Power of Attorney and a Living Will - The same thing? - Fiscal Agents Money Management Newsletter

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The Money Management Newsletter: Taxes and Estate Matters
Power of Attorney and a Living Will - The same thing?
Will you need one? Do you know somebody that does?

By David Newman, originally published May 2002, revised April 2006
The Money Management Newsletter

As life becomes more complicated, certain legal formalities need to be addressed. Our own health and/or the well being of our parents, spouse and any dependent children, could be in some form of jeopardy, if sickness strikes. Who will manage your affairs, look after your children or manage the lifestyle needs of ailing parents? How is authority conveyed to those chosen to take on the responsibility and where do you look for guidance?

The Ontario Government has developed a useful information guide about Powers of Attorney (PA).

Three different types of Power of Attorney are addressed.

	A Continuing Power of Attorney for Property covers your personal property and allows the person you name to act for you even if you become mentally incapable.
	A Personal Care Power of Attorney covers your personal care decisions, such as housing and health care.
	A non-continuing Power of Attorney for Property covers your financial affairs but can't be used if you become mentally incapable. This limited Power of Attorney might be given to someone to look after your financial transactions while you're away from home for an extended period of time.

Many people believe a Power of Attorney and a Living Will (LW) are the same thing. We will answer NO to the following questions: -

	Is a PA the same as a living will? No.
	Is a PA and/or a Living will the same as a Last will and testament? No.
	* The PA and or Living will expire when the person dies. Thereafter, instructions are taken from the Last will and testament.
	Do I have to register a POA or living will with the government? No.
	* A PA appoints an individual to act on your behalf in the matter of property or personal care when you become incapacitated. Whereas, the "living will" or "advance directive" only addresses treatment or personal care issues in near death situations. E.g. Not being kept alive on artificial life support.
	Is a lawyer required when making a PA or Living will? No.
	* If your affairs are complicated, you should consider that option.
	If I don't have a PA or Living Will, will the government step in and manage my affairs if I can't? No.
	Family members have the right to make health care decisions or apply to become "guardian" of property. Close friends can also make application. The Office of the Public Trustee only act in situations where no other suitable person is available, able and willing.

Where to find more information:

The Powers of Attorney booklet available from the Ministry of Attorney General (14 pages, FREE) spells out the workings of attorneyship, joint and separate attorneys, compensation and applicable conditions and restrictions. It also provides the same detail on personal care related PA's and includes the power of attorney forms along with full instructions.

A sister publication entitled "Powers of attorney and Living wills - Questions and answers" is equally informative and worth the effort to download.

What is a living will? - An overview

A living will, sometimes called an "advance directive," is a document containing your wishes about your future health or personal care. You make a living will when you are able to understand treatment choices and appreciate their consequences (that is, when you are "capable"). A living will only takes effect when you can no longer understand and appreciate treatment choices (that is, when you are "incapable").

People complete a living will for two main reasons: to gain control over their future health care, and to relieve their loved ones from the burden of making difficult decisions for them.

To find out more on 'Living Wills" and related matters check out this website"- Living Wills at UofT

At this point we would propose "Caution" regarding any Do-It-Yourself (DIY) project. Greg M. Bowen, CFP, CLU, CH.F.C wrote in his Life insurance Industry newsletter - "Life Letter" an article entitled "Should you do your Own Will? The topic centered on the Legal Will kits advertised on television and focuses on The National Legal Will Kit. While such the Kits may contain lots of useful information, Mr.Bowen advises that they are very general and could leave the author of the Will unsure of his/her own actions.

The fill-in-the-blanks approach will not suit everybody. He recounts problems with some sections of the kit being too short for multiple bequests, others being left blank and not applicable. Some of the information was found to be disturbing such as stating that you "should not revise the Will by crossing something out or by writing revisions on it." Any revisions would require the purchase of a new kit. The kit expressly forbid copying the documents.

Guidance about business interests was weak. Also provisions for beneficiary designations and/or other terms and condition were equally lacking in direction.

If you're hoping that a store bought-mass-marketed-Will-kit will provide full protection for your estate, and ongoing security for your family, beware. It seems that some of the general disclaimers that are found within this type of product need to be read very carefully. For instance Mr. Bowen noted the following disclaimer was included under the heading Limitation and liability and read "none of the author, publisher, or other marketing and distributing agents are able to warrant the validity of a Will made by you using this kit." That being said, he states that "A poorly written Will can cause more problems than no Will at all. A judge can even declare it invalid."

In providing wise counsel the National Legal Will Kit did apparently state "you should seek appropriate legal, financial, or other expert advice or assistance as may be required. Bowen's article did find some educational value however as a typical Will kit contains a glossary of legal terms, helpful in understanding the language of Wills a estates. Other items include an Assets and liabilities record sheet, informational sheets to record Personal History and other checklists for your Estate Trustee. The kit will list the things to be done when the person dies, as well as the people to be notified, etc.

