ESTATE PLANNING ESTATE PLANNING BASICSBASICS

Heather Richardson, B.A. (Hons), LL.B.

Staples & Swain Professional Corporation10 William Street SouthLindsay, ON K9V 3A4

705.324.6222www.staplesswain.com

WHAT IS ESTATE PLANNING?WHAT IS ESTATE PLANNING?

Process to effectively deal with your Process to effectively deal with your person and assets if you die or become person and assets if you die or become incompetentincompetent

Good estate planning:Good estate planning:– Is more than just a simple WillIs more than just a simple Will– Minimizes potential taxes and legal costsMinimizes potential taxes and legal costs– Sets up contingency planningSets up contingency planning– Ensures your wishes regarding health care Ensures your wishes regarding health care

treatments & end of life directives are followedtreatments & end of life directives are followed– Considers the effect of relevant legislation & case Considers the effect of relevant legislation & case

lawlaw

DYING WITHOUT A WILLDYING WITHOUT A WILL

Dying intestateDying intestate Government written WillGovernment written Will

Administrator Required to Apply to Administrator Required to Apply to CourtCourt

Disappointed SpouseDisappointed Spouse Disappointed FamilyDisappointed Family Red tapeRed tape Lost tax Saving opportunitiesLost tax Saving opportunities

JOINTLY HELD ASSETSJOINTLY HELD ASSETS

On death of first owner, surviving On death of first owner, surviving joint owner(s) becomes absolute joint owner(s) becomes absolute ownerowner

Excellent idea between spouseExcellent idea between spouse Survivor becomes owner without legal Survivor becomes owner without legal

or probate costsor probate costs No freezing of much needed cash/assetsNo freezing of much needed cash/assets Real property (land), bank accounts, Real property (land), bank accounts,

RRSPs and investmentsRRSPs and investments

JOINTLY HELD ASSETSJOINTLY HELD ASSETS

YOU SHOULD NOT OWN ASSETS YOU SHOULD NOT OWN ASSETS JOINTLY WITH A PERSON(S) OTHER JOINTLY WITH A PERSON(S) OTHER THAN YOUR SPOUSETHAN YOUR SPOUSE Immediate tax implicationsImmediate tax implications Exposure to creditors/matrimonial claimsExposure to creditors/matrimonial claims Loss of control of your estate Renders Will Loss of control of your estate Renders Will

and Powers of Attorney meaninglessand Powers of Attorney meaningless Avoiding “probate” not worth the risk!Avoiding “probate” not worth the risk!

CHOICE OF EXECUTORCHOICE OF EXECUTOR

Legally responsible to carry out terms of your Legally responsible to carry out terms of your Last Will and TestamentLast Will and Testament

Must be honest, capable, knowledgeable and Must be honest, capable, knowledgeable and availableavailable

Able to act impartially towards all Able to act impartially towards all beneficiariesbeneficiaries

Able to work with any co-executors appointedAble to work with any co-executors appointed Able to withstand criticism from beneficiaries Able to withstand criticism from beneficiaries

and family membersand family members Could face personal liabilityCould face personal liability Possible conflict of interestPossible conflict of interest Have they agreed to act?Have they agreed to act?

BLENDED FAMILIESBLENDED FAMILIES

Ensuring “your” children are not Ensuring “your” children are not disinherited after your deathdisinherited after your death

Providing for dependants and spouseProviding for dependants and spouse Predatory marriagesPredatory marriages Privacy issuesPrivacy issues Effect of Domestic ContractsEffect of Domestic Contracts

SPOUSAL TRUSTSSPOUSAL TRUSTS

Simple, basic estate planning toolSimple, basic estate planning tool Up to entire income and/or capital of Up to entire income and/or capital of

estate available to surviving spouseestate available to surviving spouse Creates two taxpayersCreates two taxpayers Distribution of remaining funds Distribution of remaining funds

governed by your WILLgoverned by your WILL

PROVIDING FOR CERTAIN PROVIDING FOR CERTAIN TYPES OF BENEFICIARIESTYPES OF BENEFICIARIES

Protecting provincial benefits for Protecting provincial benefits for disabled childrendisabled children

