 2016 famous singer Prince passed away without a will in place. Without a spouse or children his $156 million estate was divided between his six half-siblings, causing a dispute which resulted in a six-year long court battle. Additionally, wills allow trusts to be put in place for the benefit of minors or disabled relatives. In our October 2022 newsletter we talked about Henson Trusts and their advantages. Wills create the groundwork for how your more vulnerable loved ones can continue to be cared for long after you are gone. Lastly, for families with minor children, having a guardianship appointment in place gives parents the peace of mind of knowing that their children will be well taken care of if anything were to happen to them.

Why Update Your Will?

Maybe you already have a will in place, but it has not been updated in some time. Make a Will month is also a great time ask yourself if anything has changed in your life that would warrant an update to your will. Some situations include:

•    You recently got married or divorced
•    You became a parent
•    Your financial situation has changed
•    You need to update your estate trustee or guardian appointments

There are many situations which could cause your will to be outdated. If your family dynamic has changed, it is good practice to ensure that your estate planning documents reflect this change to ensure your loved ones are properly taken care of. If your financial situation has drastically changed, having a will reflecting these changes will make the administration process easier on your estate trustee when it comes time to distribute assets. Lastly, if any of your appointments are no longer a viable option – be it by way of death, incapacity or simply a change of heart – naming new appointments is critical, you never know when you will need them to step into their role. 

Making a will is made easier by a wills & estates lawyer who understands the ins and outs of provincial legislation and can provide expert advice on how to draft your will in the most beneficial way to you and your loved ones. If you need your will updated or know someone that needs a will drafted, our office is ready to help. 

Henson Trusts: Providing Protection to Your Loved Ones with Disabilities

There are many important scenarios to think about during the estate planning process. Who will administer my affairs? Who will be the guardian of my children? And most importantly, how can I still provide for my loved ones once I have passed on? This last question is especially important for families who have family members with disabilities. It can be stressful thinking about how your loved one will be taken care of after you are gone when you are the one that has been their primary caregiver their entire life. Fortunately, estate planning administrative law in Ontario allows specific trusts to be put in place in your will that ensures that family members with disabilities will be provided for long after their loved one has passed away. You should work with an experienced estate planning lawyer so you are prompted on issues that you may not have previously considered. Here is a primer on Henson Trusts.

 What is a Henson Trust?

Absolute Discretionary Trusts, more commonly referred to as “Henson Trusts” here in Ontario, provide the groundwork in which the testator can properly plan for funds from their estate to continue supporting a beneficiary with a disability without jeopardizing their eligibility for government benefits such as the Ontario Support Disability Program (ODSP).  These kinds of trusts were named after Leonard Henson, a father dedicated to protecting and planning for his daughter with a disability. Since then, Henson Trusts are commonly used in wills in Ontario to protect the inheritance of a beneficiary with disability by having a Trustee hold and manage the inheritance, legally moving title from person to trust and thus not rendering them ineligible to receive government assistance. The Trustee uses the Trust to provide for the needs and benefit of the person with a disability and there is no limit as to how much can be distributed.

 Henson Trust and the Ontario Support Disability Program

Recent changes were made that allow ODSP recipients to receive $10,000 over a 12-month period and to personally hold assets up to $40,000. If left money in an inheritance, most individuals with a disability would exceed the $10,000 limit thus making them ineligible for ODSP. Henson Trusts put that inheritance aside to be used as needed and administered by a third party known as the Trustee. The property is not considered an asset for ODSP purposes as long as it stays in trust.

 Advantages of Henson Trusts

With Henson Trusts in place, beneficiaries with a disability benefit from both their inheritance as well as government assistance. Having a Trustee in place ensures that the beneficiary will always be provided for and that there will always be someone taking care of them financially.

 Disadvantages of Henson Trusts

It is entirely up to the Trustee to decide how they want to distribute the trust for the benefit of the family member with a disability. Conflict of interests can arise therefore it is important that the testator names a Trustee that is honest, sincere, and knowledgeable. Trustees are responsible for managing assets, distributing funds, keeping records and accounting, preparing tax returns, preparing reports to ODSP, maintaining real property owned by trust. As such, being a Trustee to a Henson Trust is a lot of work and testator should appointment someone they feel fit for the task. 

 Other considerations

Do you know someone on ODSP? It is important if you do to discuss these topics with them and their family members. We get calls regarding this issue several times a year where a mom or dad or aunt or uncle of the ODSP recipient dies leaving the ODSP recipient a small inheritance that is not big enough for them to be able to come off ODSP but at the same time leaves the ODSP recipient in a vulnerable position at risk of possibly losing their benefits or having to hire a lawyer to assist with creative solutions to stay on ODSP because there was no proper estate planning done. 

How to Set Up a Henson Trust

Henson’s Trusts need to be worded carefully and proper terms must be written into the will so that the beneficiary cannot freely withdraw money risk their government benefits. In addition, Henson Trusts must be written in a way that plans for the “accumulation period” which, in other trusts, the balance must be paid out after 21 years but in these situations, Henson Trusts may be required to remain active for a much longer period. The wording must also state what is to happen to the balance of the trust when the beneficiary passes away; failure to do so could have the trust fall into an asset of the beneficiary and make the beneficiary ineligible for government funding.

Feel free to reach out if you have a loved one with a disability and have more questions about Henson Trusts.

What is Probate in Ontario? When Is Probate Required? A Discussion on Estate Administration

If you or anyone you know has had a loved one close to them pass away, chances are you have heard the term “Probate”. And though you may have heard the term, there is often confusion surrounding what exactly probate is and more importantly, is it necessary? The short answer: not always. In this article we will look at what probate is, when it is needed, and how to potentially reduce estate tax (also referred to as Estate Administration Tax or in this article as probate tax). Of course, each situation is specific and a consultation with us is the best way to determine what the proper course of action is.

 What is Probate?
Probate is a process by the provincial Court system which takes the Will and officially declares this document as the Last Will & Testament of the deceased. It is essentially a court order that cannot be refused or questioned. Part of the probate process involves paying probate tax. In Ontario the “Estate Administration Tax” is 1.5% on the value of all assets (rounded up to the nearest thousand), excluding the first $50,000. 

