Powers of Attorney and Wills: 8 Estate Planning Tips in a Post-Pandemic World

Thinking About Preparing or Updating Your Powers of Attorney and Your Will? Here Are a Few Tips To Help You With Your Estate Planning in a Post-Pandemic World

Over the past year our clients have asked us many questions about powers of attorney, wills and estate planning during a pandemic andthe effects of COVID-19 on the estate planning process. We’ve collected our insights based upon these experiences and are offering these insights to you in the form of an expanded blog post guide, which may help you with your estate planning activities.

Estate Planning and Procrastination

Clock vanishing into thin air. Estate Planning, Wills, Power of Attorney

Perhaps you’ve never considered the need for a will or powers of attorney. Or maybe you’ve already had your will and powers of attorney prepared but haven’t looked at them in a while.

If you are in either of those categories, don’t worry, you are not alone. According to a survey completed by the Angus Reid Institution, nearly 51% of Canadians do not have a will. Of those Canadians that do have a will, only 35% of those surveyed said their wills were up to date.

Estate Planning Fundamentals

During our many discussions about estate planning, a topic that has been top of mind for many individuals over recent months is, whether now is the right time to update or create an estate plan. The answer to this question is: yes.

While the thought of preparing or even updating an estate plan may seem overwhelming at this time, we hope to put those feelings of anxiety to rest within this email update. With this in mind, we believe that our clients may benefit from an overview of what estate planning really is, its attributes and characteristics, along with some estate planning best practices.

Your Estate Planning Consists of Three Primary Documents

1. Power of Attorney for Property.

2. Power of Attorney for Personal Care (formally known as a Living Will).

3. Last Will and Testament.

Estate Planning Strategy

In addition to the foundational three documents, there are other planning strategies that work together and form part of your over-all estate plan, including:

  • Life insurance policies
  • The use of beneficiary designations on registered accounts, such as RRSP’s & TFSA’s
  • The creation of a trust to hold and administer assets both during and after your lifetime
  • Joint ownership of assets

Each of these documents, and mechanisms have their own specific function both during your lifetime and after you have passed away.

Powers of Attorney (Property & Personal Care)

Power of Attorney for Property and Power of Attorney for Personal Care. These two types of powers of attorney are effective legal documents only while you are alive. That is, they may only ever be used while you are living. Once you pass away, these documents are no longer legally effective and cannot be used for anything.

Older couple with lawyer looking at a document. Estate Planning, Wills, Power of Attorney

Both types of powers of attorney operate in a similar fashion. That is, you as the Grantor (the person granting authority), appoint one or more individuals to be your attorney for either Property or Personal Care. While these individuals are given the title of “Attorney”, they do not need to be a lawyer.

A grantor may appoint anyone over the age of 18 to be their attorney for property, while they may appoint anyone over the age of 16 to be their attorney for personal care.

Last Will and Testament

Once you pass away, your Last Will and Testament takes over as the operative legal document pertaining to your estate planning. While you are alive, you may change your Will as often as you like, provided you have the mental capacity to understand those changes being made. However, the last form of Will you sign prior to your passing, will be the operative Will used to administer your estate.

A Last Will and Testament is a document that serves two main functions:

  1. It appoints an individual or individuals to act as executor/executrix, who will be responsible for administering your estate after you have passed away; and
  2. It provides instructions to your executors as to how you want your property administered and distributed upon your passing.

Your executors are given the authority and responsibility of administering your estate. That is, they must collect and preserve your property and ensure that all your taxes and debts have been paid. Following which, whatever is left over (the “Residue” of your estate), is then to be transferred to the beneficiaries of your estate, in accordance with the instructions you have left in your will.

Pen on top of Last Will and Testament document.

Without a will, your estate will not have an appointed executor, nor will you have left instructions about how you wish your property to be distributed. In this situation, anyone, including a family member or spouse may make an Application to the Superior Court to appoint themselves as your executor.  In such instances, your property will then be distributed pursuant to the default rules established by the Province of Ontario.

