Sunday, February 3, 2019

I don't know what to get her!

There are more than enough stupid things to get someone for their birthday or Christmas. Old people already have everything they need.  Young people certainly don't need more junk. Although I am a member in good standing of the Law Society of Upper Canada at Osgoode Hall, Toronto I am not authorized to practice law because I no longer pay professional errors and omissions insurance.  Nonetheless because I practiced law for about 40 years (1975 - 2014) it's really the only thing I know of any consequence.  Like any self-respecting person I wish to contribute something of value to society before I become certifiably useless.

Much of my law practice involved the settlement of people's affairs after they were dead or incompetent.  These areas involve what are broadly called succession law (wills) or substitute decisions (powers of attorney). To state my thesis at the outset it is my opinion that everyone should have a will and power of attorney. They make an ideal gift when all else fails.

Elderly people generally acknowledge that a will is a good idea.  They like to know what happens to their stuff when they die.  Most of them have stuff.  The common observation from young people is, "I don't have anything!"  Before dealing with this know-it-all error, allow me first to address the situation where you don't have the courtesy to die.  If you're hospitalized following a car accident or a vegetable for any other reason, then what?

Power of Attorney:

The word attorney does not mean lawyer.  People think it means lawyer because it is part of the larger expression "attorney-at-law".  The word attorney comes from the word "attorn" from the Latin "ad" meaning "to" and "torner" meaning "turn"; hence to turn to or transfer. A power of attorney is a transfer from one living person to another. An attorney-at-law is therefore a category of agent having particular legal credential. However a formal agent need not be a lawyer. It can be a friend, relative or even a corporation (such as a trust company if you haven't anyone in mind or they're all too old).

Often when it comes to a power of attorney people seek to apply the same misguided logic as when dismissing the need for a will by saying that everything they have is jointly owned with another - as though that somehow obviates the need for a will or power of attorney (but it does not). Since the customary vernacular for joint ownership is banks and real estate it is important to understand a number of things. First, in the real estate world the term "joint" is a term-of-art; that is, it has a defined me. It means the survivor gets the entire asset upon death - so the first thing to note is that dealing with an incompetent person's interest in real estate is without entitlement until he or she is dead (which means a sale cannot be undertaken even if the financial need exists). Second, in the banking world the term "joint" is not a defined term; at best it is a word having certain industry standards accumulated by experience.  Increasingly banks are wary of broadening the meaning of the term "joint" which formerly had only particular application to married persons (usually a man and a woman) and even then only when they were not living separate and apart.  Accordingly the banks have opted instead to limit the plain term "joint" to describe the banking convenience of deposit and withdrawing funds in reasonable amounts for reasonable purposes while both parties are alive and in apparent agreement.  So for example if one joint owner were disabled (and the bank was aware of that fact) and the other joint owner attempted to withdraw all the funds from the account for whatever purpose, the bank can be expected to resile from the transaction and require other proof of entitlement beyond the mere extension of the usual commercial meaning of "joint". This position is even more acute following the death or estrangement of one or both the account owners.

There are naturally many other instances of having to deal with perfect strangers to enable the smooth operation of an incompetent friend's affairs - the income tax department, the driver's licence bureau, a landlord, an employer and just about any other person or institution with which you can imagine most people associate from time to time (insurers, government offices).  Having a written power of attorney has at least the advantage of expediting what you may suppose should be second nature in the circumstances (on the theory that you are the spouse or common-law spouse or closest relative).

It is normally the case that a power of attorney is required when someone is incapable of handling their own affairs, usually by force of mental incompetency or physical disability. This however does not prohibit someone (the "grantor") from appointing another (the "attorney") to act on their behalf if the grantor is going to be unable because of travel or some other inconvenience (such as temporary rehabilitation) to conduct his or her own affairs. It should however be understood that the lawful authority of  an attorney only exists if the grantor is unable or unwilling to handle his or her own affairs even though third parties - such as banks - are entitled to rely upon the actions of the attorney pursuant to a written document. In plain terms the power of attorney is not a licence to steal.

The further advantage of having a power of attorney is that it legitimizes medical questions arising from "do not resuscitate" issues. Specific terms - usually broadly stated that "if there is no hope of recovery and my death is imminent as determined by a qualified medical professional, then I be allowed to die" - can be incorporated in the power of attorney.  These terms are sometimes referred to as a "living will" because they anticipate the need for end-of-life resolution before someone actually dies.

There are some institutions which attempt to thwart any effort to disclose information about their client.  A power of attorney will normally succeed to rise above the defence of "confidential information" and thus enable practical solution without undue frustration and bureaucracy.

Last Will and Testament:

Getting back to where I started - with wills - I reiterate the stock response from young people in particular, "I don't have anything".  In fact that is not necessarily true. If you have been employed you probably paid into the Canada Pension Plan which entitles your estate to a death benefit of about $2,500. Depending how your death arose, there may also be life or accident insurance payable to your estate (assuming you didn't name a beneficiary and that the beneficiary also survived the crash). Unknown to you, your rich uncle may have serendipitously died just days before you, leaving you a windfall inheritance. Revenue Canada may owe your estate a tax refund. You may have an automobile in your name.

Recall as well that the joint bank account you have with your co-vivant may be frozen by the bank upon learning of your death. I should add that one important step to take to ensure that "joint" means not only convenience of depositing and withdrawing reasonable amounts but also "survivor gets it all" is to insist that the bank amend its records of the account to insert "JWROS" (Joint-with-right-of-Survivorship) after the names on the account. This imports the distinct implication of survivorship on the otherwise narrower commercial meaning. Consider asking your financial advisor to add JWROS to any jointly owned investment accounts as well.

