Women's Wealth Canada
Women's Wealth Canada
S3 E4: Simple Estate Planning for Everyone with Jennifer Leach Sandford, Pt. 2
In this episode of the Women's Wealth Canada Podcast, we sit down with Jennifer Leach Sandford, a lawyer specializing in wills and estates. Jennifer shares valuable insight into the importance of having a will in place and when is the best time to prepare one, especially if you have a health diagnosis that may lead to progressive illness.
We also delve into the differences between a will, power of attorney, and healthcare directives. While a will provides instructions for the distribution of your assets after you die, power of attorney and healthcare directives come into play when you lose capacity. Your healthcare representative and personal care representative make decisions on your behalf, such as whether you're going into long-term care, while the power of attorney controls the administration of your assets.
Jennifer also shares some fascinating stories of cases where wills were challenged, and why it's essential to work with a lawyer who ensures the individual giving the instructions has the necessary capacity.
Don't miss this informative episode where you'll learn everything you need to know about estate planning. So, sit back, relax, and listen to the end to discover how you can protect your future and your loved ones. 💡💼💰
Our Guest
Jennifer Leach Sandford, Horne Coupar LLP
Jennifer is a lawyer practicing in the areas of wills, estates, trusts, tax planning, and taxpayer representation. She joined Horne Coupar LLP in 2021 prior to which she worked as an income tax and trusts lawyer in Montreal and Toronto for over fifteen years.
Hosted by Glory Gray
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Glory Gray:
Hi, everyone, I’m Glory Gray and welcome to the Women’s Wealth Canada Podcast. Today, we’re continuing our discussion with Jennifer Leach Sandford.
Jen is a lawyer with Horne Coupar LLP in Victoria, BC. She specializes in wills, estates, trusts, tax planning and taxpayer representation. In our last episode, we discussed how to protect your estate after you’ve passed on, with proper wills and estate planning. This month, we’ll talk about the important steps for you to take that protect you in your own lifetime. Come listen to part two of our discussion with Jennifer Leach Sandford about Simple Estate Planning for Everyone.
Glory Gray:
You mentioned capacity earlier. So keeping that in mind, when is the best time to prepare a will?
Jennifer Leach Sandford:
I think it's important for everybody to have a will. I think it's important to have something in place. I have clients who come in and the last will they did was in the 80s. And if nothing's changed, that's fine. I mean, the law’s changed, which maybe sometimes changes whether the will is meeting all of the requirements. But we have clients who come in and they've had a diagnosis of dementia, beginning indicators of dementia. And again, your lawyer will have to assess whether they think you have the capacity necessary to prepare a will. There's sort of an order of priority or hierarchy of capacity. For a will, you need the highest level of capacity, you really need to be able to consent and to make good decisions. What often unfortunately happens is somebody's trotted in, in their last days, when they clearly don't have capacity. And those are the wills where, if you have an unscrupulous professional who takes instructions and acts on those without really ensuring that they're comfortable with the individual's capacity, those are the wills that get challenged. When there's a hard right turn in the last days of the person's life. All the way through, there was a will, number one will, number two will, number three, and they all made sense. There was a continuity to them. But in the last will, they all of a sudden give it to the gardener. Well, that raises a red flag. The lawyer has to make an assessment and has to be pretty comfortable that they're taking instructions from somebody who has an appreciation of what they have, you might not need to know the exact balance, but they need to know roughly what assets they own, how those assets are held. They need to know who they want to give it to and why they want to give it to them. I mean, if they want to give it to their gardener, if they can explain why they're giving it to their gardener in such a way that makes sense, that's rational, that the lawyer can document and make good notes and explain, and if it appears rational, then those instructions might be valid. It really depends on the circumstances. But coming back to your question about when should the will be made, definitely if there's any need for making a new will or making a will at all, and you've had some kind of health diagnosis that may lead to some progressive illness, that's definitely a good time to do it.
Glory Gray:
And that brings me to another thought, power of attorney, and healthcare directives. We are often taught in our industry to help our clients make sure they have a will with a good lawyer, and also that that lawyer can assist them with the power of attorney and a health directive. Can you tell us about the difference between those three?
