ESTATE PLANNING BASICS Heather Richardson, B.A. (Hons), LL.B. Staples & Swain Professional Corporation 10 William Street South Lindsay, ON K9V 3A

WHAT IS ESTATE PLANNING? Process to effectively deal with your person and assets if you die or become incompetent Process to effectively deal with your person and assets if you die or become incompetent Good estate planning: Good estate planning: – Is more than just a simple Will – Minimizes potential taxes and legal costs – Sets up contingency planning – Ensures your wishes regarding health care treatments & end of life directives are followed – Considers the effect of relevant legislation & case law

DYING WITHOUT A WILL Dying intestate Dying intestate Government written Will Government written Will Administrator Required to Apply to Court Administrator Required to Apply to Court Disappointed Spouse Disappointed Spouse Disappointed Family Disappointed Family Red tape Red tape Lost tax Saving opportunities Lost tax Saving opportunities

JOINTLY HELD ASSETS On death of first owner, surviving joint owner(s) becomes absolute owner On death of first owner, surviving joint owner(s) becomes absolute owner Excellent idea between spouse Excellent idea between spouse Survivor becomes owner without legal or probate costs Survivor becomes owner without legal or probate costs No freezing of much needed cash/assets No freezing of much needed cash/assets Real property (land), bank accounts, RRSPs and investments Real property (land), bank accounts, RRSPs and investments

JOINTLY HELD ASSETS YOU SHOULD NOT OWN ASSETS JOINTLY WITH A PERSON(S) OTHER THAN YOUR SPOUSE YOU SHOULD NOT OWN ASSETS JOINTLY WITH A PERSON(S) OTHER THAN YOUR SPOUSE Immediate tax implications Immediate tax implications Exposure to creditors/matrimonial claims Exposure to creditors/matrimonial claims Loss of control of your estate Renders Will and Powers of Attorney meaningless Loss of control of your estate Renders Will and Powers of Attorney meaningless Avoiding “probate” not worth the risk! Avoiding “probate” not worth the risk!

CHOICE OF EXECUTOR Legally responsible to carry out terms of your Last Will and Testament Legally responsible to carry out terms of your Last Will and Testament Must be honest, capable, knowledgeable and available Must be honest, capable, knowledgeable and available Able to act impartially towards all beneficiaries Able to act impartially towards all beneficiaries Able to work with any co-executors appointed Able to work with any co-executors appointed Able to withstand criticism from beneficiaries and family members Able to withstand criticism from beneficiaries and family members Could face personal liability Could face personal liability Possible conflict of interest Possible conflict of interest Have they agreed to act? Have they agreed to act?

BLENDED FAMILIES Ensuring “your” children are not disinherited after your death Ensuring “your” children are not disinherited after your death Providing for dependants and spouse Providing for dependants and spouse Predatory marriages Predatory marriages Privacy issues Privacy issues Effect of Domestic Contracts Effect of Domestic Contracts

SPOUSAL TRUSTS Simple, basic estate planning tool Simple, basic estate planning tool Up to entire income and/or capital of estate available to surviving spouse Up to entire income and/or capital of estate available to surviving spouse Creates two taxpayers Creates two taxpayers Distribution of remaining funds governed by your WILL Distribution of remaining funds governed by your WILL

PROVIDING FOR CERTAIN TYPES OF BENEFICIARIES Protecting provincial benefits for disabled children Protecting provincial benefits for disabled children Ensuring inheritance lasts for beneficiaries who may not be capable of managing money Ensuring inheritance lasts for beneficiaries who may not be capable of managing money Drug/Alcohol/Gambling Addictions Drug/Alcohol/Gambling Addictions Rocky or Predatory marriages Rocky or Predatory marriages Present or potential future creditors Present or potential future creditors Minors Minors Proper and adequate support of dependents Proper and adequate support of dependents

TAX PLANNING Don’t lose any capital gains exemptions Don’t lose any capital gains exemptions Protect from unintended consequences that may defeat your wishes Protect from unintended consequences that may defeat your wishes Keep your tax deferrals through using the proper roll-overs Keep your tax deferrals through using the proper roll-overs Probate planning Probate planning Multiple Wills Multiple Wills

BUSINESS SUCCESSION Deferring taxes through estate freezes Deferring taxes through estate freezes Maintaining gains exemptions Maintaining 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 buy- sell agreement Will there be adequate capital for a buy- sell agreement Multiple Wills Multiple Wills

SMART PHILANTHROPHY Tax Planning & Lifestyle Goals Tax Planning & Lifestyle Goals Financial Gifts / Life Insurance Designation Financial Gifts / Life Insurance Designation Real Estate Real Estate Shares Shares Charitable Remainder Trusts Charitable Remainder Trusts Endowments /Foundations Endowments /Foundations