Any of the DIY kits or books are helpful as a guide in formulating your ideas when preparing instructions for a lawyer. My final thought is, If you have $5,000.00 of assets the DIY Will is great. If not, the money's not going with you, so hire a lawyer and you'll rest easier.

On the book shelf

Winning the Estate Planning Game: Estate Planning Strategies for Canadians by Tim Cestnik, Prentice Hall Canada, $24.95, ISBN: 013028517X. Any of these Items may be out of print and only available at your local library or used book store or on eBay.
	The books listed in this section are also featured in our Bookstore.

Find information about wills, power of attorney, tax reduction strategies, use of trusts, probate planning, life insurance strategies and more.

The Canadian Guide to Will and Estate Planning: Everything You Need to Know Today to Protect Your Wealth and Your Family Tomorrow by John Budd and Doug Gray, McGraw-Hill Ryerson, $24.99, ISBN: 0-07-089439-6

We all know we need a will. And in these uncertain times, it seems even more essential to have our affairs in order. So, why do two-thirds of Canadians still die without a will, without a plan for passing on their wealth and possessions?

In The Canadian Guide to Will and Estate Planning, Canada's bestselling lawyer and accountant team provide you with the insights and authoritative guidance you need to ensure your family and your assets are protected today and tomorrow.

Through practical checklists, real-life examples, answers to frequently-asked questions and a glossary of common terms, Douglas Gray, LL.B., and John Budd, F.C.A., cover it all. In this easy-to-read guide, they provide reliable advice on a myriad of topics including guardianship, powers of attorney, trusts, probate, small and family businesses, charitable giving, tax planning, insurance and much more.

Completely updated to reflect the latest changes in legislation and taxation practices, including changes in the capital gains tax and trust laws, The Canadian Guide to Will and Estate Planning also covers topics such as:

	Selecting retirement residences and nursing homes
	Preparing a will that can't be contested
	Avoiding family feuds and spousal disputes
	Taking advantage of the latest opportunities to reduce the taxes on your estate

Don't let the government be your principal beneficiary - Take the time to plan ahead!

Wills - Guide for Canada by Tom Carter, Self-Counsel Press, $29.95, ISBN: 1-55180-310-0

Wills gives you the information you must have in your will. Chapters include the estate planning process, choosing an executor, enduring power of attorney, the costs of dying and the basis for writing a legal will.

Related information on Fiscalagents.com

	Ten estate planning tips Make sure you plan and discuss with your family or professional advisors how you want your estate to be distributed; don't keep everybody in the dark until the end.
	How to revoke that power of attorney Has the person you gave Power of attorney (PA) over your affairs not lived up to your expectations, and now you wish to remove and revoke their authority?
	New Substitute Decisions Act People have heard that they must make a Power of Attorney before the legislation becomes effective, otherwise the government will take over their affairs.
	Incapacity - Planning ahead helps What is a Power of Attorney? A will gives an executor or liquidator the authority to manage someone's affairs after death, whereas a power of attorney gives a person named the power to make decisions on your behalf.
	Death, disability and the family business To deal with the possibility of a serious disability, a business owner must have a continuing power of attorney for the management of property in place.
	What happens to your property if you don't leave a will? The following is a quick synopsis of how your property would be divided if you died without a will in the Province of Ontario.
	Exercise caution when trying to avoid probate costs Since June 1, 1992 when probate fees in Ontario were increased, we have noticed many clients taking extra precautions registering the ownership on investments and designating beneficiaries.
	Estate planning from the Muskoka chair Canadians love their cottages and chalets. Many have been in the family for several generations. Estate Plans must be set up to keep these much-loved properties in the family for future generations... optimal plan may be to ensure that the cottage owner has a valid Power of Attorney for the Management of Property.
	Income-splitting using testamentary trusts If you're considering leaving an income-producing inheritance to someone, putting part or all of it in a trust instead of giving it directly to your beneficiary can impact the family tax bill.

Articles on the web

From Readers Digest Canada, this page explores will planning with Lawyer Stephen R Elias. whose firm provides a Self-Counsel books for the layman. Living Wills information is provided by Cynthia St John, a spokesperson from a national nonprofit organization called Dying with dignity. Final arrangements are discussed by author Lisa Carson in her article Caring for the dead: your Final Act of Love. For the real pioneer of self-help; Osgood Law School of York University offer a few continuing educational courses under the title Estates, Wills and Trusts.

Getting Advice: We believe that a will requires careful planning to ensure all essential matters are covered. It should also be reviewed periodically and discussed with a qualified adviser or team of advisers to incorporate any changes in your personal circumstances. We have featured Webgenuity's software as an example and illustration of DIY electronic estate planning software services; we do not endorse or recommend this product, the information and links are provided as a convenience to our readership.

Notice: Fiscal Agents Financial Services Group are not engaged in rendering tax, accounting or legal professional services or advice. The comments in this newsletter are not intended, nor should they be relied upon, to replace specific professional advice. Before acting on material contained herein. Readers should seek advice that is appropriate to their personal circumstances from a professional advisor.

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