If you have a child with a disability, particularly one receiving ODSP, you may wish to consider leaving funds to them in your will through what is known as a Henson Trust.

This is a special kind of trust that is set up so that the disabled beneficiary does not have access to their funds, and so the funds are exempt from means tests that these government programs have.

Yet, the funds can be invested and made use of for the benefit of the disabled beneficiary. The income that the beneficiary receives is purely discretionary. This means that it is completely up to the trustee (the person running the trust) to decide how much and when payments are made to the beneficiary.

The reason behind this is so that the beneficiary has no right to the income. If the beneficiary were required to receive the income, this would affect entitlements under the ODSP. In other words, if the beneficiary can force the trustee to pay the income to him, then he has a right to the income, and this income is taken into account in determining ODSP eligibility.

Some people are nervous about the purely discretionary nature of the Henson trust, and may wish to direct how the trustee is to handle the funds. However, if you do that, then you risk affecting the beneficiary’s right to ODSP. One way around this is to create a “letter of wishes”. This is a separate document from your will, which is not legally binding, but sets out your wishes as to how the funds in the Henson trust are to be used The letter of wishes does not get mentioned in your will. While not legally binding, if you choose your trustee correctly, your trustee is likely to follow your wishes. There is no particular legal format for this as it is not a public document – you can prepare this on your own, and keep it with your will.

As for the trustee (the person who looks after the funds for the disabled beneficiary), you want to choose someone you not only trust to manage the finances well, but also who is sensitive to the disabled beneficiary’s special needs. Typically a sibling or close family member is a good choice, but if that is not possible, then a corporate trustee is an option.

Finally, you need to consider what happens to any funds left over when the disable beneficiary passes away. These can be left to siblings of the disabled beneficiary, other family members, or to charity.

Henson trusts are not only useful for disabled beneficiaries, but also for what in law is known as “improvident” beneficiaries. That is, people who may not be the best at handling money, or have gambling problems, or simply need protection from claims by spouses and creditors.

You’ve moved to Ontario from another jurisdiction – even just another province or territory in Canada. Is your continuing power of attorney for property or your power of attorney for personal care valid in Ontario?

In short, possibly, particularly if your power of attorney was made elsewhere in Canada, and often the United States, the United Kingdom, Australia, and New Zealand. However, generally if there are any questions as to the validity of your power of attorney from outside Ontario, it is quicker and more certain to have new Ontario powers of attorney prepared.

Ontario has legislation governing the recognition of powers of attorney from outside the province, set out below.

Powers of Attorney for Property
Section 85 of the Substitute Decisions Act states that a power of attorney is valid in Ontario if it complies with the internal law of (i) the place where it was executed; (ii) the place where the grantor was domiciled; or (iii) the place where the grantor was habitually resident.

Powers of Attorney for Personal Care
The test is the same as for powers of attorney for property. A power of attorney is valid in Ontario if it complies with the internal law of (i) the place where it was executed; (ii) the place where the grantor was domiciled; or (iii) the place where the grantor was habitually resident.

Internal Law of Ontario
What makes a power of attorney valid in Ontario?

1. Age of grantor – you must be at least 18 years old to create a power of attorney for property, and at least 16 years old to create a power of attorney for personal care.

2. Mental capacity – you must be of sound mind to create a power of attorney.

3. The power of attorney must be in writing.

4. The power of attorney must be signed and dated.

5. Witnesses – you must have two witnesses, who are not the appointed attorneys, sign the power of attorney.

In Conclusion
If your “foreign” power of attorney meets the requirements listed above, it is likely valid in Ontario. However, if it doesn’t meet those requirements, it still may be valid in Ontario, but you’ve got to prove that it is valid where you were domiciled or habitually resident. In that case, if you still have capacity to create new powers of attorney, it is likely easier, quicker, and cheaper to get new Ontario powers of attorney prepared. But if a person no longer has capacity to create a new power of attorney in Ontario, then a lawyer from the jurisdiction in which the power of attorney was created will need to be retained to provide evidence that a power of attorney is valid.

You have prepared a continuing power of attorney for property, and a power of attorney for personal care in Ontario. Now you want to travel, and are wondering about what happens when you are outside of Ontario. Are your powers of attorney still valid there?

