Nobody could have predicted the traumatic brain injury Tiffany Harding’s step-daughter, Petra, would suffer in 2018 at the age of 23.
“She doesn’t remember … but she’s glad that she’s here and that she has a second chance,” says Harding, vice-president and head of Wealth Planning at Gluskin Sheff.
Throughout the ordeal, Harding and her husband had to make decisions on Petra’s behalf — decisions that could have been difficult to execute had it not been for the powers of attorney (POAs) Petra had signed in her early 20s.
It’s these real events that hit home. We never think about what can happen when we leave our front door or when we get into a car.
Decisions on wills and POAs are often put off until later in life. Avoiding difficult decisions and discussions around one’s own mortality, or that of a loved one, is easy in the bustle of day-to-day life. But the unpredictable nature of the COVID-19 pandemic has forced many people to reconsider their planning.
“COVID -19 has come in and turned everything upside down, because it has forced people to think about illness and death, and to consider whether they have a plan in place to protect their family should the worst come to pass,” Harding says.
Experiencing a personal, life-changing event such as an illness, witnessing a premature death or even seeing friends and loved ones go through the estate administration process often provides the motivation people need to stop putting off these decisions.
“We have no idea when we’re going to die … So the question people who don’t have a will should ask themselves is, ‘If I were to pass away tomorrow, what would happen?’” says Camille Jordaan, vice-president, Wealth Planning at Gluskin Sheff.
Estate planning professionals recommend making these decisions as soon as possible and updating them after major life events. When appropriate, it’s also very important to communicate your decisions with loved ones so they understand what your wishes are.
“Sometimes people see estate planning as a scary thing or want to avoid thinking about death. If I start having conversations about my estate planning, is something bad going to happen to me? … Those are highly-emotional discussions,” Harding says
It’s hard for younger generations especially to understand the benefits of putting protection mechanisms in place unless they’ve experienced some kind of loss, she adds.
When my step-daughters were in their early 20s, I said to them, it’s very important you have powers of attorney in place and that you have documented your last wishes. Because anything can happen to anyone, anytime.
Estate planning and life events
According to an Angus Reid survey from 2018, 51 per cent of Canadians do not have a will. Among those who do, more than a third admitted the documents were out of date.
Estate planning professionals advise every person who owns assets to have wills and POAs for property, and every person above the age of majority to have a POA for personal care, in place. These documents should be reviewed and revised if necessary after major life changes; including, but not limited to:
– Acquisition of new assets;
– Marriage, separation, divorce and remarriage;
– Birth/adoption of a child/grandchild;
– Significant change in family dynamics;
– Children reaching the age of majority;
– Marriage of a child;
– Change in employment;
– Changes in residency;
– Significant change in financial circumstances;
– An illness or disability;
– Retirement; and
– Death of a loved one.
Jordaan says acquiring assets is often a reason to get these documents in order, but it is “absolutely critical” when children are involved.
A divorce is also another important life change — arguably more so than getting married — for making a will or reviewing an existing one to ensure your wishes reflect your current situation. Wills generally tend to become much more important in the context of second and subsequent marriages, especially when there are children from previous marriages and families are blending.
A good estate planner will ask a lot of questions to better understand the family, their needs and their wishes, and will make sure those goals and objectives stay on track. They will also raise issues small and large that may otherwise not come up, such as what will happen to your social media accounts after you’re gone. An estate planner should also ensure they are up to date on new developments and how those can affect your estate and incapacity planning.
For example, Harding’s estate planning lawyer suggested she revisit her end-of-life medical care wishes in light of the current pandemic. Previously, Harding’s orders were such she did not want “heroic measures” applied. This meant she did not want certain types of measures taken merely to prolong her life, such as being put on a ventilator. In a COVID-19 world, however, the use of a ventilator can mean the difference between life and death.
“Because of how my POA for Personal Care was drafted, I had put myself in a position where I couldn’t be put on a ventilator if I got COVID-19, which is not consistent with my current wishes, so we had to re-draft it for my peace of mind while the pandemic continues,” Harding says.
