Incapacity and long-term care planning, whether for themselves or for their loved ones, are generally topics Canadians prefer not to think about. One of the things highlighted by the pandemic is our vulnerability to unexpected life events.
COVID-19’s devastating and disproportionate impact on older people has also heightened our sensitivity to eldercare; the kind of quality and effective care we want for ourselves or our loved ones, and how we should best prepare.
“The whole pandemic has turned people’s minds to estate and incapacity planning a bit more because what if something happened to them?” says Jag Gandhi, vice-president of wealth planning at Gluskin Sheff.
“What was happening in long-term care facilities and how seniors were being taken care of—seeing those realities—people are probably going to plan for incapacity or be more cognizant of their incapacity planning going forward,” she says.
With life expectancy increasing overall in the last 30 years–Canadians now live an average of more than 82 years compared with about 77 years in 1990, according to the Public Health Agency of Canada–some people are also giving more thought to what they would like their lives to look like as they age and what financial and estate planning considerations will come into play.
An analysis by the Canadian Medical Association published in March 2021 estimated the demand and cost for eldercare will nearly double by 2031, and requests for home care will rise to 1.8 million patients from 1.2 million.
All of this underscores the importance of making these decisions while you and your loved ones have the capacity to do so, Gandhi says, predicting that in a post-pandemic world, people will be extra sensitive about making sure they have their planning in order in case anything were to happen.
For children or other family members, it means initiating the conversation to find out what your elderly loved ones want if capacity became an issue.
A worst-case scenario nobody wishes to find themselves in is when someone becomes incapacitated without estate and incapacity planning documents in place. Family members might end up in conflict because they disagree over the best course of care, or they are left trying to figure out what to do and how to pay for the cost of care.
Planning your future care
“I always put a lot of emphasis on having the conversations with your loved ones about your wishes and ensuring they know where to locate your will and powers of attorney,” says Tiffany Harding, the head of wealth planning at Gluskin Sheff. If they don’t know where to find these critical documents it can be challenging.
Harding says that the following are critical to eldercare planning: Having powers of attorney (POA) in place for financial and health care matters; having a will; and reviewing who your designated beneficiaries are on your life insurance policies and registered plans. It is important to have these documents updated so that they reflect your most current wishes and that the individual named in them know where to locate them.
From a planning perspective, Gandhi also breaks it down into two categories:
-What does my care look like?
-Do I have the financial resources to cover these costs for a certain length of time?
Other key issues that should also be discussed with loved ones include: Would I want to remain at home with a caregiver or do I want to be part of a social community in a retirement home? How should my assets be dealt with to manage my care?
Underpinning these decisions is appointing an attorney who values your wishes, who is capable of handling your financial affairs and who will advocate for you if health care decisions need to be made.
“People have a hard time appreciating that powers of attorney are important documents, but as you age it really becomes critical,” says Gandhi. She notes that clients will sometimes automatically assume it will be their spouse, or their kids, or all the children together, which may not be the case.
“If your children don’t live close by or happen to not get along, does it really make sense to appoint them together? If they can’t get along while you have capacity, how do you know that they’re going to get along when you don’t have capacity? So it’s having those hard discussions.”
Planning ahead is also important given the outlook of rising costs for eldercare over the next decade. Industry experts estimate the current cost of a long-term care home can be as much as $70,000 or more per year depending on the type of accommodation. Private home-care services can range between $20 to $90 per hour, according to the Canadian Life and Health Insurance Association (CLHIA).
“I’ve spoken to clients who have spent $10,000 or more a month on care expenses,” says Harding.
What could be more important than a will?
Some people may think creating a wealth plan and having a will is sufficient, forgetting that while laws exist that outline how assets would be disbursed if there is no will on death, there is no real equivalent if you can no longer handle your own affairs without complications.
“People are always so focused on the will, but powers of attorney are just as important” Gandhi says.
There are two separate types of POA documents. One is for property, which gives your appointed attorney (not your lawyer) control over your assets, such as buying and selling your property, paying your bills or dealing with your business. A POA for property can be effective as soon as it is signed or it can come into effect upon incapacity. Because you are handing someone enormous financial control, you want to ensure that person not only has the right skill set, but that they also have your best interests in mind. The other POA is for personal care and it only comes into effect when you no longer have the capacity to make your own health-care decisions.
You can appoint the same person or people to handle both property and personal care–a spouse or an adult child for example–or assign different attorneys to be in charge of each. How that is arranged will depend on individual circumstances.
If a spouse or adult children do not have the acumen to deal with monetary and tax decisions, for example, they could be partnered with someone with more finance knowledge. In some situations, it may even make sense to appoint a trust company, alone or together with a family member, as an attorney for property. If the attorneys for property and personal care are different, however, it is important to have some coordination between your powers of attorney to ensure there are no issues when your health care advocate requires money to pay for a caregiver, for example.
Some kind of coordination is particularly important if you have assets in other countries. Experts recommend having a POA set up in each of the jurisdictions where your assets are located to ensure the documents are recognized. There is no guarantee that your Ontario POA will be acknowledged in another jurisdiction if something were to happen to you. Coordination could entail putting your local appointee jointly with the person in charge in the foreign jurisdiction. This coordination should also apply to your POAs for personal care if you spend time residing in another jurisdiction.
For many of us, the pandemic has changed not only our view of our own mortality, but also how our health affects those around us. This means making sure those we love most are not burdened with impossible decisions when the inevitable happens.
“The hard decision for family members is when they don’t know what their loved ones wanted, because they never asked or they felt awkward about having the conversation,” says Harding.
“That’s a harder place to be in when you don’t even know where to start.”