Ensuring inheritance lasts for Ensuring inheritance lasts for beneficiaries who may not be capable beneficiaries who may not be capable of managing moneyof managing money

Drug/Alcohol/Gambling Addictions Drug/Alcohol/Gambling Addictions Rocky or Predatory marriagesRocky or Predatory marriages Present or potential future creditorsPresent or potential future creditors MinorsMinors Proper and adequate support of Proper and adequate support of

dependentsdependents

TAX PLANNINGTAX PLANNING

Don’t lose any capital gains Don’t lose any capital gains exemptionsexemptions

Protect from unintended Protect from unintended consequences that may defeat your consequences that may defeat your wisheswishes

Keep your tax deferrals through Keep your tax deferrals through using the proper roll-oversusing the proper roll-overs

Probate planning Probate planning Multiple WillsMultiple Wills

BUSINESS SUCCESSIONBUSINESS SUCCESSION

Deferring taxes through estate Deferring taxes through estate freezesfreezes

Maintaining gains exemptionsMaintaining gains exemptions Who will have control Who will have control Shareholder agreements Shareholder agreements Is there a buy-sell agreement?Is there a buy-sell agreement? Will there be adequate capital for a Will there be adequate capital for a

buy-sell agreementbuy-sell agreement Multiple WillsMultiple Wills

SMART PHILANTHROPHYSMART PHILANTHROPHY

Tax Planning & Lifestyle GoalsTax Planning & Lifestyle Goals Financial Gifts / Life Insurance Financial Gifts / Life Insurance

DesignationDesignation Real EstateReal Estate Shares Shares Charitable Remainder TrustsCharitable Remainder Trusts Endowments /FoundationsEndowments /Foundations

DRAFTING ISSUESDRAFTING ISSUES What if child/beneficiary predeceasesWhat if child/beneficiary predeceases Adopted vs. step-childrenAdopted vs. step-children Cy-press (charity does not exist)Cy-press (charity does not exist) Ad torrem (contest = forfeit)Ad torrem (contest = forfeit) Partial IntestaciesPartial Intestacies Personal item that no longer exists/not in Personal item that no longer exists/not in

deceased’s possessiondeceased’s possession Isn’t enough money in the estate to satisfy the Isn’t enough money in the estate to satisfy the

giftsgifts Proper execution of the documentProper execution of the document CodicilsCodicils Will KitsWill Kits Funeral WishesFuneral Wishes

WHAT ARE WHAT ARE POWERS OF ATTORNEYPOWERS OF ATTORNEY

Legal Document Designating Another Legal Document Designating Another Person(s) the Authority to Act on your behalfPerson(s) the Authority to Act on your behalf

Two Types of Powers of Attorney:Two Types of Powers of Attorney:

1. Power of Attorney for Management 1. Power of Attorney for Management Property Property

(general vs. limited)(general vs. limited)

2. Power of Attorney for Personal Care2. Power of Attorney for Personal Care Property POA can be effective immediately or Property POA can be effective immediately or

“Springing” (ie. triggered by future event)“Springing” (ie. triggered by future event) Personal Care POA effective upon incapacityPersonal Care POA effective upon incapacity

WHAT POWERS DOES WHAT POWERS DOES PROPERTY POA HAVEPROPERTY POA HAVE

Can make decisions and take action Can make decisions and take action regarding the Grantor’s assets, income, regarding the Grantor’s assets, income, expenses and liabilitiesexpenses and liabilities Paying taxes and bills from Grantor’s bank accountPaying taxes and bills from Grantor’s bank account Making investment decisions regarding the Making investment decisions regarding the

Grantor’s retirement savingsGrantor’s retirement savings Buying or selling a homeBuying or selling a home Signing contracts/leasesSigning contracts/leases Making gifts with Grantor’s funds to familyMaking gifts with Grantor’s funds to family Using funds to support Grantor’s dependentsUsing funds to support Grantor’s dependents Initiating/Continuing Litigation on Grantor’s behalf Initiating/Continuing Litigation on Grantor’s behalf