 For example, an estate valued at $1,275,180.20, the tax rate would be calculated on $1,276,000.00, and calculated as follows:

• $0 per $1,000 for the first $50,000 of the estate

• $15 per $1,000 for the remaining value of the estate

• $1,276,000.00 - $50,000 = $1,226,000.00

• $1,226,000.00 ÷ $1,000 = $1,226.00

• $1,226.00 x $15 = $18,390.00

The Estate Administration Tax (or probate tax) for this estate is $18,390.00.

 When is Probate Required?
Whether or not probate will be required is usually based on the value of assets you have as well as discretion of the asset holders. Probate is required when:

1. Financial institutions ask for it 

Some financial institutions, especially if the asset exceeds a significant value, will not release the assets to the Executor without probate. When estates are probated, the Court will issue a Certificate of Appointment of an Estate Trustee With/(out) a Will. This certificate is given to the Executor named in the will and gives them the authority to handle and distribute all the deceased’s assets without question. If just one asset holder requests probate for a particular asset, the entire estate will fall into probate. 

 2. There is Real Estate involved 
If the estate consists of real estate property, and that real property does not pass to a joint holder by right of survivorship then probate will almost always be required. 

3. There is no Will 
If there is no will in place, then probate is ALWAYS required. Someone will have to apply to be the Executor of the estate in order for the asset holders to release the assets. 

 How to Potentially Avoid Probate?
With proper estate planning, there are some ways in which individuals can avoid paying probate tax, or at the very least, avoid paying the estate tax on all assets. Ways you can avoid probate include:

1. Beneficiary Designations 
Ensuring that certain assets have named beneficiaries is a good way of avoiding probate. Assets such as TFSAs, RRSPs, life insurance and pensions that have a named designation pass directly to that beneficiary and fall outside of the estate.

2. Asset held in Joint Tenancy 
Much like beneficiary designations, if an asset is jointly held, the asset is then transferred to the surviving party upon the death of the other making the asset no longer property of the deceased and thus not falling into the estate. However caution must be exercised before adding beneficiaries to say, the family home. Always get legal advice before placing your assets into joint tenancy. 

3. When a Secondary Will is in place
Occasionally, secondary wills can help reduce the amount of probate tax your estate is subject to by keeping certain assets such as privately held shares and personal effects such as jewelry, art and antiques out of your primary will and thus away from probate. Generally, secondary wills are used by individuals who own their own incorporated business, are a shareholder of a privately held business that is incorporated or own real estate property that is “Land Titles Conversion Qualified”. For a more detailed description of this please take a look at this article I co-wrote on the subject. 

 In general, probate is required more often than not here in Ontario and it’s not always a bad thing. Getting the proper estate planning advice is the best way to ensure that your assets flow to your beneficiaries in the way you intend. If you have questions about probating an estate, let’s set up a meeting to talk about how we can ensure that your loved ones are left with the most possible at the end of the day.

What are Powers of Attorney? Why are they so important?

Let's take a look at one of the most important estate planning documents that you can have; Powers of Attorney.

 What Are Powers of Attorney?

A Power of Attorney is a legal document that gives an individual the authority to make decisions on the grantor’s behalf for convenience or when they are no longer capable of making those decisions for themselves when they are alive. This is in contrast to a will which takes effect when the testator dies. Incapacity can occur at any time in a person’s life. Think of Powers of Attorney as a type of disability insurance, you may never have to use them, but you’ll be happy to have them if you do. The person you choose for your Power of Attorney should be someone that you trust - usually a spouse, relative or close friend.

 There are two types of Powers of Attorney in Ontario:

 1. Power of Attorney for Personal Care

Your Attorney for Personal Care is someone that will make decisions regarding your health care. This can include decisions about your housing, nutrition, hygiene, and safety. They are also responsible for life support measures. Ontario law states that your Attorney for Personal Care must follow the wishes set out in your Power of Attorney for Personal Care document; you can help your Power of Attorney make those choices by laying out your wishes in advance. You may be closely following medical assistance in dying measures (MAID) and the law. Currently your Attorney cannot make MAID decisions for you but the criteria to enter has recently expanded so please continue to check in with our firm over time as the law evolves.

2. Power of Attorney for Property

 Your Attorney for Property is someone that will make decisions regarding your property and finances. Did you know that you can have multiple Power of Attorney for Property documents applying to different jurisdictions? It is recommended that if you spend considerable time in another province or country for certain periods of the year (snowbirds, for example) that you look into obtaining these documents in the visiting jurisdiction to work in tandem with your Ontario documents. Please feel free to reach out to our firm for any questions about this. 

 Who Can Act as Attorney?

 For Power of Attorneys for Property your attorney must be at least 18 years old; for Power of Attorneys for Personal Care the age minimum is lowered to 16. The attorney must be of sound mind and willing to assume the role and understand what it means to assume the role. Unless a spouse or family member, the Power of Attorney for Personal Care cannot be providing health care (or related services) to the grantor for compensation; the reason being to avoid a member of stuff at a health care facility (or something of a similar situation) from taking advantage of patients. 

 Should You Have One?

 If you are over 18 there is no reason not to have one, in fact young adults 18 and above should have these in place before moving out of the house for school or work. You may think that you are young and healthy, but Power of Attorneys are not exclusively for the elderly. You never know when an accident could occur and having a Power of Attorney in place for life’s “what ifs” will save your family unnecessary distress and cost.

Marriage, Divorce, Separation, and What It All Means for Your Estate

When making a will, the testator can decide who they want included or excluded as part of their estate planning. They have the testamentary freedom to exclude an estranged family member or specifically leave legacy gifts to their favourite niece should they so choose. There is no requirement that the testator remain “fair” and distribute their estate equally. However, as with everything, there are exceptions to the testamentary freedom rule where spouses are concerned.