In short, the answer to this is – it depends where. To get a definitive answer, you would need to speak with a lawyer in the jurisdiction in which you are traveling.

However, you cannot assume that your power of attorney is valid outside of Ontario, even within Canada. In fact, if you regularly travel to a particular jurisdiction (for instance, say you own a condo in Florida or Arizona to which you regularly travel), it would make sense to prepare powers of attorney under that jurisdiction’s law as well, so that you have valid powers of attorney for when you are there. When doing so, you need to make sure that your multiple powers of attorney do not invalidate each other.

Even within Canada, the legal situation varies by province and territory. Note that there are currently proposals under consideration to harmonize each province’s and territory’s recognition of other provinces’ and territories’ powers of attorney. Let’s look at the Canadian situation.

Alberta, Saskatchewan, and Manitoba, the Northwest Territories, Nunavut, and the Yukon
These three provinces and three territories have legislation that specifically recognizes powers of attorney for property from other jurisdictions. Alberta is a leader in this field. In Alberta, section 2(5) of the Power of Attorney Act recognizes what we would call a power of attorney for property as valid, so long as the power of attorney is valid in accordance with the law of the jurisdiction in which it was created.

The remaining provinces and territories listed in this section have legislation that is very similar to the Alberta legislation for powers of attorney for property.

In contrast, section 7.3 of the Personal Directive Act recognizes what we would call a power of attorney for personal care as valid if it is made in accordance with the formalities of the Alberta legislation.

Saskatchewan, Manitoba, and the Yukon have legislation that is very similar to the Alberta legislation of powers of attorney for personal care. Nunavut has no legislation regarding dealing with powers of attorney for personal care from outside of the territory. In the Northwest Territories, to be valid a power of attorney for personal care must either comply with the formal requirements of the Personal Directives Act or have a lawyer who practices law in the jurisdiction in which the power of attorney was prepared certify that it was made in accordance with the formalities of that jurisdiction.

British Columbia
British Columbia has the most detailed statutory scheme of any province or territory. British Columbia has laid out in section 4 of the Power of Attorney Regulation made pursuant to the Power of Attorney Act detailed criteria for recognizing whether what we call a power of attorney for property is valid. The power of attorney for property will be valid only if the following requirements are met:
(1) It will only be valid if it is valid in accordance with the law of the jurisdiction in which it was created.
(2) It is still effective in the jurisdiction in which it was created.
(3) At the time of execution, the grantor was ordinarily resident outside of British Columbia, but in Canada, the United States, the United Kingdom, Australia, or New Zealand.
(4) It is accompanied by a certificate from a lawyer who practices law in the jurisdiction in which it was prepared, indicating that the above is true.

British Columbia has laid on in section 9 of the Representation Agreement Regulation made pursuant to the Representation Agreement Act detailed criteria for recognizing whether what we call a power of attorney for personal care is valid, and the requirements are essentially the same as for a power of attorney for property, discussed above.

New Brunswick, Newfoundland & Labrador, Nova Scotia and Prince Edward Island
These four provinces do not have legislation that deals with powers of attorney for property from other jurisdictions. In these provinces, you may need to apply to court to have your power of attorney recognized.

Nova Scotia and Prince Edward Island do have legislation to deal with powers of attorney for personal care from other jurisdictions, and will recognizes these powers of attorney so long as they comply with the formalities of there own jurisdiction, or the jurisdiction in which the power of attorney was executed, or the jurisdiction in which the grantor was ordinarily resident. In Prince Edward Island, you can rely on a lawyer’s certificate stating that your power of attorney complies with the proper formalities of the jurisdiction in which it was created.

Typically, when a couple is preparing wills, they leave everything to each other, and if the other spouse does not survive them, to their children. The idea is that your spouse should benefit from all of your hard work, and whatever is left over goes to benefit your children.

However, what if your spouse remarries after your death? Then, they may choose to give some of their estate to their new spouse, or their new spouse’s children. You won’t even know that these people exist – much less want the fruits of your hard labour going to them rather than your children. What can you do to protect your assets from this sort of situation? There are a number of options – each has its advantages and drawbacks.

