marty_rumack webBy Martin Rumack

Studies and surveys indicate that more than 50 per cent of Canadian adults do not have a will, and about 70 per cent of Canadian adults do not have a signed Power of Attorney.

I believe that number would drop significantly if people truly understood the significant consequences of dying or becoming incapacitated without these legal documents.

Let’s start with a will.  What will happen if you died without one? Under the law that governs this situation (which is called an “intestacy”), your estate assets will be frozen until the courts appoint someone to administer your estate, known as an “Estate Trustee Without a Will”. This involves making a formal application to the court and always involves a certain amount of delay that is inherent in the process. This in turn could cause financial hardship for your family.

Eventually, your estate will be distributed by the Estate Trustee according to provincial intestacy laws, which vary by jurisdiction. Typically, they provide a set dollar-amount to a surviving spouse (in Ontario it is $200,000), with the balance divided in line with a graduated formula among your spouse and each of your biological or adopted children.

If you have no surviving spouse or children, then your assets would go to your next-of-kin, in a prescribed order that is set out by legislation. In contrast, common-law spouses and step-children may not he recognized by legislation as having any entitlement at all.

In these various scenarios, the Estate Trustee has very little discretion in distributing your assets. This means that – absent a will that expressly directs the distribution of your estate in the most tax-advantageous manner – you will have missed many opportunities to reduce taxes both before and after your death.

Similarly, without a will any preferences you have concerning the guardianship of your minor children or dependents may not be recognized. Payments to minor children would be held in trust by the courts, but only until they reached the age of majority. At this point, they would have a legal right to the money to spend as they wish – a thought that many parents find disconcerting and even abhorrent!

If you don’t have a will, these are just a few of the ways that your family and next-of-kin could be subject to delays, additional expenses, angst and potential conflict amongst themselves at an already stressful and emotional time.



Why do I need a Power of Attorney? – Like wills, a Power of Attorney is an often-overlooked legal document that you can have drafted to dictate the manner in which various matters will be dealt with in the event you become mentally incapacitated (for example due to an accident or illness) and therefore unable to make decisions on your own.

There are three kinds of Power of Attorney in Ontario:

General Power of Attorney for Property (to manage your finances and property, usually on a short-term or temporary basis);

Continuing Power of Attorney for Property (for managing your property on an ongoing basis); and

Power of Attorney for Personal Care (for appointing someone to make decisions about your current and future medical and personal care).

If you have the appropriate Power of Attorney document in place, you can choose who will act on your behalf. If you do not, the court may choose one for you. This means you may be leaving important decisions in the hands of family or others who are not fully familiar with your situation or your wishes, and more importantly, may not want to take on the responsibility of handling your affairs.

Even worse: Without written guidance in place as to your preferences and expectations, your family’s ability to arrange for your appropriate medical, shelter, nutrition and clothing needs might be impaired, to the point where costly and time-consuming litigation may commence. This is especially undesirable in cases where you have become suddenly and unexpectedly incapacitated and need prompt and proper medical care.

People often resist turning their minds to drafting a will for many reasons: they consider themselves “too young”, or feel that there are not wealthy enough to need to bother with having a will drawn up or are superstitious that having one drawn up will actually hasten their demise. The need for a Power of Attorney is often dismissed for similar reasons.

The truth is that it is never too early and an estate is never too modestly sized to make a will unnecessary or premature. As long as you own real estate, investments (regardless of size), vehicles, a business or any personal property, you have an estate that should be dealt with by way of a will.

Likewise, there is never a downside to formally choosing a trusted family member or friend who will deal with your assets and arrange for your medical and other personal needs in the manner that you wish, in the (hopefully unlikely) event that you become mentally or physically incapable of doing so.

Toronto lawyer Martin Rumack’s practice areas include real estate law, corporate and commercial law, wills, estates, powers of attorney, family law and civil litigation. He is co-author of Legal Responsibilities of Real Estate Agents, 3rd Edition, available at www.lexisnexis.ca/bookstore. Visit Martin Rumack’s website at www.martinrumack.com.

  • Green Pine Realty Ltd.

    Helpful article. A neccesary reminder on a matter many often forget about until it is too late.
    Which site can someone print off the forms for Personal Care?
    Thank you.
    Sincerely,
    Rita Giglione,
    Broker of Record/Owner
    Green Pine Realty Ltd., Brokerage
    http://www.ritagiglione.com

  • Linda Caisley, Notary Public

    Great article!

    In addition to Powers of Attorney, in British Columbia, we also have a document called a Representation Agreement.

    A few Representation Agreements (Section 9 Agreements made before September, 2011) had powers to deal with real property. No Representation Agreement made after September, 2011 contains the power to deal with land, and so it’s important to know which version your client might be trying to use.

    Also, be aware that using a pre-September 2011 Section 9 Representation Agreement, or a Power of Attorney for land transactions in British Columbia usually creates extra work and extra cost for the clients, and requires more time to deal with – for example, the documents must be registered at the Land Title Office, and title insurers will usually automatically send the title insurance request to underwriting.

    Please give your notary or lawyer more time to complete the transaction at hand if either of these documents are involved.