 As of January 1st, 2022, Bill 245 received ascension, making significant changes to the Succession Law Reform Act (SLRA). Some of these changes include the way marriage is treated in estate planning. In this article we will look at how Bill 245 affects marriage, divorce, and separation. 

 Wills & Marriage
Under old Ontario legislation, if you made your will prior to January 1st, 2022, and then got married, your Will would be revoked and deemed invalid. If you were then to pass away at this time, your estate would fall into intestacy, and it would be as though you never had a will at all. Bill 245 seeks to address “predatory marriages” where, as an example, an elderly person, usually someone who is vulnerable due to being recently widowed or with existing health problems, enters into a marriage with a significantly younger person and, upon the death of the elder, the much younger partner would receive a large amount of the deceased’s estate. As you can imagine, this can greatly impact the elder’s children from the first marriage (if they had any) as they would be “cheated” out of their inheritance in favour of this new marriage. Bill 245 protects the deceased’s estate from falling into intestacy by no longer invalidating a will upon marriage. 

 Wills & Divorce
A will is also not automatically revoked by divorce either. Rather, the ex-spouse is treated as if they had died immediately prior to the testator’s death. This means that the divorced spouse has no right to act as the estate trustee (even if they were named as such in the deceased’s will) and they also have no right to be a beneficiary of the estate either. 

 It is important to note however, that the ex-spouse could be entitled to a portion of the estate as pursuant to a court order such as a support agreement or a signed separation agreement.

 Wills & Separation 
Possibly one of the most important rulings to come out of Bill 245 is the revamped definition on separated spouses. The rules that govern divorced spouses as described above, now also apply to separated spouses as well where as previously, this was not the case. The SLRA now defines separation as, before the testator’s death:

-    The parties lived apart for three years immediately prior to the testator’s death as a result of a breakdown of marriage or,
-     The parties lived apart because of a breakdown of marriage and there was a court order or valid separation agreement, or arbitration award granted with respect to dealing with the breakdown of their marriage

According to Bill 245, separations that meet the requirements of the SLRA as defined above are subject to the same rules as divorce. This means that when reading the will, separated couples are also treated as though they had died immediately prior to the testator’s death and have no right to be an estate trustee or beneficiary. 

Separations that do not meet the requirements of the SLRA however, the will is then enforceable, and the surviving spouse will have the option to benefit from the will. That is why marriage contracts or cohabitation agreements can be such important documents prepared during a relationship.  They may provide coverage for your estate if you die prior to a recognized separation under the SLRA and should be reviewed when a relationship breaks down.

Beneficiary Designations
It is also important to highlight that beneficiary designations are not changed by separation or divorce. While Bill 245 states that divorced and separated spouses no longer have a claim to the residue of the deceased’s estate, assets that are designated to the ex-spouse remain in place. These included investment accounts such as, TFSAs, RRSPs, RRIFs, and pensions. These designations must be explicitly changed either with the financial institution or in the language of a new will. That is why it is especially important to review these with me and/or your financial institution if your relationship status changes. 

Takeaways 
While Bill 245 is a significant milestone to estate planning and seeks to protect Ontarians and their wills, it is always a good idea to review your will with me whenever you encounter a major change in your life. Wills may no longer be revoked after a remarriage or divorce but, talking to me and revising your estate plan is the best way to ensure that your last wishes are granted without ambiguity. 

If your relationship status has changed let’s set up a meeting to talk about how we can ensure that your final wishes are reflected in your estate planning today. 

Is it time to update your will?

You completed a will a number of years ago. That’s great! Your will is one of the most important documents you will make in your life; it lays out the groundwork for how you want your final wishes to be administered. But when is the last time you took it out and had a look at it? Studies show that as of 2021, 2.95 million Canadians did not have an up-to-date will. We unfortunately deal with wills that should have been updated prior to death in our probate practice with some frequency. If your will is outdated, those final wishes that you had may not be granted and, in some cases, an outdated will could fall into intestacy (meaning the government may dictate who can be estate trustee or who benefits), creating more strain and more cost to administer your estate for the loved ones you leave behind. It is a good habit to take a look at your will every 5 years to see if anything needs changing.

When You Should Update Your Will

1. You Get Married – although marriage no longer automatically revokes a will in Ontario, it would still be a good idea to revaluate your will when you are newly married.

2. You Get Divorced – a will made before a divorce is interpreted as though the ex spouse died prior to the testator’s death however again, with a major change in one’s life, it would be sensible to meet with me to look at your overall plan, to ensure your to ensure your up-to-date wishes are reflected in your planning.

3. You Are a Dual US/Can Citizen or US citizen living in Canada and did not Get Tax/Estate Advice – if you did your estate plan previously with someone who did not suggest you get cross border advice, you may wish to see someone now who can assist, especially if you are not planning on renouncing your US citizenship. My colleague Canada/U.S. Cross-border Tax, Trust and Estate Planning Lawyer Michael Cirone explains how American citizens living in Canada who are selling their principal residence should get proper advice to avoid U.S Capital Gains Tax in his recent article. You can find his article here.

4. You Became a Parent – you’re going to want to ensure there is a guardian in place for your new addition to your family; especially if your previous will does not account for unborn children. Updating your will when you become a parent also gives you the opportunity to add them as a beneficiary of the estate. If you did your first will with me and you have more children now then when we first met, you should not need an update in most cases.

5. Changes to Your Financial Situation – you want your will to reflect your most current final situation whether you have either gained an asset or lost/sold an asset. If certain assets that are no longer in your possession are mentioned in the will, you will want to take those out.

6. Changes to the Individuals Named in Your Will – if someone named in your will is no longer available, by way of death, incapacity or simply a change of heart it is important to make new appointments for estate trustee or guardian as soon as possible or to take out beneficiaries that you no longer wish to gift to.

How to Update Your Will

Changing your Will does not need to be a stressful process. Let’s set up a meeting to talk about how we can ensure that your final wishes are reflected in your estate planning today!