Option #1 – Mutual Wills
Under this option, you and your partner enter into wills as normal. However, in addition to entering into wills, you also enter into an agreement between the two of you not to change your will without the other’s permission. Once one of you passes away, obviously that permission can no longer be obtained, so the surviving partner can never change their will.

ADVANTAGES – These sorts of agreements are legally binding, and if one spouse decides to change their mind, the court will enforce the agreement and the estate plan you and your spouse agreed to will be carried out.

DISADVANTAGES – There is a lack of flexibility involved – there can be reasonable circumstances where it may make sense for one spouse to change their will after the other has passed away. As well, you will need to have an additional agreement prepared in addition to your wills, and one party will need to attend at another lawyer’s for independent legal advice. If your spouse is determined to get around this, they can do so my giving gifts of assets while they are alive.

Option #2 – To Your Children In Trust
Under this option, your funds go to your children’s benefit according to the terms of your will. Your spouse would receive the money, but on the requirement that they use the money to look after the children.

ADVANTAGES – This is simple and easy to do in a will. There are no extra costs or steps to take.

DISADVANTAGES – Your spouse may need some of the funds that you leave behind, but will not have access to them because they are for your children’s benefit. There is additional work and costs involved in running a trust for your children.

Option #3 – To Your Spouse In Trust for Their Life, Then To Your Children
Under this option, the funds from your estate are available immediately for the benefit of your spouse. However, the funds do not belong to your spouse, but rather to the trust. So, any funds left over at the end of your spouse’s life are not disposed of by your spouse’s will, and are therefore guaranteed to go to your children.

ADVANTAGES – This is simple and easy to do in a will. There are no extra costs or steps to take. It ensures that your spouse has access to some of your assets when you pass away.

DISADVANTGES – There is additional work and costs involved in running the trust.

What’s The Best Option?
What is best for you is going to depend on your specific circumstances, and this is normally something that it is worth consulting a lawyer about.

This page is about you. Do you have any comments or questions about wills or estates? Let me know and I will answer them.

Here are some frequently asked questions:

What is a mirror will?

Mirror wills are simply wills that “mirror” each other. Typically prepared by a husband and wife, the husband’s will gives everything or almost everything to the wife, and if the wife does not survive him, then everything or almost everything to their children. The wife’s will is not the same, obviously, as she does not give everything to herself when she passes away. Instead, it is the mirror image of the husband’s will. It gives everything or almost everything to the husband, and if the husband does not survive her, then everything or almost everything to their children.

Am I correct to assume that my executor can’t be a beneficiary ?

No, that is not correct. In fact, normally it makes sense to have a beneficiary as the executor (or one of the executors), as the beneficiary has a direct interest in making sure that everything is handled properly with your estate.

Does my executor have to see my will or assets prior to my death ? I would not think so but I just want to be sure.

No, but your executor should know where to find your will.

Are registered accounts (RRSPs, TFSAs) going to be taxed prior to distribution

If you designate your spouse as beneficiary of these accounts, then they can be rolled over on a tax free basis to your spouse. Otherwise, it is deemed that you cashed the RRSP, etc. in on the date of your death, and there would be taxes resulting from that.

My will would state : after payment of taxes, funerals arrangements and other wishes…. assets should be distributed as follows… Can you please clarify for me

Yes, that is correct. You don’t have a choice in this matter – taxes and funeral expenses come right off the top, before anything can be distributed to beneficiaries.

Because I am married, I read the first $200K has to go to my spouse. Is it correct?

It is a bit more complicated than this. Your spouse is entitled to what he or she would have received if the two of you separated on the date of your death.

I have a life insurance policy at work, am I correct to designate as beneficiaries ”to be paid to my estate” so the amount will be added to my estate and divided according to my wishes?

It is generally preferable to designate a beneficiary (and an alternate beneficiary) of a life insurance policy. The reason for this is that if you designate the beneficiary, the payment goes to the beneficiary without any hassle or legal process. If you designate your estate as beneficiary, then the procees of the life insurance policy will end up subject to probate taxes, and can be vulnerable to lawsuits or creditors.

Please confirm that I can amend my will at my entire discretion as my life and wishes change.

Yes, that is correct.

Here are some of the things you ought to keep in mind before you launch into the task make your last will and testament.