Jennifer Leach Sandford:
Yeah, and I think that those are equally as important as the will if not more important than the will, because the will, as I said before, when you die, if you haven't got a will, the law provides for a way to administer your will and it may not meet your needs, but at least there are instructions and a means to distribute your assets. The Power of Attorney and healthcare directive we call….there's two documents that we prepare on a regular basis that are part of our incapacity planning: power of attorney and representation agreement. A health care directive is something where you are giving instruction for yourself. So it's something that you are drafting. We call them an advanced health care directive. So a “Do not resuscitate” order or something that you've drafted. Not necessarily you've personally drafted, but they’re your instructions for yourself. We call that an Advanced Health Care Directive. A power of attorney is a document that deals with your financial and legal rights when you don't have capacity. And a health care and personal care representation agreement is authorizing someone to act and make decisions about health care. But also, if you've lost capacity and you're living at home and your needs are increasing such that you can't be cared for at home, your healthcare representative and personal care representative will make the decision about whether you're going into long term care and if they do then which long term care facility would you go to. Your healthcare representative and your personal care representative make those decisions? The power of attorney is the person who's controlling the purse strings. They have the ability to access the money, they control the administration of the asset for the adult who has lost capacity. We don't prepare advanced healthcare directives very often because doctors and medical professionals appear to be less willing and interested in following them. And the reason is that you're giving instructions for your care for sometime in the future. And you don't know the circumstances under which they're going to be put into place. Whereas a representative that you have authorized who says they know my wishes, they're going to assess the situation as it occurs. And they will be able to give timely instruction at that moment. “Yes. Do Not Resuscitate. Based on this information, no more life giving support, this is not what she would have wanted.” And the medical professionals are more inclined to respect those because they are making real time decisions based on the facts in front of them, as opposed to instructions that were given before anything happened.
Glory Gray:
So that's a really important distinction. The health care directive, is you, yourself, saying okay, in the future, do I want to have induced feeding? Do I want to be resuscitated? I don't know, I'll just check these boxes. But the medical representation agreement says ‘this person I trust, and they're going to decide what happens at the time. And I'll talk to them along the way as we go.’
Jennifer Leach Sandford:
Yes, your representative must, statutorily obliged, legally obliged to respect the wishes you've expressed, while you were capable. They don't have to respect any instructions given once a person has lost capacity. So if you're delirious, or you've just lost capacity, you don't have the ability to create rational thought, then they don't have to respect those wishes. But the representative must respect your wishes that you've expressed while you were capable. So what we say to our clients is, when you sign this, and you've appointed somebody, talk to them, tell them what you want, make sure they know. And to that end, an Advanced Health Care Directive could be very useful because it provides a guideline for what your intentions are and how you wish to be cared for. And that representative is going to, within reason, be able to give instructions based on that.
Glory Gray:
Okay, but the doctors and nurses will be dealing more with the person rather than having to just this document.
Jennifer Leach Sandford:
That's right, they're not going to look at the Advanced Health Care Directive. But the representatives are going to be guided by that and guided by what you've told them. And that's why having more than one representative is a good idea. Because you have some backup, we were talking about executors being non-residents and how that can be problematic for your estate. It is absolutely okay to name non-residents as your representative. There's no financial consequences to that. So if your child is living in the United States, you can name them as a healthcare representative. You know, these days, you don't have to physically be in the room, you can be on the end of a phone call. And that is sufficient to be able to give instructions. When we were talking earlier about the power of attorney, the power of attorney is dealing with finances and legal rights. So if you're sued, they can defend you. If you need to make a claim against somebody, they can step into your shoes and make that claim. And they administer all of your assets for your care and on your behalf. While you are incapable. Again, there's generally no issue with appointing a non-resident as an attorney, because it's still your money, you are still the beneficial owner of that money. So it doesn't create the same trust issues. You are still alive and any income is taxed in your hands. It doesn't create the same issues as the estates. However, if you have a US person in your family, it can create issues for a US person. So if your adult children live in the United States and they're taxed in the United States, naming them as power of attorney creates an obligation for them to include your bank account in their foreign bank account reporting forms, and those foreign bank account reporting forms carry significant penalties. So if they forget there could be a real shock to them. So we generally advise if you've got a US person that you care about, better to not to appoint them as your attorney.
Glory Gray:
That's interesting. Also, along those lines, can you explain what an enduring power of attorney is?