Four things for pet owners to consider when estate planning

In a 2020 survey conducted by the Canadian Animal Health Institute (CAHI) it was shown that over 58% of Canadians own either a cat or a dog. I'm sure the numbers went up throughout the pandemic. With at least over half of all Canadians caring for household pets the question often brought up is, what happens to my furry companion after I pass? I was quoted in this article for the Globe and Mail last year on this very topic.  We care for these animals as part of our family, and it is no surprise that many Canadians want to make sure their pets are taken care of even after they are gone. Michael Jackson left $2 million from his estate to his chimpanzee Bubbles and while there are laws in place preventing cash gifts to be left to pets in Canada there are other ways in which you can ensure your pet is taken care of in the event of your passing. Here are four things to consider when working on your estate plans.

1. Establish a Pet Guardian

In Ontario, because pets are considered personal property, you cannot legally leave a cash gift to Fido or Garfield. However, what you can do is establish a pet guardian in your Will who agrees to take care of your furry companion upon death or incapacity. Ensure that you choose someone who understands the responsibility of taking care of an animal as it can be a hard job. It is a good idea to keep medical records and veterinary information in a place your estate trustee can access it and give it to your chosen pet guardian.

1. Give a Cash Gift to a Pet Guardian

You cannot leave your dog Toto money in your Will, but you can leave a pet guardian money so that they can provide for your pet. This puts a lot of trust on your chosen pet guardian to honour your wishes so again it is important you choose a pet guardian you can trust.

1. Establish a Trust for a Pet Guardian

A cash gift is nice but what happens when the money runs out? Establishing a trust for the benefit of someone who will take care of your pet is a good way to ensure that they will be continuously cared for throughout the duration of their life. An efficient way to calculate the amount you should leave in your trust is to multiple $3000 by your pet’s life expectancy, this way your furry friend will always have the care they need. To avoid a conflict on interest it may be a good idea to designate the trustee as someone other than the pet guardian. The trust also must have an end date. An example of a clause you may put in the will could be that once the last remaining pet passes the rest of the trust balance is distributed among your other named beneficiaries of the estate.

1. Pet Foster Programs

If you find yourself in a situation where your family is either unwilling or unable to take on the responsibility of your pet after your passing you have the option of researching a “foster” program with your local Humane Society. In this way a search will be carried out by the Humane Society to find a new home for your pet. Gifting your pet to the Humane Society allows them to take custody of your furry friend and find them a loving home where they will continue to be cared for.

Did you catch the last episode of Mrs. Maisel?📺 What it teaches us about order of death.

In the last episode of this season’s The Marvelous Mrs. Maisel (I promise this is not a spoiler), Miriam Maisel’s father, Abe, turns to his wife Rose and says in a very serious voice “I go first.” This is on account of their contemporary, Moishe, being hospitalized due to a heart attack.

As an estate lawyer, these three words, got me thinking. So many of my clients have an order of death in their heads that they assume will play out. But life is full of elements we cannot control and a proper estate plan must always consider multiple scenarios.

One of the benefits of working with an estate planning lawyer who focuses on this area is that we deal all too often with estates where the order of death that occurs was not adequately planned for. Where a son and mother die in quick succession before the first estate was settled. Where an adult child dies before their parent.

These are tragedies but all wills are not built alike. A properly drafted will provides for gift overs no matter the order of death and alternate named appointments for the estate trustee so that the estate runs as smoothly as possible and the family can focus on what is important.

So You've Been Named Executor in a Will, Now What?

While it can be an honour to be named the executor (also known as estate trustee) in a Will, it can also be a burden and quite a lot of responsibility on your part. The good news is that, depending on what the Will says, you may be eligible to receive compensation for your time and effort in administrating the estate. The bad news is that as executor, you are the only thing standing between the estate and a possibly distressed beneficiary if things turn sour. As distinct parties in an estate administration, it is important to have an understanding on what your rights and duties look like once the administration process begins.

Beneficiary Rights

As the beneficiary there is not much that you need to do in terms of preparing the estate for administration. Just sit back, relax, and let the executor handle the work. In a perfect world we would like to be able to put our utmost good faith into the executor handling the estate however, the world is not perfect and that is not always the case.

Beneficiaries are owed a duty by the estate trustee that they will follow the instructions set out in the Will and beneficiaries have the right to see to it that they do. After all, the sum of assets in the estate does not belong to the executor themselves, but rather they can be thought of as the caretaker passing along items meant for someone else.

Let’s take a look at what some of those duties entail:

Executor Duties

As executor of an estate, you have many responsibilities and obligations to fulfill. To not overwhelm you, we have broken these duties down into 5 major categories:

Arranging the funeral

Document Collection and Asset Appraisals

Applying for probate (if necessary)

Accounting to beneficiaries

Distributing assets to the beneficiaries

Arranging the Funeral

As the trustee it is your duty to make the funeral arrangements for the deceased. You can apply for the Death Benefit; a simple application process which grants you $2,500, usually used to help cover the cost of the funeral. Another thing you will need is to obtain an official Death Certificate. Usually, the funeral home will provide you with one. This certificate is a necessary document when applying for probate, which we will talk about in the following steps.

Document Collection and Asset Appraisals

Probably the most important thing to do is to locate the original Will. This document will be your road map for administering the estate. Other documents that must be gathered are documents relating to existing bank accounts, real estate records/deeds, ownerships, life insurance policies, tax returns, pension plans, investment portfolios and records of debts. Basically, you will want to find every document that pertains to the assets and debts of the deceased’s estate as you will be required create a list containing the sum of all the assets for your probate application. It is your job to find out what the estate is worth and to determine the date of death value on items such as the home, vehicles, personal items such as jewelry, and bank accounts. It will also be your job to cancel things such as credit cards, subscriptions, driver’s licenses, passports, social insurance numbers and health cards.

Applying for Probate

Sometimes the estate will have to go through a process called “probate”. Probate is a twofold process which validates the Will and appoints an executor by will of the Certificate of Appointment (just because you were named executor does not necessarily mean you are automatically appointed the executor). At this step in the administration process it is best to retain us to assist to handle this process as it is a lengthy and complicated one. Estates that go through probate are subject to an Estate Administration Tax which is part of why determining a calculated list of assets is important. The other reason being that you will need to divide that sum amongst the beneficiaries.