Identification

First, you must make sure that your name, date of birth, social security number and current address are correct. Remember that other people might share your identical name, so take great care to get these details right: your personal identifiers are critical in terms of a search of a will and the correct data will allow the proper authorities to be able to backtrack to verify your identity.

Revocation Statement

You will need to revoke all other existing wills and codicils and make this explicit.

Appoint an Executor

You must appoint an Executor (some states prefer the title Personal Representative) of your will. The Executor is the person who will carry out your wishes and will execute the will according to your instructions.

It is also important to keep in mind that each state has different requirements as to who may serve as an Executor. In general, however, the person selected as Executor should be over 18 years of age. It will serve you well to choose someone who is, in your opinion, honest, wise and fair.

Give your Executor the power to pay your debts, taxes, estate administration fees and funeral expenses to ease the burden on your loved ones when the time comes for them to settle all your affairs. Your Executor should also be given the power to dispose of or sell any real estate you own, or have an interest in. He or she should deal with these assets as you would wish yourself.

Assets

You should make a detailed list of your assets and to whom you wish to leave them in the event of your death. This will greatly assist the Executor when he or she is obliged to carry out the duties of Executor.

You should state clearly who should get what, even down to percentages: this is particularly important with regard to cash, money in the bank, shares or interests in companies. You must also state clearly who should receive these allotted assets should the person mentioned in your will die before you. You will need to spell out that the assets left to the said person who dies before you are to be distributed to the rest of the people in the will, or to a specific person or institute.

You should also include a Residuary Clause, which allows the Executor to take care of all the rest of your assets that have not been mentioned. You might include provisions should the people to whom you bequeath re-marry, by adding the phrase, ‘Per stirpes’, which means that the asset thus bequeathed will pass down the bloodline of the beneficiary.

Other Points

It is also important to state whether the Executor is to be paid or reimbursed for his or her services.

You should state whether you want your Executor to post bond. This can be an expensive exercise and one you may not want to pursue, if it means a serious drain on the assets you leave to your beneficiaries. Just be careful to choose your Executor wisely.

It is important that you name a second choice of Executor, should your first choice be unable or unwilling to carry out the duties.

Sign your will and have your signature witnessed according to the laws of the state in which you live, or which state you are in at the time of signing. Finally, ensure you store the will in a safe place.

If the last will and testament of a deceased person does not divide up the assets, then this task is left up to the beneficiaries. Unfortunately, this can create huge rifts among family members even in the best of families. Imagine how much worse it can be in a family that is already divided in how they interact with each other.

The intricacies of dividing the assets among the beneficiaries become more complicated when the estate is not properly assessed for value. If an equitable division is desired, then the value of each item should be determined in order to more fairly distribute the property. Alternatively, the grantor can simply decide to bequeath specific tangible items to each beneficiary along with a percentage of the intangible assets.

Dividing the Assets: Percentages

Assets can be divided according to the wishes of the grantor including an equitable distribution or a non-equitable distribution to the beneficiaries. The latter is less time consuming although it often creates a greater number of problems for those who inherit the estate assets.

However, it is often more common for the grantor to divide the assets up equally among the beneficiaries. In this case, he might simply state that each beneficiary is to inherit a certain percentage of the property to be distributed. For example, in a scenario with four beneficiaries, the grantor can simply state that each beneficiary is to receive 25% of the estate.

Dividing the Assets in the Will: Clarity

It is important to include general terminology in the last will and testament when describing the assets so that no single item is inadvertently omitted. For example, instead of naming each savings account, it might be more prudent to include the names of the banks where the savings accounts are held. In this way, no specific accounts are left out of the will accidentally.

Clarity can only be achieved with the use of proper terminology and careful wording. When specific bequests to beneficiaries are made, it is important to list each of the items that pertain to that bequest. For example, if a sailboat is given to a nephew, the grantor should list everything that goes along with the bequest. This might include such items as a trailer, hitch, spare sails, and items that are kept onboard. If these items are not listed, another heir could argue that they are not included in the bequest since only the sailboat is mentioned.

How are Assets Divided if not Listed in the Will

Normally a last will and testament has what is known as a “residual clause.” This is a final clause in the will whose purpose is to catch any other assets that have not previously been listed, either on purpose or inadvertently. It would be an extremely poorly drafted will that did not have such a clause.