DRAFTING ISSUES What if child/beneficiary predeceases What if child/beneficiary predeceases Adopted vs. step-children Adopted vs. step-children Cy-press (charity does not exist) Cy-press (charity does not exist) Ad torrem (contest = forfeit) Ad torrem (contest = forfeit) Partial Intestacies Partial Intestacies Personal item that no longer exists/not in deceased’s possession Personal item that no longer exists/not in deceased’s possession Isn’t enough money in the estate to satisfy the gifts Isn’t enough money in the estate to satisfy the gifts Proper execution of the document Proper execution of the document Codicils Codicils Will Kits Will Kits Funeral Wishes Funeral Wishes

WHAT ARE POWERS OF ATTORNEY Legal Document Designating Another Person(s) the Authority to Act on your behalf Legal Document Designating Another Person(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 Property 1. Power of Attorney for Management Property (general vs. limited) 2. Power of Attorney for Personal Care 2. Power of Attorney for Personal Care Property POA can be effective immediately or “Springing” (ie. triggered by future event) Property POA can be effective immediately or “Springing” (ie. triggered by future event) Personal Care POA effective upon incapacity Personal Care POA effective upon incapacity

WHAT POWERS DOES PROPERTY POA HAVE Can make decisions and take action regarding the Grantor’s assets, income, expenses and liabilities Can make decisions and take action regarding the Grantor’s assets, income, expenses and liabilities Paying taxes and bills from Grantor’s bank account Paying taxes and bills from Grantor’s bank account Making investment decisions regarding the Grantor’s retirement savings Making investment decisions regarding the Grantor’s retirement savings Buying or selling a home Buying or selling a home Signing contracts/leases Signing contracts/leases Making gifts with Grantor’s funds to family Making gifts with Grantor’s funds to family Using funds to support Grantor’s dependents Using funds to support Grantor’s dependents Initiating/Continuing Litigation on Grantor’s behalf Initiating/Continuing Litigation on Grantor’s behalf

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

WHY GRANT POWERS OF ATTORNEY Peace of mind. To ensure your assets, and yourself are looked after by someone you trust and in the manner you desire, if you become ill or incapacitated in the future. Peace of mind. To ensure your assets, and yourself are looked after by someone you trust and in the manner you desire, if you become ill or incapacitated in the future. Control. By selecting in advance who you wish to speak/act on your behalf you can provide guidelines & instructions to them & eliminate the possibility a Guardian will need to be appointed. Control. By selecting in advance who you wish to speak/act on your behalf you can provide guidelines & instructions to them & eliminate the possibility a Guardian will need to be appointed. Convenience. If you are unavailable, but need some affairs attended to, granting a limited, or temporary Power of Attorney is often helpful. Convenience. If you are unavailable, but need some affairs attended to, granting a limited, or temporary Power of Attorney is often helpful.

WHAT HAPPENS IF I HAVE NO POA AND NEED IT If you become incapable to make decisions about your property and/or your person someone will have to be designated as your “Guardian” or “Substitute Decision Maker” If you become incapable to make decisions about your property and/or your person someone will have to be designated as your “Guardian” or “Substitute Decision Maker” For personal care, decisions fall to next of kin For personal care, decisions fall to next of kin Family member or someone close can apply to Court for appointment as your Guardian Family member or someone close can apply to Court for appointment as your Guardian Guardianship Applications Require Capacity Assessments, Can be Costly & Time Consuming Process Guardianship Applications Require Capacity Assessments, Can be Costly & Time Consuming Process Office of the Public Guardian and Trustee (the Government) will assume the role of Guardian if no suitable applicant is available Office of the Public Guardian and Trustee (the Government) will assume the role of Guardian if no suitable applicant is available

WHO SHOULD I APPOINT Someone you TRUST Someone you TRUST Someone that knows/honours your views/wishes Someone that knows/honours your views/wishes Someone willing to do the work/be available Someone willing to do the work/be available Often, your Attorney is a close relative/friend Often, your Attorney is a close relative/friend Can be more than one person, either jointly or jointly & severally Can be more than one person, either jointly or jointly & severally For Property Management, could be a Professional or Trust Company For Property Management, could be a Professional or Trust Company Important to Appoint Alternate(s) to first choice Important to Appoint Alternate(s) to first choice Choose Wisely. Choose Wisely.

CAN I REVOKE/CHANGE MY POWER(S) OF ATTORNEY Both Powers of Attorney for Property and for Personal Care can be changed or revoked at any time as long as the Grantor has legal capacity Both Powers of Attorney for Property and for Personal Care can be changed or revoked at any time as long as the Grantor has legal capacity WHAT DO I DO IF MY POA IS BEING ABUSED? Tell Someone. The Elder Abuse Coordinator, the Police, the Public Guardian & Trustee, Your Doctor … and Seek Immediate Legal Advice. Tell Someone. The Elder Abuse Coordinator, the Police, the Public Guardian & Trustee, Your Doctor … and Seek Immediate Legal Advice.

THANK YOU QUESTIONS?