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Wills and Powers of Attorney are important planning documents which every person should have. Preparation should be relatively painless and inexpensive. While there are many do-it-your self kits of varying cost and effectiveness, they should be professionally prepared and periodically reviewed with your lawyer.

  What are they?
  What do they do and when?
  How are Wills and Powers of Attorney the same,
and how do they differ?
  What do most people do?
  What if I don't have a Power of Attorney?

  What is a Will?
  What goes in a Will?
  Who can my Trustee be?
  What powers does a Trustee have under a Will?
  Where should a Will be kept?
  How often should a Will be changed?

What are they?
What do they do and when?
How are they the same, and how do they differ?

Essentially, Wills and Powers of Attorney do the same thing. They allow you to appoint someone to carry out your instructions - follow your will - when you are not available or able to act for yourself. Although each has the same aim, they can never act together. A Power of Attorney is effective as long as you are, but is only valid while you are alive. Conversely, a Will is only a piece of paper while you are alive, and only becomes a legal and binding document once you are gone.

First, let us examine a Power of Attorney.
Who or what is an Attorney?
The Substitute Decisions Act (Ontario) allows you to appoint someone whom you trust and depend upon to act as your attorney. The attorney can be anyone who is over 18 and of sound mind, and is often a husband or wife, close family member or friend.

The legal document setting this up is called a Power of Attorney. You can name more than one attorney, acting together or separately, or can layer attorneys, so that if the person you name is unable or unwilling to act, someone else can take their place. The powers of the attorney can be all-encompassing, or as restricted as you feel comfortable with.

What can Powers of Attorney do?
There are two basic types of Powers of Attorney: an Attorney over property and an Attorney over personal care.
A personal care Attorney allows you to name a person and give them full authority to give instructions to your doctors or care-givers should you become mentally or physically unable to care for yourself.

The law allows you to give verbal or written instructions to your attorney - what types of medical care you would accept and what you would refuse-and gives your attorney the power to carry out your wishes. By giving the authority to one or two persons you trust, disturbing and painful family crises can be avoided through your forethought.

The second type of Power of Attorney deals with your property. You appoint an attorney to act on your behalf in any business or property transaction. You can impose whatever restrictions you feel comfortable with, such as to allow the attorney to assist in the purchase or sale of a specific property, or to be valid only in certain months, when you are on vacation, or only if you are unable, for any reason to manage your own affairs, in the opinion of your doctor, or a licenced assessor.

At its widest, your attorney is given authority to sign virtually any document that you could sign (with a few exceptions, such as your Will, another Power of Attorney, or to exercise a position, such as officer of a company). An unrestricted attorney can sign cheques or contracts on your behalf and you are bound by them as if you had personally signed.
And, subject to any restrictions you impose in the document, the power is effective from the minute the document is signed.

Anyone accepting the attorney's signature, on presentation of the signed Power of Attorney is protected from any claim that the attorney acted improperly. The Power of Attorney is valid until revoked by you, but, if your attorney continues to act improperly, you continue to be bound. Therefore, by appointing someone as your attorney, you must repose the utmost trust and confidence in them. If there is any doubt, then it is wise to put in effective restrictions, or name two or more attorneys who must act jointly or only with the consent of the majority.

What do most people do?
The answer isn't really important, as a Power of Attorney should be designed to meet your needs, not everyone else's.

Nonetheless, many couples name each other as attorneys, then name an adult child, brother or sister, as a substitute attorney if their spouse can't act. Most have both property and personal care Attorneys named in the same document.

The types of restrictions vary widely, although most decide on full, unrestricted Powers of Attorney. They must then decide where to keep the documents. Obviously, if the document is kept in a safety deposit box or safe, it cannot be used, unless the attorney is told of the document and given access to a copy. But if the document is to be used as it should, signed copies are made, and delivered to the attorney and substitute attorney with appropriate instructions.

What if I don't have a Power of Attorney?
For a while, there were horror stories circulating. If you didn't have a Power of Attorney and were in an accident, the government took over everything you owned. Your unfortunate husband or wife was left without money and had to ask the government for permission to touch any of your assets. Horror stories!

Unfortunately, they were all too true. If any person were unable to manage their own affairs, a new government department, the Office of the Public Trustee and Guardian, (PM) took over management of all of their assets. Without a Power of Attorney naming someone who could then apply to take over management, the consent of the PTG was needed on every document. If a distraught wife had to sell the family home to meet expenses, she needed the consent of the PTG, even if the home was in her name alone. An application to have a spouse or family member take over costs thousands of dollars and required a complete plan for each asset to be disclosed.

Thankfully, the law was changed in 1996 so that family members were given the right to apply to manage the affair s and assets of the incapable person and so long as the plan and person appeared reasonable, they are allowed to take over without a court proceeding and the PTG would step aside. Still, the government, through the PTG, decides who is to take over, so that a simple Power of Attorney allows you to make the decisions in advance.