What Are Tangible Assets?

Tangible assets are those that are visible. They have a physical presence to go along with their value. Tangible property includes such items as real estate, buildings, cares, boats, furniture, jewelry, artwork, collectibles, books, and more.

What Are Intangible Assets?

Intangible assets are those that are not readily visible. They include such items as insurance, bonds, bank accounts, and mutual funds. Don’t forget to divide up intangible property in a will.

One of the first things to consider in preparing a will is who will handle your affairs on your behalf once you are gone. This person is known as your executor (executrix if female) or as your estate trustee.

In deciding whom to choose, you want someone:
* you trust
* capable of dealing the large amount of administration / paperwork involved

Often the choice is obvious – it will be the same person as your beneficiary. For instance people will often choose their spouse as their executor.

It is also a good idea to consider who would be a good backup executor if your first choice of executor cannot act.

You can appoint more than one person to act as executor – for instance, all of your children. In this case, all executors must made decisions jointly, but the tasks that need to be done can be shared. You should only do this if all of your executors get along well; otherwise, this is a recipe for disaster.

Your executor is responsible for:

* Your funeral arrangements and the payment of those expenses from your assets;

* Locating all of your assets

* Caring for your assets until they are sold or distributed

* Obtaining probate

* Preparing tax returns and paying any taxes owing

* Paying off any bills, loans, or debts you owe

* Distributing your assets as set out in your will

The job of an executor normally is not particularly complex. However, it is time consuming, and does involve a lot of legwork and attention to detail.

Executor Compensation

Executors (female plural is executrices) are entitled to compensation for their work. Typically, they receive 2.5% of all assets collected, and 2.5% of all assets distributed, so essentially 5% of the value of your estate.

If there is ongoing management of the estate (for instance, holding funds in trust for children), there is a management fee of and 0.4% per year of the value of the funds managed.

These fees are guidelines that are normally followed, but can be adjusted upwards or downwards based on the complexity of the estate.

If an executor is the sole beneficiary an estate, it does not normally make sense to take compensation, as that converts an inheritance, which is not taxable, into income, which is taxable.

You can also set out the terms of your executor’s compensation in your will.

A Power of Attorney is your authorization, given to another person, to act on your behalf.  In practice, there are several specific Powers of Attorney to choose from, each accomplishing a particular purpose.  From these, there are two forms most commonly completed at the same time as your will. The exact requirements for the appointment of your Power of Attorney may change from jurisdiction to jurisdiction, but the intent stays much the same.

The first is a Power of Attorney for personal health care in which you appoint the person you wish to be responsible for your health care decisions if you become incapacitated.  This is where you may make your wishes known as to what health care and medical services you would or would not like to have performed when you are unable to speak for yourself.  It’s easiest for someone who knows you well, and with whom you have discussed the topic, to make the decisions that could be required.

The second is a durable or continuing general Power of Attorney in which you grant another person the power to control your affairs as if they were you. It becomes effective immediately, and only ceases at the time of your death.  A durable or continuing General Power of Attorney is a very powerful document.

That being said, a durable or continuing Power of Attorney is a useful thing to have on hand.  It means that the person named (usually your spouse or other immediate family member) in the document may conduct all of your affairs as if they were you.  Consider what would happen if you unexpectedly became incapable of making coherent decisions or even signing your own name.  Could anyone access your bank accounts?  How would your bills be paid?  Any property that you control is now in limbo.  To gain access to your assets someone must petition a court to grant the right to administer your affairs, which can be a prohibitively costly procedure.  On the other hand, this Power of Attorney conveys an awful lot of control to someone else’s keeping, so choose wisely.

Also available in some jurisdictions is a General Power of Attorney which does not take effect until you are incapacitated, which, at first blush, seems the perfect thing to have.  However, incapacitation must be proven, and avoiding the need for expensive court intervention is a big part of the reason to have a Power of Attorney in the first place.

