Last Wills and Power of Attorney

Wills and power of attorney are immensely important decisions and documents because they demand giving your complete trust to someone. At Allan Law we help you prepare your will and powers of attorney, so that you make the best decisions now for the future when you may not be able to.

Last Wills

Everyone should have a will. We understand it can be unpleasant to think about your own death, but it is important for you to plan what you would like to happen to the wealth and property you have spent your lifetime accumulating. With a will, you ensure that your loved ones are taken care of after your death.

A will, or last will and testament, is a written document that sets out how you want your assets to be distributed upon your death and who you want to manage your estate. There are strict legal requirements to creating and executing a will. If those legal requirements are not followed, the will may be deemed invalid. Therefore, it is best to retain a lawyer to effectively prepare your last will.

At Allan Law, our focus and over ten years’ experience in last wills and powers of attorney allows us to advise clients in Aurora and the Toronto area and help them thoroughly prepare their last will and testament. With us helping you prepare your will, you can relax knowing you have fully planned for your estate and family after your eventual passing.

Book an appointment with us if you wish to discuss your will and testament.

Allan Law - Woman drafting her last will and testament. Last Wills and Power of Attorney

Power of Attorney

A power of attorney is a legal document that authorizes another person or persons to make financial or health care decisions on your behalf while you are still alive. Its primary purpose is to allow the person you have named as your “attorney” to make decisions if you are unable to do so yourself, such as in the event you become mentally disabled.

Power of attorney provides a lot of control and responsibility and should only be given to someone you fully trust. Otherwise, it can lead to exploitation or abuse. Because of its immense importance, we help you understand the benefits and risks of power of attorney and assist you through the power of attorney procedure.

Power of Attorney for Property and Power of Attorney for Personal Care

There are two kinds of power of attorney: one for property and one for personal care. The power of attorney for property gives someone the legal authority to do everything with your money that you can, although they cannot make your will. The power of attorney for personal care governs your healthcare and personal needs. This can include directions with respect to end-of-life care.

At Allan Law, we can help you prepare effective and comprehensive powers of attorney. We also help to ensure you give attorney to those you can trust and will make the best decisions on your behalf. Call us or book an appointment with us if you want to discuss your power of attorney.

Allan Law - Elderly Couple Signing Power of Attorney

FAQ

No. The original copies are either left with your lawyer or taken with you for safekeeping. It is important to store the original will and powers of attorney in a safe environment. Therefore, we offer clients the option of storing their will with us in our vault. If they agree, they take an unsigned copy. They may also leave the copy with us and take the original home. We provide our clients with multiple signed powers of attorney, and we retain extra originals in our vault for safekeeping at no extra charge.

A codicil is a supplement or a revision to a will made by the testator (the person who makes the will) which is annexed to the will and forms part of the complete document.

The executor is the person you appoint in your will to manage your estate after you die. You may name one or more executors, including a primary executor and a secondary, backup executor. You should carefully consider the choice of an executor. The role carries great responsibility and can be quite demanding, depending upon the circumstances of your estate.

Generally, spouses will name each other as their executors and their adult children as the alternatives, although there may be circumstances in which either may be inappropriate. In choosing an executor, you may wish to consider the potential complexity of your estate as well as the executor’s availability, willingness to act, financial acumen, and relationship with the beneficiaries named in your will. Many costly estate disputes can arise because of conflict between the executor and beneficiary (i.e., sibling rivalry).

The executor is charged with the duty of carrying out the terms of your will. The responsibilities include immediate, interim, and final tasks. While the tasks are extensive, some of the main responsibilities are as follows (for a complete checklist of the duties, please contact our office):

IMMEDIATE:

  • Locate and read the will
  • Make funeral arrangements
  • Retain or consult with an estates lawyer
  • Ensure cash and valuables are located and properly stored
  • Confirming that proper insurance is in place
  • Confirming names and addresses of the beneficiaries named in the will
  • Cancel deceased’s credit cards, club memberships, etc.