Custodianships: Planning for your family
For many parents, deciding who will become their children’s legal custodian can be one of the toughest decisions they make in the estate planning process — you are entrusting someone with the lifetime responsibility of raising your child. Do they have the time and ability to take care of them? Will they act in your child’s best interest? Do they live close by or in a different province or country? If they live far away, what impact would a move have on your child’s wellbeing?
To avoid any potential conflicts of interest, Jordaan recommends your child’s custodian be a different person than the person who will be in charge of their finances (i.e., their guardian for property or the trustee of a trust holding assets for your child)
Many children whose parents have passed prematurely will move into the custodian’s home, Jordaan notes. But what if the custodian’s home isn’t big enough, for example? If they need to move to a larger space, how will this be funded? These decisions can present a conflict of interest if the guardian also controls your assets.
“You don’t have somebody providing oversight on whether the expenses that are being incurred for this child are legitimate and in keeping with what the deceased parents wanted,” says Jordaan.
When it comes to family members, it’s not just about making decisions in case you die, however. It’s also planning for unforeseen circumstances when people are alive.
Powers of attorney
POAs are written authorizations appointing specific persons to make decisions about your finances, property and personal and end-of-life care while you are alive, but incapable of making those decisions yourself.
Having a POA in place for Harding’s step-daughter allowed her and her husband to help Petra quickly, without any delay or impediments.
“We were able to walk into Sunnybrook Hospital, we were able to make decisions on her behalf, we were able to walk into her financial institution to deal with her finances, we were able to apply for ODSP (Ontario Disability Support Program) benefits on her behalf — we were able to step into her shoes while she was incapable of handling these things on her own,” Harding says.
Still, discussing estate and incapacity planning with family can be fraught. Parents often struggle with how much to tell, or discuss with, their children or other beneficiaries. But what happens if there is a disagreement or misunderstanding and you’re either not there to explain your intentions or incapable of doing so? Not having these discussions can result in unwanted surprises later. Conversely, what if sharing your plans causes unhappiness and friction well before your incapacity or death?
Complicating these matters are the potential changes to family relationships in the event of a death. Harding has witnessed families who got along fine when both parents were alive. But the death of a parent, she says, can change those dynamics significantly, creating discord and conflicts that were previously not an issue.
A holistic picture helps in estate planning
When putting together a will, ask yourself what your overall goals are: What do I want to happen when I pass away? What are my intentions? Work backwards from there, Jordaan advises.
One of the biggest mistakes she sees when working with clients to plan their estates is not looking at the complete picture — and instead making decisions on an asset-by-asset basis.
A piecemeal approach can often result in unintended consequences, disappointed beneficiaries and misunderstandings.
Another common mistake people make is using a will kit, especially when complicated assets and family dynamics are involved. While will kits can work for families with extremely straightforward situations, there are numerous considerations that a “self-help” method is not designed to address.
There are also a number of considerations when it comes to you estate that are either not covered by a will or can supersede a will in many jurisdictions: These include joint ownership of property with survivorship, beneficiary designations on registered plans and insurance policies and assets held in trust. And not everyone understands divorce and separation do not revoke a POA or beneficiary designations.
Ultimately, there are far too many decisions involved to not take the time to plan ahead.
Harding and her step-daughter are lucky. Because of her age, Petra’s brain is recovering — something doctors were uncertain of two years ago. And because the paperwork was in place when it was needed the most, the family did not have an administrative nightmare to deal with, allowing them the ability to make necessary decisions on Petra’s behalf and focus their time and energy on what mattered most to them – Petra and her healing
“Estate and incapacity planning are two of the easiest things to put off. Unfortunately, I find nothing motivates people to complete their planning more than an illness in the family … But you don’t want to wait until that happens to get everything in order,” says Jordaan, adding: “The likelihood of you incurring more time, hassle and cost to get things done under potentially adverse circumstances goes up exponentially at the 11th hour.”
For key considerations on updating your wills and powers of attorney, please download our guide.