Jennifer Leach Sandford:
There are two forms of powers of attorney, there's a general power of attorney and an enduring power of attorney. A general power of attorney is appointing somebody and authorizing them to make decisions regarding your finances and legal rights, while you still have capacity. So let's say you go to Florida for the winter, you've got a business here, you could appoint someone as having power of attorney. And they would be able to make decisions about your assets, or maybe about the business while you're down south. So you're not physically here, they can step in and do the banking on your behalf and so on. But you still have capacity. And when you come back, you could revoke it and or change it or or just keep it aside. An enduring power of attorney is a power of attorney that has effect when you've lost capacity. So maybe you've only lost capacity temporarily. Maybe you're in surgery or in a coma, and then you come out of it, and you can revoke it or change it. But in most cases, you've lost permanent capacity. And so an enduring power of attorney enables and authorizes somebody to make those decisions for you while you're still alive but you've lost capacity. Our power of attorney has both, it's a hybrid. So we'll have a power of attorney, and our client signs it, but doesn't activate it. So it's been signed while they had capacity, but we haven't had the attorney come in to sign it just stays in the vault until they're ready to activate it. And then what happens sometimes with our older clients, maybe their spouse has passed away. And they just want a little bit of help. They're not ready to be declared incapable, they don't want anyone saying that they can't manage their affairs. But maybe they just want a little bit of help to pay their bills and to talk to the government about their tax issues. So they can activate the power of attorney, even though they still have capacity, and it will still be in place, they will also continue to work if they lose capacity. So it straddles both periods of capable and the incapable.
Glory Gray:
Now that's interesting, because I think a lot of people are hesitant to create a power of attorney because they think I'm not ready. I don't want anybody right now to take charge of things. And what you're saying is you don't have to, it can happen at a future date. But let’s get the document in place.
Jennifer Leach Sandford:
That's a really, really good point. These powers of attorney are powerful documents. With a power of attorney, you can sell a person's home, you can mortgage their property, you can liquidate all of their assets. Those attorneys are bound by fiduciary duties, they must act in the best interest of the adult who gave them that authority. But they're still very powerful documents. And so no, if you're not ready to activate it, you don't have to, but it's there if you need it. The reason why I said that I think the incapacity documents are almost more important than the will, is that if you die without a will, as I said, the law provides, there is a way to administer your estate, even if you haven't provided instruction. But if you are still alive, and you've lost capacity, and let's say you're in a coma, the only way that your loved ones can access your assets to pay for your care. So for example, to sell your house to pay for your care, is to go to court and get what's called a committeeship, which is essentially making them guardians of you. It removes almost all of your rights as a person away from you, and allows them to control your assets. It removes the dignity from the person. And it's very expensive, because you have to go to court. At the cheapest it would be about $5,000 to get a committeeship. But if it's contested, if you have family members who are fighting over who should be the person in control, it could be hundreds of thousands of dollars. So that versus a couple of $100 to get a power of attorney. I can't stress it enough, it is really important.
Glory Gray:
And our spouses do not have automatic power of attorney unless it's a jointly held property, correct?
Jennifer Leach Sandford:
Exactly. Traditionally, it was joint accounts and everything was held jointly, but if that's not the way you hold your assets, and I no I don't hold my assets that way, then your spouse does not have any automatic right to that unless they are a joint owner of those assets. And even then, if you hold a house in joint tenancy, you can't sell that house without the other owner. So somebody has to be acting for that person. And if you don't have any legal authority, then you can't do that.
Glory Gray:
Is there anything else that you think that everybody should know about these important documents?
Jennifer Leach Sandford:
I just want to maybe leave people with a feeling that you have agency, you have the ability to make your own choices. And depending on how you want to distribute your assets on your death or hold your assets. There are lots of different solutions. So if your family has children who aren't managing money very well, you know, there are ways that you can protect it. If you have a blended family, there are ways that you can ensure that everybody is provided for and that there is a good plan in place to provide for both your spouse and your children. I think the standard is to say “everything to my spouse, and I trust my spouse to provide for my children.” But after you've gone, there's no guarantee that that's going to happen. And if they get remarried, or if they change their life, then that's not necessarily going to go on to the next generation. So there are ways to ensure that everybody is provided for and to minimize the chance of conflict after you're gone.
Glory Gray:
And I'll just add to that to encourage our listeners that you will feel so much better. Having simply sat down with a good lawyer and having gotten these documents done. They can be adjusted later. They can be written in such a way that they will achieve what you actually want to achieve and you'll just feel so much better having had them done. So thank you so much for being with us on the Women's Wealth Canada podcast today, Jen.
Jennifer Leach Sandford:
Oh, it's my pleasure. It was wonderful to talk to you!