INTERIM

  • Notify beneficiaries of their bequest
  • Prepare detailed inventory of assets and liabilities of the estate
  • Arrange for appraisals of estate assets
  • Determine whether “probate” is required and if so, submit will for probate
  • Open an estate bank account
  • Determine any available insurance policies and/or pension plans
  • Investigate tax liability and consult with an accountant, if necessary. Prepare and file final income tax returns and request Clearance Certificates
  • Prepare interim release and make interim distribution, if appropriate

FINAL

  • Convert assets to cash (subject to terms of the Will)
  • Deliver personal property left under terms of will to the named beneficiary
  • Settling claims and debts
  • Obtain clearance certificate from revenue canada
  • Make arrangements for any “trusts”
  • Distribute residue of estate to beneficiaries
  • Provide beneficiaries with an accounting of the administration
  • Obtain a release from beneficiaries
  • Close estate account

The timeframe for completing the administration of an estate is generally one year from the deceased’s death. This is known as the “executor’s year.” There can be consequences to the executor personally if he or she fails to administer the estate within one year.

No. Just because you have named someone as your executor does not mean he or she is obligated to act. Provided they have not started to act on behalf of your estate after your death, the named executor may “renounce” his or her right to act by signing a legal form before a certificate of appointment is granted (i.e., “probate”). When the estate is insolvent or nearly insolvent, a named executor will often renounce because the risks of acting can outweigh any potential benefit. Also, individuals living in different jurisdictions from the deceased often choose to renounce their right to act due to potential technical and administrative issues.

The executor faces the potential for personal liability. While the executor is not responsible for the deceased’s debts, the executor is personally responsible for his or her management or mismanagement of the estate. If the executor fails to manage the estate properly, he or she can be held liable to the beneficiaries and/or other third parties.

Yes. The executor has the right to charge a fee or “compensation” for managing an estate. The Trustee Act states: “A trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice.” While there is no set fee in the Trustee Act or elsewhere, the courts have developed “guidelines” for calculating the executor’s compensation as follows:

  • 2.5% of the capital receipts
  • 2.5% on capital disbursements
  • 2.5% on revenue receipts
  • 2.5% on revenue disbursements
  • 2/5 of 1% (0.4%) per year management fee on the gross value of the estate

It is important to note that the “guidelines” are just guidelines and the courts recognize that in some cases it may be appropriate for an executor to charge more compensation and in other cases, the guidelines may be too much. The courts have historically considered the following five factors in determining the appropriate amount to compensate an executor if the “guidelines” are deemed inappropriate:

  1. The size of the estate
  2. The care, responsibility, and risks undertaken by the executor
  3. The time spent by the executor managing the estate
  4. The skill and ability demonstrated by the executor in managing the estate
  5. The results obtained by the executor in managing the estate; i.e., the extent to which the estate was successfully administered

Of course, if the will sets out the executor’s compensation, this amount will be followed, and the guidelines and above factors will not be considered. There is also a legal presumption which states that if the executor is left a specific bequest in the will, this amount is intended to be his or her compensation (However, this “presumption” can be rebutted by the executor).

The funds paid to the executor as compensation are deducted from the “residue” of the estate. “Residue” refers to the funds that are left over after all the estate debts, general legacies, and other specific bequests have been paid. In many instances, the executor elects not to charge compensation because he or she is either the only residuary beneficiary or one of a few residuary beneficiaries (i.e., one sibling acting as the estate trustee on behalf of his or her siblings). The compensation is taxable income whereas the inheritance is not, so it may be more tax-advantageous for an executor to forego compensation. This depends on the number of beneficiaries.

The general rule of law is that the executor of an estate is permitted one year to complete the administration of an estate. This is known as the “executor’s year.” The year begins on the date of the testator’s death. In the event you are a beneficiary of an estate in which the estate trustee has not completed the administration of an estate within one year, you may want to seek legal advice.

