It’s the end of the year again, and the last 12 months may have brought significant changes to your daily life. This time of year always brings us to a point of reconciliation between our past and our future. Certainly as the aches and pains of the aging process are beginning to put cracks in the armor of immortality, to which the “boomer” generation has been so desperately clinging, we should remind ourselves that we need to organize our affairs for the journey ahead.
Everyone knows the importance of a Will. If you already have one, you may wish to look back on the past year to see if any changes are necessary. Ask yourself: Are the executors I proposed still alive and well? Are they still living in the same vicinity as myself so as to be in a position to look after my affairs after I am gone? Are my beneficiaries still alive? Do they still have the same needs as they did when I signed my last Will? The answers to these questions may mean that your estate plan needs to be reviewed.
Let me provide some other examples. If you have recently been divorced, your divorced spouse is, by law, no longer a beneficiary under your Will. This is normally a good thing, but you must remember to change the beneficiary designation on your Registered Retirement Savings Plan or your company pension plan and on your life insurance. If your former spouse continues to be named on these documents, that spouse may still be eligible to receive the benefits of these assets, which pass outside of your estate and are not covered by your Will.
A separated spouse is still a spouse. Steps have to be taken to remove the name of your separated spouse from your Will, pension plan and life insurance in the same manner as divorced spouses. In doing this, you will obviously have to abide by any legal or contractual obligations that you might have concluded or will be concluding with your soon-to-be ex-spouse.
If you own a business, you may wish to plan for your succession as the owner of the business.You should not simply be leaving your business to your estate or your children. First, your children may not be interested in having your business. Second, if only one or two of your children are interested in carrying on your business, you will need to balance their desires with the interests of your other children.You should discuss the succession of your business with all of your children to determine who will carry on in your place. If your children are not interested in succeeding in your business, you will do a better job selling your business while you are alive than your heirs will after you die.
Also remember that you have an estate while you are alive as well as after you are gone.To manage your affairs while you are alive, you should appoint a representative to look after your property when you are unable to do so. The instrument that is commonly used for this purpose is called a Continuing Power of Attorney for Property. This document can be used when you are physically unable to look after your affairs or when you lose the mental capacity to do so. Some people appoint attorneys during long periods of travel or while wintering in the south. This is a task that you need to undertake sooner rather than later because the problem with losing the capacity to look after your affairs is that you are often the last person to realize this is happening. By then it is often too late. If you cannot look after your affairs, you will not have the capacity to create a Power of Attorney to delegate your authority to anyone else.
When thinking about an attorney, you should pick someone you trust who is likely to be nearby when you are not capable. If you feel uncomfortable imposing this burden on one person, you can pick two or more attorneys, who can keep an eye on each other and hopefully work together for your benefit. They have to unanimously agree on what they are doing unless you permit a majority rule to apply. By making a formal appointment of an attorney for your affairs, you now have created a statutory obligation on that attorney to act in your best interest and to be legally accountable for his or her actions taken on your behalf at any later date.
In addition to your property, you must also look after your person. A Power of Attorney for Personal Care can be very useful in this regard.This power only takes
effect when your incapacity prevents you from making your own decisions affecting your person.The kinds of decision-making required for you can involve simple issues such as where you live to more emotionally charged issues such as whether you remain on life support. It is important to discuss with your attorney for personal care your wishes and desires in various situations and then write them down specifically in your Power of Attorney document.
The benefit of this appointment is that your attorney for personal care will be designated to speak on your behalf when you cannot and will be spared the often trying experience of arguing with other members of your family about what steps need to be taken to look after you. In the coming months, we will deal with the issues of incapacity and substitute decision-making for aging parents in greater detail.
John Johnson is a partner with the law firm of Nelligan O’Brien Payne LLP (www.nelligan.ca) with offices in Ottawa, Kingston, Vankleek Hill and Alexandria.
[This article was originally published in the December 2004 issue of Fifty-Five Plus Magazine.]