Accounting to Beneficiaries

Executors have a duty to provide every beneficiary named in the estate with an accounting of all the assets, expenses, distributions, income and losses of the estate. It is important to be transparent with the beneficiaries to avoid unnecessary conflict. Remember, the work done by the trustee is for the benefit of the beneficiaries, the Executor does not have the right to make their own decisions on how the estate gets distributed, they must follow the wishes of the deceased as set out in the Will.

Distribution of the Estate

Lastly, once probate has been granted and all other debts and expenses have been paid, the remaining task of the Executor is to distribute the assets to beneficiary and get releases signed. 

If you have been named as an executor and want to discuss the process or want some advice on whether or not to act as always feel free to reach out.

Getting Your Affairs Organized Online

In Estate Planning, our top priority is helping our clients plan for their future in a way that is efficient, stress-free, and most importantly, secure.

However, after the conversation with Laroux about digital asset management, each client is usually left on their own to organize digital storage of their important documents and information. Our move to a paperless society places us at risk of dying with the important information locked in our computers behind a password.

It is essential that the exchange of personal information is done in a way that minimizes potential risk of exposure. Forwarding documents through email is hazardous for two reasons; the first being that sensitive emails can get lost in the flow of everyday life, making document collecting a disorganized and slow process, the second being that it has become increasingly easier for hackers to retrieve private information via email. 

We want our clients to feel safe, secure and cared for and most importantly, to feel organized and ready for all the stuff that does not make its way into the will or powers of attorney. For this reason, for those looking for online solutions, we took a look at three platforms: Side Drawer, ReadyWhen and EstateBox. We are not affiliated with any of them.

Accessibility

One of the elements we looked at when assessing each platform was how user friendly the experience was. What we loved about these platforms was that each section was pre-organized into categories which allows users to better manage their documentation and information. These categories included subjects such as health, home, financials, investments and legal. Categorizing your profile makes it easier and less stressful to plan for your future, ensuring that there is a place for every document you may ever need to find. What we found interesting about EstateBox in particular, were the helpful prompts that preceded each grouping that aims at guiding you through the process, highlighting potential documents you may need so that you are less likely to miss important information. 

Collaboration

Possibly the most attractive aspect of these platforms is the ability to add collaborators to your profile. This includes legal professionals, financial advisors, family members or anyone you feel needs access to your personal information and documentation such as your estate trustees and Attorneys for Property. For all three services this feature is completely customizable meaning that you have the ability to delegate who to share information with, who to allow access to edit this information and who you want to hide this information from. This puts you 100% in control. With SideDrawer, there is even a timeline feature gives the user full transparency over how their collaborators are interacting with their information. ReadyWhen’s Ready Mode feature goes above and beyond to allow you to add photos and videos to your profile that are only accessible after your passing to give your loved ones a lasting memory that they can cherish forever.

Support Services

Every person we talked to from each of the three platforms were exceedingly welcoming and helpful. It is clear that the founders and support staff of these establishments take pride in their work and want to make the user experience as easy as possible. Their friendly, patient and encouraging interactions with clients are what set them apart from other businesses. What we found exceptional about SideDrawer was their website prompt asking if you would like to schedule a quick fifteen-minute chat with them, showcasing that they are indeed ready and available to help. With these platforms, users can rest assured that they will receive the any help that they may need.

Pricing

SideDrawer, ReadyWhen and EstateBox offer affordable pricing, further increasing the accessibility of their platforms. The pricing for each is as follows:

SideDrawer: US$6/month or US$60/year

ReadyWhen Pro: $5/month or $50/year or $500/Lifetime

EstateBox: $12.99/month or $155/year

Verdict

When it comes to digital asset management, any of the three platforms would be a valuable asset to your planning process.

How to Become an Executor When Your Loved One Dies Without a Will

As probate lawyers commonly say, “If you don’t create your own will while you’re alive, the government will give you one when you’re gone.” What that means is that if a person dies without a will (called “intestate”) their estate will be administered according to provincial law. Likewise, the heirs who are entitled to receive any inheritance are also predetermined by provincial laws of succession. If there are no heirs, assets may become property of the government.

Who Is In Charge?

Whether a person dies with a will or intestate (without a will), there still needs to be someone in charge to oversee the deceased’s final affairs. If the deceased had a will, the person serving in this role is called the Executor (also known as an Estate Trustee). If a person dies without a will, a judge will appoint someone to administer the estate.

How Can I Become My Loved One’s Personal Representative? 

If you’re interested in becoming an Administrator over your loved one’s estate, you’ll want to contact a probate attorney or take a look at the province’s probate rules to determine if you are eligible to serve and where you stand in terms of priority to serve. In most places, a surviving spouse is given first priority, with children to follow. From there, other family members may be considered. If you are low on the priority list but other family members do not want the job, you may be able to get written permission from them to “move ahead in line.” 

Once it’s determined that you are eligible to serve, or that you have permission to serve from those who have priority over you, the next step is to hire an attorney to formally petition the court by filing what’s generally called an Application for a Certificate of Appointment of Estate Trustee Without a Will. With your filing you will likely have to pay a fee, give an estimated value of the estate, and provide a detailed list (including names and addresses) of surviving heirs.

Can a Lawyer Help Me With this Process?

Probate can be a long and frustrating process, even for professionals. The laws of each province are different and one simple mistake could set the process of closing out your loved one’s final affairs back for months, and sometimes years. It may be in your best interest to work with an experienced probate attorney who can handle the Court process, manage legal deadlines, and help you avoid any liability with heirs for something unintentionally gone wrong.

If you would like to discuss becoming the administrator of your loved one’s estate who has recently passed away without a will, we’d be happy to speak with you. Contact us here to schedule an initial consultation.

What to keep in your safe

Safety deposit boxes have been in use for decades; maybe your parent or grandparent owns one. However, contrary to popular belief, safety deposit boxes are not the most secure way to ensure that your valuables are protected. The reason for this is because the contents of safety deposit boxes are rarely insured with the bank, as well, they may be difficult to access upon the death of a loved one. 