Simply put, “passing of accounts” refers to the process where the estate trustee presents his or her accounts to the beneficiaries and applies to have the accounts approved by the court. The process functions as a court audit of the estate trustee’s accounts. The beneficiaries can object to the accounts, demand more information and documentation, and challenge the estate trustee on his or her accounts in a hearing before a judge. The court can ultimately approve or “pass” the accounts, amend the accounts, or reject the accounts. The passing of accounts application can be a useful proceeding for challenging an estate trustee on their administration of an estate.

There is no legal requirement for an estate trustee to “pass accounts.” However, a beneficiary of an estate can compel the estate trustee to pass the accounts by obtaining a court order. A beneficiary may consider requiring an estate trustee to pass his or her accounts if there is a lack of disclosure from the estate trustee, if the beneficiary objects to certain transactions performed by the estate trustee, or if the beneficiary objects to the amount of compensation claimed by the estate trustee. Often, a request for an order requiring an estate trustee to pass his or her accounts is sought along with other relief, such as a request for an order removing and replacing the estate trustee.

The estate trustee can also apply voluntarily to pass his or her accounts. There are several reasons why the estate trustee may want to pass his or her accounts. First, the passing, if approved, exonerates the trustee from any liability with respect to the accounts (fraud and errors are exempt). Secondly, it allows the estate trustee to take his or her compensation when the consent of the beneficiaries cannot be obtained. As a general matter of practice, the estate trustee should always maintain accurate and up-to-date accounts so that an accounting can be provided if requested or ordered.

When someone dies without a will, he or she dies “intestate.” In the case of intestate estates, someone must apply to the court to obtain the legal authority to act on behalf of the estate. The court application, if granted, results in a “Certificate of Appointment of Estate Trustee without a Will.” The Certificate gives the named person the legal authority to act as the estate trustee where there is no will.

The Estates Act prescribes who may be appointed to act as the estate trustee of the deceased’s estate when the deceased dies intestate. It provides that the deceased’s spouse, common law spouse, or next of kin may apply. If the spouse or next of kin is unwilling or unable to act, in certain circumstances, the court may appoint the Office of the Public Guardian and Trustee, a trust company, or another party.

There are specific requirements as to what must be filed with the application. The application must be made on notice to everyone who is entitled to share in the distribution of the estate. As well, if any beneficiaries are children or mentally incompetent, the Office of the Children’s Lawyer or the Office of the Public Guardian and Trustee must also be put on notice.

The Succession Law Reform Act (Part II) addresses who is entitled to share in the deceased’s estate when there is no Will.

The estate administration tax is paid when an application is made for a Certificate of Appointment of Estate Trustee with a Will (or without a Will in the case of intestate estates). The tax was formerly referred to as “probate fees.” It is calculated based on the gross value of the deceased’s assets wherever located (less the value of any encumbrances on any real property owned by the deceased). Certain assets are excluded from the calculation, such as assets passing on survivorship, insurance proceeds or registered funds passing to a named beneficiary, real property located outside of Ontario, and jointly held assets passing on survivorship. The formula for calculating the tax is enumerated in the Estate Administration Tax Act, 1998 and includes:

  • $5 for each $1,000, or part thereof, of the first $50,000 of the value of the estate; and

  • $15 for each $1,000, or part thereof, of the value of the estate exceeding $50,000.

In the event a deceased’s will is lost, an application may be made to the court to prove the last will. If all parties with an interest in the estate agree, the content of the lost will can be proven based upon affidavit evidence (i.e., a hearing in writing). If there is no agreement, the person seeking to prove the contents of a lost will must establish, among other things, that the testator did not intend to destroy or revoke the Will prior to his or her death.

The attorney is required to keep accounts of all transactions involving the property managed. The attorney may apply to the court for approval of his or her accounts or alternatively, may be compelled to do so by one or more of the following parties:

  • The grantor of the Power of Attorney
  • The grantor’s or incapable person’s guardian of the person or attorney for personal care
  • A dependant of the grantor or incapable person
  • The Public Guardian and Trustee
  • The Children’s Lawyer
  • A judgment creditor of the grantor or incapable person
  • Any other person, with leave of the court

It is generally best practice for an attorney to assume that his or her records will be scrutinized. With this in mind, accurate records should be kept along with supporting documents, receipts, invoices, etc., where applicable.