A Power of Attorney can be revoked at any time by following the procedure specified by your jurisdiction.  By the same token, a person appointed to be a Power of Attorney might decline the appointment when the time comes, or having accepted, may become unable or unwilling to continue to act over a lengthy period of time.  For this reason it is prudent to appoint at least one alternate choice.  Two or more individuals may be appointed jointly, meaning that they must act together and only if all parties are in agreement, or severally, meaning that each may act independently without the approval of the other.  The same individuals you have named as executor/executrix and alternate choices in your Will are excellent candidates for the role of your Power of Attorney.

Power of Attorney documents are commonly completed at the same time as the making of your Will and may be available as a part of a Last Will and Testament package deal from your lawyer.  An awareness of some of your options beforehand helps you to ask the right questions, better understand the answers, and allows you to make informed decisions.

Once you have taken the all-important first step of deciding upon the potential administrators of your estate, and have ensured the willingness of your choices to act in that capacity for your last will and testament, you must prepare to set out your beneficiaries. The question of who gets what seems fairly straightforward, and in most cases, it is. However, there are some things to consider before you make the final decisions.

First and foremost in your consideration are your spouse and children. The vast majority of couples will each arrange their own affairs so as to leave everything to the surviving spouse. To address the possibility of a husband and wife conceivably passing away together, or within a short time of each other, alternate beneficiaries should be named. Most commonly, this would be an equal division of the residue of the estate among the children of the couple. A provision may be included to address the possibility of the death of a child of the couple before the parents whereby that child’s issue (children) may inherit the allotted gift instead. This would mean that if your son or daughter died before you, your grandchildren would inherit that share.

If your children are young at the time of the writing of your will, additional instruction regarding the distribution of funds should be included for the guidance of the executor/executrix. Parents may feel that an individual child must reach a particular age before the inheritance is released to him or her. For example, the parents may instruct the executor/executrix that the inheritance is to be held in trust until the child reaches the age of 25 years.

It is important to note that once a husband or wife has predeceased the other, the surviving spouse may choose to make changes to the beneficiaries of his or her own will independently, as circumstances change. This means that the spouse who inherits everything is under no obligation to follow through with the alternate beneficiaries named in your original will. Therefore, if you have in mind personal gifts that are important to you, they should be included in your will in the area of specific bequests. Merely telling someone that you want him or her to have a particular item or amount very rarely works out that way in the end.

To divide assets equally among a number of beneficiaries, rather than try to put a dollar figure on an equal share of the estate, the wording of the bequest should make reference to shares in, or percentage of, the residue of the estate. This means that after the debts of the estate (credit card bills, loans, taxes, etc.) have been settled by the executor/executrix, and any specific bequests carried out, the value of the remainder of the estate will be calculated, divided into the specified amounts, and distributed accordingly. If a specific bequest is made to one of the individuals receiving a share in the estate, it is important to clearly state whether the specific bequest is in addition to, or included in, the value of the individual share. As well, it is a good idea to always keep the contents of your will in mind when giving large gifts to individuals who are beneficiaries in your will. If the gift you have given while you are still alive was meant to be part of that individual’s inheritance, your will may need to be updated to allow for the reduction in size of that share of the estate.

If there are no children of the marriage, a husband and wife may agree that the residue of their estate should be distributed in equal shares to the immediate family of each party, such as brothers, sisters, parents, etc. If there is some disagreement between the spouses as to how the assets should be divided, a lawyer can advise the parties regarding guidelines that a court is likely to apply should the couple die with no will at all.

If you have no spouse and no close friends or relatives to inherit your worldly assets, many people might like to choose as beneficiary a charity that they feel does work they would like to support.

As mentioned briefly above, individual gifts of specific cherished items or monetary amounts may also be included in a will under specific bequests. Most commonly, these bequests will be to close friends, religious organizations or charities and will be a small percentage of the total of the estate. Special bequests will normally be carried out before the value of the residue of the estate is calculated, reducing the amount available to the major beneficiaries.

Most people will not have large and complex estate matters to consider and the will making process can be as straightforward as is suggested above. Large assets can be held in joint ownership with the intended beneficiaries, avoiding costly court and legal fees. Beneficiaries of life insurance policies and retirement savings plans should be kept current to avoid the proceeds passing to your estate. In any case, it is always a good idea to speak with an estate planning professional and your lawyer to be sure that you are aware of all the options available in your particular jurisdiction.