Therefore, the best place to keep important assets is in a fire-proof safe that is bolted to the floor in the comfort of your own home. Usually, the contents of your home fall under the jurisdiction of your homeowner’s insurance policy which adds that extra peace of mind to know that your valuables are insured if anything was to happen. A fire-proof safe is also the superior option because it allows for easy access of your items if you ever need them. To put this into perspective, an Estate Trustee will require numerous documents to access your safety deposit box at the bank whereas all you have to do is give them the code and location of your safe in your home.

The items that you may want to keep in your safe will vary between individuals. Here is a list of the top 8 that you should consider keeping in your safe: 

1. Legal documentation such as wills, power of attorneys, signed marriage contracts or cohabitation contracts, are important to keep in a safe as they can be easy accessed by Estate Trustees as the need arises.

2. Identification such as passports, original birth certificates and social insurance numbers are good things to keep safe as you do not want them to get lost or stolen.

3. Insurance policies and up to date print outs of banking information including branch location and account numbers should be stored in a safe ensure that they are readily accessible and that they do not get misplaced. It is best to keep your financial documents together to avoid confusion. If you don’t want to put printouts of your banking info in your safe see 7. 

4. Title deeds to assets such as your house or car are important documentation that allows you to prove ownership and may be required more frequently that others thus its important to keep in a place where you know their whereabouts to save time searching through miscellaneous papers. 

5. Valuables such as jewelry, cash, and small collectible items that you would not want damaged in case of a fire or stolen in the event of a robbery should always be securely kept away.

6. Photographs in either their original forms or digital hard drives containing family photos are sentimental items that may hold no monetary value but certainly hold an emotional one and should not be taken for granted and would do well to be included in the safe.

7. Digital assets information about how to get into the phone and computers and then any other login information will go a long way to ensuring the Estate Trustee can access items when need be. You could provide the access to account information this way instead of the printouts mentioned in 3 but keep your Estate Trustee up to date as that login info changes. 

8. Your point people – Contact information of your accountant, financial advisor, account manager where you bank, property manager if you have income properties and if you are a business owner an additional list of the key people who should be on standby to assist if something happens to you.

Keep your assets organized safe and secure to avoid loss and unnecessary hardship. Remember to keep the location of the combination in a reliable place as well and to share that information with the Estate Trustees in advance.

Don't get spooked! 5 things to talk to your parents about estate planning

1.    Do They Know Where their Will is Located?

Talk to your parents about where they keep their original will (the one that is signed in wet ink, not a photocopy) and establish a plan on how to access it when needed. To avoid delays in the administration of their estate, the will should be kept in a safe place that is easily accessible to their chosen executor so that the executor can handle their affairs without unnecessary issues from the court. 

2.     Safety Deposit Boxes? Maybe Time to Get Rid of Them 

In a recent article by CBC, increasingly more and more safety deposit boxes have been reported to have been emptied by banks across Canada against the wishes or the knowledge of the owners. These situations have proven that safety deposit boxes are not a secure way to store your valuable possessions and therefore, it is not a good idea to keep your will in a safety deposit box. 

Safety deposit boxes do not fall under Canada’s Bank Act and are largely unregulated, making it hard for those who have lost their possessions to receive any sort of compensation. In 2012 there was a “network wide reconciliation process” which saw the emptying of 16,000 boxes kept with TD Canada Trust who claimed the reasons for drilling holes in the boxes amounted to overdue rent, lost keys or where required by law. 

If your parents currently have a safety deposit box with their bank it is advisable to have a conversation with them about visiting the box and possibly relocating its contents. Their will, and any other important documentation, should not be left with their financial institution as it is impossible to guarantee it’s safety. Save yourself any future headaches and legal battles by reconsidering the validity and security of safety deposit boxes.

3.    Digital Assets – Do They Have a Plan in Case Either Parent Becomes Incapable or Dies? Issues of Logins and Passwords on Death 

Did you know that 99% of North Americans have at least one online tool that they use for their personal lives?

If we’ve had an estate planning meeting, you likely recall me asking you to get your digital affairs in order so your named executor or Attorney can have access when need be. But what about your parents? Since more and more of our home bills and statements are delivered electronically, those that have digital access once a loved one becomes incapable or passes have an easier time when dealing with their loved ones affairs.

To be clear, any system you setup needs to protect you and your loved ones from potential fraud by another family member or friend. No system is foolproof in that regard but it is good to keep it in mind when establishing a digital asset management system. 

Also rest assured that all my wills & powers of attorney for property provide the legal authority for either the estate trustee (with your will) or the attorney for property (in the continuing power of attorney for property) to have legal access to your digital assets. 

4. Burial Wishes – New Innovations in the Way We Approach Death

Death can be an uncomfortable conversation that many people choose to avoid having with their loved ones. But the fact is, everyone dies, and being prepared for that is one way to take control of the life you still have. In Ontario, there are increasingly new, innovative ways for both preparing for and administrating your death:

Death Doulas
The End-of-Life Association of Canada defines death doulas as someone who gives support to an individual who is terminally ill or who wants to prepare for the unexpected. Many people feel that that talking about death with their family places an unnecessary burden on them that they wish to avoid. The purpose of a death doula threefold; give support, provide education, and grant empowerment for those nearing the end of their life. These doulas work with their clients to ease their fears and ensure that their wishes are finalized. They are a support system which helps them work through their fears and uncertainties. They aid with the administrative side of death and help clients get their “affairs in order”. They ask clients important questions such as “where do you want to die?” and “if you are no longer capable, is there someone that can speak for you?” Death doulas help with bucket lists and final wishes. 

If talking about death its not something you feel comfortable talking to your parents about, it might be worth seeking the assistance from a death doula to ease the burden surrounding death and ensure that your parents are well taken care of so that you make focus on what matters most in those final years or months.  

