Your Aging Parents: Special Considerations for Estate Planning

Having taken advice from our parents for a whole lifetime, the idea that we eventually have to give some back to them is a subtle but very important change in the way we do things. This subtlety is not lost on our parents, who must now receive this advice.

I am sure that most of you have noticed the pride that our elderly parents take in their own independence. Examples are all around us: the 85-year-old who is still driving his own motor vehicle; the elderly widow who is still able to cut her own grass or do planting in the garden. There comes a time, however, when the joy of this independence fades. Parent and child can sense it and neither wants to talk about it with the other because it illuminates an inevitable truth. In the legal world, lawyers get paid to have conversations with the elderly and advise them with respect to their estate plan or with respect to their future care issues. We always find that these senior citizens would very much like to be able to discuss these issues with their children. When we contact their children, we find that the children are just as anxious to talk about these issues with their parents. Each anticipates a reluctance of the other to discuss such matters — and thus the important things go unsaid.

Most elderly people who are planning their estates have a good idea of what they want to do with their money. For some elderly persons, however, a discussion about their future physical care is a tacit admission that their days of absolute independence may be over. If you have aging parents, the important goal is to maintain their independence as much as possible. This can start by giving useful gifts to your parents, such as a gift of snow removal services, lawn cutting or house cleaning. Your parents will never ask for these things, but they will usually accept them as gifts. This will accommodate their need for help and your obligation to look after them without any hurt feelings.

In this context, some issues invoke the need to preserve the safety of the parents. One of these is the driver’s licence — truly the last bastion of independence for most elderly parents .The thought of your 89-year-old mother driving the “elderly” to church on Sunday is a “clear and present danger” born out of a life of determined independence. If you feel uncomfortable tackling this issue, you need the help of the medical profession because doctors are by law obliged to report persons who are no longer fit to drive. You may need to stimulate that reporting obligation by contacting your parents’ doctor to provide some “information that may be relevant. ”The result of this may be that you will find yourself attending church more regularly.

Unfortunately, these conversations are not always possible because of the advent of dementia or Alzheimer’s disease, which may require a different course of action. In previous articles, we discussed the powers of attorney for property and for personal care. The mental capacity required for a continuing power of attorney for property requires that the person giving the power knows what kind of property he or she has and its approximate value, and is aware of obligations owed to dependants. The donor must also understand that the person receiving the power will be able to step into the shoes of the donor in every way except making a will. The donor must not only be aware that the attorney must account for his or her dealings with that person’s property,but must also understand that he or she may, if capable, revoke the continuing power of attorney. The donor of the power must have an appreciation for what will happen if the property is not managed prudently and the potential for misuse of the authority given to the attorney.

The capacity to give a power of attorney for personal care only requires that the donor of the power has the ability to understand whether the proposed attorney has a genuine concern for that person’s welfare and appreciates that this person may have to make decisions for him or her.

If an aging parent demonstrates a significant lack of capacity, a different route may need to be followed. Under the Substitute Decisions Act of the Province of Ontario, a person seeking to look after the property or “person” of someone who lacks capacity may apply to the Court to be appointed as guardian of that person. A formal capacity assessment is usually preferred. Health professionals who are qualified and certified as capacity assessors under the Substitute Decisions Act will perform this kind of examination for a fee.

Procedurally, notice of such an application to the Court is required to be given to other family members,who include the incapable person’s spouse or partner, his or her children, and his or her brothers and sisters. It is very important that this process be open and that the family members discuss these issues long before a court application is made.The preparation for such an application can be quite onerous because of the requirement of a formal assessment and the preparation of a management plan for the incapacitated person.

It is also important to have consensus among the family members before any Court application is undertaken because a dispute in the Courts is extremely expensive. Where the application is for appointment as a guardian for personal care, it must be stipulated which personal functions are to be managed by the guardian (for example, will the restrictions apply to health care, nutrition, shelter, clothing, hygiene, or safety?). Normally a Court will seek to limit the functions that are assumed by a guardian to those which are actually necessary in order to preserve as much independence as possible for the incapacitated person.

The legal world of substitute decision-making is complicated and can be costly, but it does create a very protected atmosphere for those who need it. Sometimes (read “far too often”), family members try to avoid the legal expense of an application for guardianship or the preparation of a simple power of attorney by using a joint bank account. Father-son, mother-daughter, aunt-niece, etc., etc., or any combination thereof are often used as an inexpensive alternative to managing the affairs of the incapable person. The problem is that there are no statutory safeguards imposed on the management of joint accounts, and both joint signatures have equal access to the contents of the accounts.What was intended to help or accommodate the incapable person can often end up as a preinheritance when the incapable person ceases to have any recognition of his or her financial affairs. Often there is little evidence of either party’s real intent with respect to the management of the account or what happens to the money when one of them dies.The bank account record will often refer to JTWROS, which translates as “joint with right of survivorship.”

The question that is often asked in the Court is whether the bank asked all of the necessary questions to determine whether the incapable person understood and intended that the contents of the account would go to the person who was helping to manage it. If your elderly person absolutely insists that you assist with the management of his or her money by way of a joint bank account, then it is important to ensure that there is some documentation that reflects your intended management and/or entitlement to the account.After the death of one of the account holders, only the survivor gets to give evidence on the subject, and other family members may have something different to say about it.

Save yourself a lot of heartache now and encourage your aging parents to deal properly with these issues while they have the capacity to do so.

John Johnson is a partner in the law firm of Nelligan O’Brien Payne LLP and leader of the Estate Planning practice group. Nelligan O’Brien Payne LLP (www.nelligan.ca) has offices in Ottawa, Kingston, Vankleek Hill and Alexandria.

[This article was originally published in the March/April 2005 issue of Fifty-Five Plus Magazine.]