What is a Will?
Formally, a Last Will and Testament, is a legal document written while you are alive to govern what will happen to your assets once you are dead. You can make many Wills during your lifetime, but each one cancels out all the others, so that only the last one made, provided that you were mentally competent and not under any duress, or undue influence, counts.

What goes in a Will?
In a Will, you name a Trustee, also known as an Executor or Estate Administrator, to carry out your instructions. There can be more than one Trustee named, and substitute Trustees named if the first cannot act. Then the Trustee is told what to do.

Normally, there is a direction to pay any debts, taxes and fees that would be liens against your estate. An estate consists of everything you owned or had an owner ship interest in at the time of your death. In Ontario, on your date of death a calculation is made of the value of everything you owned, and an income tax filing must be made for any taxable income or profit. There is also a probate tax payable to the government based on the value of the estate.

Once all the debts are paid, the Trustee is given a plan to distribute the estate as you wish. The distribution is as individual as you are. Usually, a couple will leave everything to each other, with provision for a trust for infant children if both parents should die while the children are too young to look after themselves.

Often close relatives or friends are named as guardians to care for any children. As the children grow up and start their own families, the Wills are tailored to meet more individual needs. Trusts can be set up to care for any disabled children, relatives or parents. Provisions can be made for grandchildren, nieces and nephews, elderly parents, specific gifts or funds set aside. Your Will is your document, your bequest to future generations and final control over your resources.

Of course, your freedom and control are not absolute. If you are married, your spouse must be considered. The Family Law Act allows a spouse left out of a Will or not properly provided for to request an equalization of all net family assets. This results in a determination of all assets of both spouses, and a proper division. There are also rules disallowing setting up permanent trusts to keep adult children from ever taking control of money left for them.

Who can my Trustee be?
A Trustee must be over 18 and mentally competent. A Trustee who doesn't live in Canada usually must post a bond personally or through an insurance or bonding company equal to the value of the estate. Obviously, you must trust your Trustee completely.

If the Trustee acts improperly, the Court can take action, but only after the problem is discovered and the harm done. If you trust someone, but there is some question about their ability to invest, restrictions can be put in place, or a financial advisor can be named as a second Trustee.

Often trust companies will act as Trustee if the estate is large enough, although their investments will usually be very conservative.

What powers does a Trustee have under a Will?
A Trustee is bound to follow the instructions in the will that appoints him or her and to fulfill the terms of any trust or gift. Unless agreed otherwise, the Trustee is entitled to be paid for services, depending on the amount of the estate and the time involved. The Trustee can hire such professional investment and legal advisors as are needed.

In the Will, you can set out the type of investments your Trustee is allowed to make. If you are silent, the Trustee is bound by the Trustee Act which grants powers to sell estate assets for the purpose of paying debts and distributing the estate. If monies are to be invested for children or any other reason, there are certain listed investments considered safe and reliable by the government. Unfortunately, they often have very modest returns and if the children are depending on the interest for their living expenses, problems can arise.

The terms of the will can expand the powers allowed to the Trustee, depending on the Trustee's experience and ability to invest wisely. The Trustee can be given the power to negotiate and settle any claims made against you or the estate. If you were operating a business or investing in market shares or mutual funds, the Trustee can be allowed to continue the business or investment funds. The Trustee can keep any real estate, including the family home, for the children, including any mortgaging or leases, and maintain the property.

If the Trustee has a sound record, you may wish to give your Trustee full powers to invest in any investment he or she considers to be good. You might also want to allow the Trustee to distribute the actual assets, down to tables, chairs, jewelry and keepsakes among the beneficiaries.

Where should a Will be kept?
Once your Will is signed, it should be stored in a fireproof place, usually away from your home. A bank safety deposit box is fine.

Many lawyers keep fireproof vaults to store client's wills and valuable documents. The Estates Court at Toronto will store Wills in a depository.

The document is yours and should be under your control should you ever wish to review or change it.

How often should a Will be changed?
A Will is a planning document and should be reviewed each time there is a major change in your life. It should be reviewed at least every five years to make sure it still does what you want.

There are certain times in your life that the law changes your Will automatically. If you marry, the law assumes that you would want to change your Will, so that any prior Will not made contemplating the marriage is considered revoked, and a new will should be drawn.

Similarly, if you divorce, the law assumes that you intended to remove your ex-spouse from the Will, and this is done automatically.

Conversely, if you separate, there is no automatic change to your Will, so that marital spouses long separated still are entitled to the other's estate if there is no Will, while long-term common-law spouses have no such rights.

Even if there is a separation agreement stating that neither spouse will make a claim against the other, if there is an outdated Will leaving everything to the survivor, this overrides most releases.

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