Home Funerals
Especially with Covid-19, home funerals are an increasingly popular option for the celebration of one’s life. Over the last 18 months many of us have lost or have known someone who has lost a loved one and have seen the struggle associated with funeral arrangements. Between lockdowns and restrictions, celebrating the life of those who have passed remains a challenge. Having a home funeral is beneficial in a number of ways. It increases participation amongst family members, ensures that the family has control over the ceremony, it presents a positive model for children who see their parents freely grieve and it is more cost efficient. 

Talk to your parents about their burial wishes, perhaps a home funeral is something that they never thought of but would be open to the idea. Home funerals are a safer way of gathering together while simultaneously allowing for celebration in a way that is more comfortable. 

Green Burials
The concept of green burials is not new, in fact, most burials before the 19th century were green burials. However, with the growth of the funeral industry and commercialization of burials, this practice fizzled out of fashion. Green burials are more environmentally friend as the body is neither embalmed with harmful chemicals nor cremated but rather wrapped in a shroud or placed in a biodegradable coffin and buried without a concrete burial vault. The goal of green burials is that the body will completely decompose and will naturally return to the earth and nourish the soil.

There are five main reasons as to consider green burial:

• Simplicity – keeps the burial simple and closer to nature

• More cost efficient – individuals save money as there is no embalming, no eccentric caskets and no concrete vault

• More environmentally friendly – conserves the land and is ultimately better for the earth

• Eradication of harmful chemicals – no formaldehyde is used 

• Preserving natural habitats – areas offer food and shelter for wildlife that will go undisturbed by infrastructure 

Talk to your parents about their desires for their funeral arrangements. In the following years, green burials will become increasingly popular as our society strives for more environmentally friendly practices to reduce our carbon footprint. Green burials are a great way to leave the earth a little more better off than you left it. 

5.    Are Their Powers of Attorney and Wills up to Date?

This is perhaps the most important. Often there are updates to be made after a spouse or child dies or in relation to cash gifts that are contemplated in the will that need to be taken out or added. After a major life event be sure to ask your parents if they need to update their planning documents, I'd be happy to help! 

Designating only one of your kids as beneficiary of a RIF or TFSA? Law in Ontario uncertain.

You have several children but you live in close proximity to only one of them and they have been helping you with groceries and banking as you get older. You appoint them executor of the estate and decide to designate them alone on the Registered Income Fund (RIF) or a Registered Retirement Income Fund (RRIF).

Your will says everything to be split evenly between your children.

 Will your beneficiary designation hold up? The law in Ontario is uncertain and if your kids don’t have a great relationship or if one child needs funds, your planning may not withstand litigation and the kids may spend unnecessary funds on lawyers to sort it out.

First things first let’s discuss the Supreme Court of Canada’s position on joint bank accounts or investment accounts

In 2007 a Supreme Court of Canada case came out called Pecore v Pecore 2007 SCC 17 (“Pecore”) on the issue of an aging parent having a joint bank account or joint investment account with an adult child.

Clients tell me all the time that they are on mom or dad’s accounts. The Supreme Court wanted to clarify what happens to those accounts when the parent dies and an adult child is the surviving account holder. Are those joint accounts supposed to fall into the estate to be shared according to the terms of the will or is the other surviving account holder allowed to keep it all?

The majority of the Court decided that the onus is on the adult child who is joint on that bank account to rebut a presumption that mom or dad intended to have them as a joint holder for convenience alone (to help them manage their finances in their lifetime).

Rebutting the presumption means that adult child has to show evidence that they weren’t merely a joint account holder for convenience and that mom or dad intended to gift the balance to them. Examples of evidence that an adult child could point to include proof that the adult child put their own money in the account and was actively involved in the management/investing of that account. It could also include evidence of the deceased parent telling others their intention regarding that particular joint account on their death (telling neighbours, a financial planner, an account manager). The Court will also look to evidence of the state of mind of the parent at the time they opened the account (were they unduly influenced by that adult child, were they reliant on them for groceries and going to the bank? Any cognitive issues present?)

If the adult child rebuts the presumption, they get to keep what is in the joint bank account, if they don’t, it falls into the estate and is subject to the terms of the will, meaning likely splitting evenly with siblings if that’s what the will says.

So what does this have to do with TFSAs, RIFs, RRIFs, or RRSPs in Ontario estates?

Say you are the mom or dad, you have adult kids, and you want to designate a TFSA or RIF or RRIF to one child who you think will take care of most of the estate matters. We know the Supreme Court has this case law about joint bank accounts, but is the current law on beneficiary designated assets?

In Ontario we have conflicting law on this issue and we are going to have to wait to see if a higher court such as the Ontario Court of Appeal or the Supreme Court of Canada weighs in. For now, if there is sufficient money to fight over, it is possible your kids may pursue estate litigation for any TFSA, RIF, RRIF or RRSP proceeds that go to one child alone where all your kids are treated equally in the will.

Here are the two most current Ontario cases on this issue:

Calmusky v. Calmusky 2020 ONSC 1506

In this 2020 decision, Henry died leaving his sons Gary and Randy. In Henry’s last will, he left the residue of his estate to one of Randy’s children and his (Henry’s) nephew. He made Gary a designated beneficiary of his Registered Income Fund (RIF).

Should the rules about joint accounts in Pecore also apply to beneficiary designated assets? Justice Lococo took the position that yes, the analysis in the Pecore case should – in other words, Gary had to rebut the presumption that the RIF beneficiary designated to him should flow into the estate and be governed according to the terms of the will. The judge in this case found Gary could not rebut this presumption despite there being a valid beneficiary designation on file at the bank.

There was a lot of concern amongst estate lawyers and financial professionals after this came out because the whole idea behind a beneficiary designated asset is that it is subject to its own rules in law (specifically the Succession Law Reform Act and the Insurance Act) and that no further evidence should be required to prove intention because that would increase unnecessary litigation in this area and would open the door to questioning all beneficiary designated assets including life insurance in addition to the other kind mentioned above.