Even if you are not yet persuaded regarding the utility of a will, the greatest and obvious advantage is that the written testament removes any doubt as to who is entitled to manage your affairs on death (the executor and trustee) and who is entitled to whatever you have (the beneficiary).  And because people who are close to you can suffer the same untimely death it is also wise to specify an alternate executor and an alternate beneficiary. The need for an alternate applies to power of attorney as well.

If you do not have a will - and even if the person ultimately entitled to what little you have is able to prove entitlement by producing documents and affidavits - it is far easier and less expensive and time-consuming for all concerned simply to produce a will.  For those who are married do not make the mistake of assuming your spouse is automatically entitled to everything on your death - he or she is not (there are important qualifications, the implementation of which can be extremely and unnecessarily expensive to resolve).


There is sometimes confusion about the operation of a will and power of attorney. A will only "speaks" from the moment of death; that is, it is of entirely no legal effect until the person who made the will (the testator) is dead.  That is important because some people mistakenly believe that because they have a will appointing an executor, the executor is entitled to handle their affairs if they become disabled.  This is not true because the executor has no authority whatsoever until the person is dead.  Before death, the person must have appointed a power of attorney to represent him or her.  Similarly the power of attorney only grants the attorney as much authority as the grantor himself or herself could exercise; which means that if the grantor is dead, so is the power of attorney. After death it is the executor in the will who administers the affairs of the deceased.  The person named as power of attorney or executor can be the same person.

An interesting refinement of the distinction between an executor and attorney is that, because the executor assumes complete capacity to manage the affairs of the deceased, it is technically the executor only (not the deceased even when alive) who has authority to dispose of the remains of the deceased.  This is captured in the legal maxim that "there is no property in a corpse" which effectively means that it is the executor only who decides how the body of the deceased is to be handled - meaning that so-called "funeral prearrangement" is a legal fiction (even though as a practical matter the executor normally abides by the written or otherwise expressed instructions of the deceased). A will might therefore include detailed burial and disposal instructions which would be enforceable upon the fiduciary duties of the executor. By the way I still recommend pre-arranging a funeral - as well as preparing one's own obituary (to ensure information is as complete and as entertaining as you might prefer).

Also keep in mind - this especially applies to people with existing obligations or expectations - that if you intend to do anything in your power of attorney or will which flies in the face of customary or usual conduct, consider the value of having an interview with your lawyer completely independent of any other person (especially the person who is included in your appointment or beneficence).  This caution extends so far as to exclude such person from the lawyer's waiting room during your conference; and I recommend that you get yourself to the lawyer's office without being driven there by the interested party.

If there is the slightest hint that someone (usually a person not named in the document as appointee or beneficiary) might later challenge your instructions on the basis of mental incapacity (advancing age, burgeoning Alzheimer's disease and the like) or undue influence, consider getting a written opinion from a qualified physician to support your current capacity.  This could usefully be filed with the documents for reference if necessary. The time to address the objection is at the outset not after you're incapacitated or dead. Don't minimize the enthusiasm of hopeful but disappointed beneficiaries.

The Cost:

Probably the most compelling objection to having a will and power of attorney is the cost. Suffice it to observe that generally you get what you pay for (which I remind you is why all I have said is technically worthless).  Don't fall into the trap of assuming or deceiving yourself to imagine that a lawyer will for some reason give you a deal. It's a business transaction like any other; and considering the importance of it, it's the last place for parsimony. Always pay for the advice you get - so at least you can allege it wasn't gratuitous and therefore without obligation.

Remember to stipulate alternates for attorney, executor and beneficiaries.  For all sorts of reasons you may never change your will and power of attorney but things might change before you do so.

You might also ask your nominees (executor and attorney) to observe the same discretion of having a will or power of attorney since they too might have circumstances arise in their own lives which ultimately affect your estate (while either living or dead).

A corporate trustee (whether as executor or attorney) is possible but of course there will be a predictable cost associated (usually a percentage of the estate being managed, not necessarily in accordance with time, care and trouble as would otherwise normally apply).

Wills by minors

8 (1) A will made by a person who is under the age of eighteen years is not valid unless at the time of making the will the person,
(a) is or has been married;
(b) is contemplating marriage and the will states that it is made in contemplation of marriage to a named person except that such a will is not valid unless and until the marriage to the named person takes place;
(c) is a member of a component of the Canadian Forces,
(i) that is referred to in the National Defence Act (Canada) as a regular force, or
(ii) while placed on active service under the National Defence Act (Canada); or
(d) is a sailor and at sea or in the course of a voyage.

“spouse”, except in Part V (Support of Dependants), has the same meaning as in section 1 of the Family Law Act;

“spouse” means either of two persons who,
(a) are married to each other, or

(b) have together entered into a marriage that is voidable or void, in good faith on the part of a person relying on this clause to assert any right. (“conjoint”)  R.S.O. 1990, c. F.3, s. 1 (1); 1997, c. 20, s. 1; 1999, c. 6, s. 25 (1); 2005, c. 5, s. 27 (1, 2); 2006, c. 19, Sched. C, s. 1 (1, 2, 4); 2014, c. 7, Sched. 9, s. 1.



29 In this Part,
“dependant” means a person to whom another has an obligation to provide support under this Part; (“personne à charge”)
“spouse” means a spouse as defined in subsection 1 (1), and in addition includes either of two persons who are not married to each other and have cohabited,
(a) continuously for a period of not less than three years, or
(b) in a relationship of some permanence, if they are the parents of a child as set out in section 4 of the Children’s Law Reform Act. (“conjoint”)  R.S.O. 1990, c. F.3, s. 29; 1999, c. 6, s. 25 (2); 2005, c. 5, s. 27 (4-6); 2009, c. 11, s. 30; 2016, c. 23, s. 47 (1).

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