A power of attorney can be revoked by the grantor as long as he or she remains capable. The revocation must be in writing and witnessed by two individuals. As a matter of practice, the grantor should retrieve all copies of a revoked power of attorney.

If the grantor is deemed incapable and hence unable to revoke the power of attorney, the court may terminate the appointment instead. Alternatively, an attorney may resign, but certain formal requirements must be followed for the resignation to be valid.

In our practice, we frequently are involved in cases in which it is alleged that a power of attorney is abusing the grantor or his or her property. Unfortunately, “elder abuse” is a rising phenomenon that often involves the misuse of a power of attorney. In situations of suspected “elder abuse” by an attorney, it may be necessary to apply to the court for the termination of the power of attorney and an order requiring the attorney to pass his or her accounts. If the grantor’s money has been misused, a claim can be advanced to recover any lost funds.

The Substitute Decisions Act, 1992 addresses the terms upon which a power of attorney may spend the grantor’s funds under the headings “required expenditures,” and “optional expenditures” with each having the following “guiding principles”:

Required Expenditures

  • Those reasonably necessary for the person’s support, education, and care
  • Those reasonably necessary for the support, education, and care of the person’s dependants
  • Those necessary to satisfy the person’s other legal obligations

Guiding Principles

  • The value of the property, the accustomed standard of living of the incapable person and his or her dependants and the nature of other legal obligations shall be taken into account
  • Expenditures under paragraph 2 may be made only if the property is and will remain sufficient to provide for expenditures under paragraph 1
  • Expenditures under paragraph 3 may be made only if the property is and will remain sufficient to provide for expenditures under paragraphs 1 and 2

Optional expenditures

  • Gifts or loans to the person’s friends and relatives
  • Charitable gifts

Guiding principles

  • They may be made only if the property is and will remain sufficient to satisfy the requirements of subsection (1).
  • Gifts or loans to the incapable person’s friends or relatives may be made only if there is reason to believe, based on intentions the person expressed before becoming incapable, that he or she would make them if capable.
  • Charitable gifts may be made only if,
    • i. the incapable person authorized the making of charitable gifts in a power of attorney executed before becoming incapable, or
    • ii. there is evidence that the person made similar expenditures when capable.
  • If a power of attorney executed by the incapable person before becoming incapable contained instructions with respect to the making of gifts or loans to friends or relatives or the making of charitable gifts, the instructions shall be followed, subject to paragraphs 1, 5 and 6.
  • A gift or loan to a friend or relative or a charitable gift shall not be made if the incapable person expresses a wish to the contrary.
  • The total amount or value of charitable gifts shall not exceed the lesser of,
    • i. 20 per cent of the income of the property in the year in which the gifts are made, and
    • ii. the maximum amount or value of charitable gifts provided for in a power of attorney executed by the incapable person before becoming incapable

The attorney is entitled to compensation, subject to the terms of your power of attorney. If the power of attorney does not specify the compensation or prohibit compensation, the guidelines generally provide for compensation as follows (although specific advice should be sought):

  • 3 % of the money received
  • 3% of the money paid out on the grantor’s behalf; and
  • 3/5 of 1% (0.6%) of the average annual value of the person’s assets

Notably, a Power of Attorney who is paid is held to a higher standard of care than an uncompensated power of attorney. The unpaid attorney is required to “exercise the degree of care, diligence and skill that a person of ordinary prudence would exercise in the conduct of his or her own affairs” while the paid attorney is required to “exercise the degree of care, diligence and skill that a person in the business of managing the property of others is required to exercise.”

A “living will” addresses your wishes regarding your treatment and personal care for the rest of your life in the event of your incapacity. The power of attorney for personal care often contains declarations of your instructions in this event.

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