Mak (Estate) v. Mak  2021 ONSC 4415

Mrs. Mak died (her husband had predeceased) leaving their four sons, Raymond, Eddie, Steve and Kenny. The wills of their parents gifted everything equally to their four sons however on their mother’s death three sons discovered that their mother’s RRIF had been designated to Kenny alone.

In this 2021 decision, Justice McKelvey reviewed the issue of applying Pecore to beneficiary designated assets and ruled in the opposite way from Calmusky finding Pecore did not apply to the mother’s RRIF. The judge noted “The whole point of a beneficiary designation…is to specifically state what is to happen to an asset upon death.” In this case, Kenny got to keep the RRIF.

So until we hear from a higher court what should you do to avoid confusion and conflict?

Feel free to reach out to me, each case is situation specific but I do have a clause I can put in your will to document your intentions regarding jointly held property or beneficiary designated assets, also if you have a valid will in place, document your intentions on beneficiary designated assets yourself, indicate why you want that child to have that RIF or TFSA alone and sign it in wet ink and date it and keep it with your original documentation.

Also let your key advisors know (your lawyer, financial advisor, bank account manager, accountant etc.) that this is your plan and have them keep a note on file about this. You should be reviewing those beneficiary designations as frequently as you review your will and it’s always advisable to get some legal advice before making changes. Thanks for reading!

MAJOR CHANGES TO ONTARIO ESTATES LAW COMING

This past spring, Ontario introduced future sweeping changes to estates law in the Accelerating Access to Justice Act. It changes many significant areas but we will focus on the top 3 of interest to my clients and their families. All of the measures below will take effect January 1, 2022 except the virtual signing which came into effect right away. 

1. The first which most of my clients know about is virtual signing is now a permanent option for Wills and Powers of Attorney. This is exciting and will allow us to continue to do contactless delivery of services throughout the pandemic.

2. Marriage no longer revokes a Will. This is one the estates bar welcomed to curb the practice of predatory marriages - marrying an elderly person exclusively for the purpose of gaining access to their estate upon their death.

3. Separation, not merely divorce, will now revoke a bequest to a former spouse. If you were legally divorced but had a will naming your ex-spouse as executor and beneficiary or you died without a will and were divorced there was legislation in place to ensure that the surviving ex-spouse was no longer the named executor of the estate nor entitled to receive a share of your inheritance. But separated spouses never enjoyed the same protection of the law until now. 

Come the new year, whether you die with or without a will, your ex-spouse will no longer be entitled to a bequest or to be your executor so long as any of the following criteria for separation are met:

1. You were living separate and apart at the testator’s date of death;

2. You were living separate and apart, as a result of marriage breakdown, for a period of 3 years immediately preceding the testator’s death;

3. You entered into a valid separation agreement before the testator’s death; or

4. If a court or family arbitration order has been made that deals with spousal rights before the testator’s death.

For clients coming to update their estate plans after separation beginning in 2022, this should provide some peace of mind as many are currently not properly protected until new estate planning documents are signed in wet ink. 

For my estate clients where their loved one died without a will, there will no longer be the concern of a separated spouse being entitled to the first $350,000 of an estate and the rest to be split among any surviving children, if any. It is welcome news to many that the legislation has caught up with the reality that many couples separate and do not obtain an official divorce. 

Please note that common law spouses do not enjoy any new rights under these changes which is why it is so important for common law spouses to get their estate plans in place.

Important Conversations to Have With Aging Parents

“Does mom want to live in a nursing home?”

“What does dad feel contributes to, or takes away from, his idea of ’quality of life’?”

“Do mom and dad have legal documentation in place that ensures someone can act financially on their behalf if they are unable to?”

These are just three of many questions you are encouraged to ask your parents and aging loved ones.

Without knowing the answers to such questions, families could be left battling over long-term care, struggling financially, and not truly honoring their parents’ wishes in the event of a future healthcare crisis.

Far too many families avoid talking about aging and long-term care until it’s too late. Especially from a legal standpoint, if you don’t know your parents’ wishes or the documentation they have in place (or don’t), you could be left with a huge mess on your hands if they become sick or disabled.

It’s advisable for adult children to have five specific conversations with their parents as soon as the opportunity presents itself:

1. Long-term care preferences - Do mom and dad want to live in a nursing home or would they prefer in-home care if the need presented itself? If they prefer a facility, what amenities and activities are important to them at this point in their life? If they want to live alone in their home, will that suit their personality or will loneliness and depression result? These are questions that, if discussed in advance, can make the transition into an assisted living facility or a home-health care program much easier on everyone when the time comes.

2. Current Legal Documentation - It’s imperative that adult children find out what legal documentation their parents have in place before incapacity occurs. This includes making sure their parents have a power of attorney for property and personal care so someone can easily step in to make financial or medical decisions on their behalf. Otherwise, the family will be forced to petition the court for control over their parents’ affairs if they passed the point of legal capacity.

3. Medical Preferences and Wishes - Adult children should find out what type and how much medical care their parents want as they age, or following a debilitating diagnosis such as Alzheimer’s and Dementia. Do they have specific wishes about life support or other end-of-life medical treatments? Who do they want to make such decisions on their behalf? The answers to these questions will help your parents to feel secure knowing their wishes will be carried out during an otherwise emotionally-charged time.

4. Current state of financial affairs - To ensure finances are properly managed, adult children should start asking tough questions about their parents’ financial affairs. This includes finding out the location of any safety deposit boxes, bank accounts, investment or brokerage accounts, long-term care insurance, outstanding debts, or other assets unknown to the family. Otherwise, necessary assets needed to cover long-term care or other expenses could go overlooked and unaccounted for. You should also ask your parents how they plan to pay for long-term care.

5. Important contacts and information - While their memory is still sharp, adult children should work with aging parents to compile a list of important contacts and information that will be useful to the family. This includes documenting key doctors, professional advisors (e.g., accountant, attorney, financial advisor), and important passwords for online accounts.

While these conversations are certainly not easy to have, families can make the transition into a parent’s senior years easier by planning ahead. Not to mention, mom or dad will appreciate your willingness to make sure their wishes are honored if and when incapacity, sickness, or disability occurs.