POWERS OF ATTORNEY POWERS OF ATTORNEY FOR PERSONAL CAREFOR PERSONAL CARE

Written legal designation wherein the Written legal designation wherein the Grantor authorizes someone/multiple Grantor authorizes someone/multiple individual(s) to make decisions on his/her individual(s) to make decisions on his/her behalf in the event of his/her incapacity to behalf in the event of his/her incapacity to make decisions regarding his/her health, make decisions regarding his/her health, safety and personal care, including medical safety and personal care, including medical treatment, nutrition & sheltertreatment, nutrition & shelter Major surgery or medical treatment decisionsMajor surgery or medical treatment decisions Arranging home visits by health care workerArranging home visits by health care worker Right to personal medical informationRight to personal medical information Admittance to long-term care facilityAdmittance to long-term care facility

WHY GRANT WHY GRANT POWERS OF ATTORNEYPOWERS OF ATTORNEY

Peace of mind. Peace of mind. To ensure your assets, and To ensure your assets, and yourself are looked after by someone you trust yourself are looked after by someone you trust and in the manner you desire, if you become ill and in the manner you desire, if you become ill or incapacitated in the future.or incapacitated in the future.

Control. Control. By selecting in advance who you wish By selecting in advance who you wish to speak/act on your behalf you can provide to speak/act on your behalf you can provide guidelines & instructions to them & eliminate the guidelines & instructions to them & eliminate the possibility a Guardian will need to be appointed.possibility a Guardian will need to be appointed.

Convenience. Convenience. If you are unavailable, but need If you are unavailable, but need some affairs attended to, granting a limited, or some affairs attended to, granting a limited, or temporary Power of Attorney is often helpful.temporary Power of Attorney is often helpful.

WHAT HAPPENS IF I HAVE WHAT HAPPENS IF I HAVE NO POA AND NEED ITNO POA AND NEED IT

If you become incapable to make decisions about your If you become incapable to make decisions about your property and/or your person someone will have to be property and/or your person someone will have to be designated as your “Guardian” or “Substitute Decision designated as your “Guardian” or “Substitute Decision Maker”Maker”

For personal care, decisions fall to next of kinFor personal care, decisions fall to next of kin Family member or someone close can apply to Court Family member or someone close can apply to Court

for appointment as your Guardianfor appointment as your Guardian Guardianship Applications Require Capacity Guardianship Applications Require Capacity

Assessments, Can be Costly & Time Consuming Assessments, Can be Costly & Time Consuming ProcessProcess

Office of the Public Guardian and Trustee (the Office of the Public Guardian and Trustee (the Government) will assume the role of Guardian if no Government) will assume the role of Guardian if no suitable applicant is availablesuitable applicant is available

WHO SHOULD I APPOINTWHO SHOULD I APPOINT

Someone you Someone you TRUSTTRUST Someone that knows/honours your views/wishesSomeone that knows/honours your views/wishes Someone willing to do the work/be availableSomeone willing to do the work/be available Often, your Attorney is a close relative/friendOften, your Attorney is a close relative/friend Can be more than one person, either jointly or Can be more than one person, either jointly or

jointly & severallyjointly & severally For Property Management, could be a For Property Management, could be a

Professional or Trust CompanyProfessional or Trust Company Important to Appoint Alternate(s) to first choiceImportant to Appoint Alternate(s) to first choice Choose Wisely.Choose Wisely.

CAN I REVOKE/CHANGE MY CAN I REVOKE/CHANGE MY POWER(S) OF ATTORNEYPOWER(S) OF ATTORNEY

Both Powers of Attorney for Property and for Both Powers of Attorney for Property and for Personal Care can be changed or revoked at Personal Care can be changed or revoked at any time as long as the Grantor has legal any time as long as the Grantor has legal capacitycapacity

WHAT DO I DO IF MY POA IS WHAT DO I DO IF MY POA IS BEING ABUSED?BEING ABUSED?

Tell Someone. Tell Someone. The Elder Abuse Coordinator, the The Elder Abuse Coordinator, the Police, the Public Guardian & Trustee, Your Police, the Public Guardian & Trustee, Your Doctor … and Doctor … and Seek Immediate Legal Advice.Seek Immediate Legal Advice.

THANK YOU

QUESTIONS?