Estate Planning and Your Business

If you are a business owner, maintaining an accurate and up-to-date estate and succession plan is a critical factor that should be considered at all stages of opening, operating and eventual winding-down or transferring of your business.

Not many business owners think of succession planning when they first open their business. Focus on expanding one’s business generally takes precedence to considering how, and when the business may be wound-down or transferred. Nevertheless, succession planning and estate planning that deals with the transfer of a business are important factors to consider at every stage of operating a business.

Business woman advising two business people, a man and woman. Estate Planning, Wills, Power of Attorney

Succession Planning and Estate Planning

Succession planning and estate planning are two distinct planning strategies. However, they are closely related and should be aligned with one another. Business succession planning is strategizing and planning about the transfer of your business, when, to whom and on what terms are essential elements of succession planning.  Estate planning, deals with the transfer of assets (including business assets) following the passing of the business owner.

In many cases, selling or transferring your business allows the business owner to retire and watch their business grow under the management of a carefully selected successor, sometimes someone in their own family. In some situations, business owner’s children have little or no interest in taking over the family business, which can simplify (or complicate) matters if there are multiple children or family stakeholders.

Business Succession Planning

Business succession planning is usually performed outside of a will. If the business owner wishes the business to be inherited by someone after their death, the business assets can and should be dealt with in one’s Will. This is where estate planning, with a succession plan in mind, becomes pivotal.

The complexity of estate planning increases significantly when a business is involved. The collaboration with a lawyer and accountant (tax) or a financial expert is essential. Your estate plan should include personal directives, wishes and assets, and your directions and preferences related to your business assets.

Estate Planning Next Steps

Whether you have a will or powers of attorney or not, or you haven’t looked at these documents in a while, there is no better time than the present to make the first steps in changing this.

Without an up-to-date estate plan, your wishes regarding what happens with your assets and personal health, may not be realized. That’s because there are default rules set by the Province of Ontario, which deal with the circumstances in which someone is either incapacitated or Estate Planning Word cloud. Estate Planning, Wills, Power of Attorneypasses away, without the necessary estate planning documents (a Will and Powers of Attorney).

The default rules are fact specific and can lead to varying outcomes, depending on the individual’s circumstances.  The biggest concern with these default rules is that they often do not reflect the intricacies of one’s wishes.

Estate planning as a whole, is an opportunity to look ahead and decide in advance how your assets will be distributed and how you will be cared for.

If you would like to discuss your estate planning affairs or related topics in greater detail, please feel free to contact us at 905-294-7780. We can create simple and complex estate plans, as required, to ensure that your wishes are met.

Learn More

If you’d like to read more about how COVID-19 is impacting estate planning, and estate planning in greater detail and its best practices, we have linked several articles below discussing similar topics. In addition, please visit our Estate Planning section on our website.

Sources and links are provided for source credit and attribution, and for additional information purposes only. Nichols Law is not affiliated, associated, authorized, endorsed by, or in any way officially connected with any of the sources or links provided.

Sources and Additional Information

Government of Canada: Coronavirus Disease (COVID-19): Outbreak update

‘What if something happens?’ Canadians’ interest in wills surges amid COVID-19

The best time to start planning for your estate is today

Ontario passes emergency order to let people remotely witness wills amid the pandemic

COVID-19 prompts flood of people to write, change their wills — but quarantine measures are getting in the way

Estate Planning if You Own a Business

Well-to-Do Business Owners Face Estate-Planning Hurdles

Too many Canadians have no will

Five key questions in estate planning and wealth transfer 

A simple guide to estate planning

Sun Life Financial Estate Planning Guide – Business and Personal

RBC Estate Planning Guide

Government of Canada – Estate planning checklist

What not to do in estate planning

Reducing your estate costs

Ontario Government – Wills, Estates and Trusts