August 7, 2020 | Now What?

You caught the virus and woke up dead. So now what?

It’s been on the mind of a lot of people lately. Lawyers have been busy with wills and POAs since the bug hit in March. Same with funeral homes, where pre-planning is a fun new thing to do. As this not-a-virus blog has stated often, your chances of being sickened and slaughtered by Covid are far less than the odds you’ll be financially whacked. But, human nature being what it is, a majority believe their health is at risk and, if infected, they will shuffle off this mortal coil.

Okay, so how do you get ready for the inevitable? We all become frail and croak (except Mick Jagger) virus or no virus.

First, you need a will. Get a lawyer and draft one. Do not grab a will off the Internet. If you can’t find a solicitor, or are incredibly cheap, then in some provinces a holographic will is legal – one you pen by hand, have witnessed (but don’t run through your word processor). Without a will, the courts will appoint an administrator to disburse assets, so if you really hate your grandchildren or still fancy your first wife, this might be a disappointment. And if you don’t spell it out, who will look after the dog?

Also required are Powers of Attorney. These give another person the authority to look after you, to make decisions regarding property, finances or personal care. Ensure you and your spouse are POAs for each other, and pick an alternate as well. If you never, ever want to be put into a long-term care home, say so. DNR? Include that, too if you don’t want Herculean efforts put into keeping you alive into antiquity. In some provinces there are POAs for both property and personal care. In others you appoint a delegate to make certain decisions.

Tip: don’t appoint multiple POAs, like you three kids. Or anyone who might be a beneficiary of your estate. If the people appointed as attorneys cannot agree on an action (like spending $8,000 a month to care for a parent with advanced Alzheimer’s) then none can be taken. Lawyers may enter. Chaos may ensue. Mom suffers. Find a competent, independent person or institution to step into this role.

By the way, if you’re ever acting as POA for another person – a parent, relative or friend – realize there’s a fiduciary and legal duty involved. By law you must put their interests ahead of your own. Ask these questions before taking ay action: “Is what I am doing completely for the benefit of that person? Is there any conflict of interest?”

Over the years I’ve been irked by the decisions some adult children have made with regard to their fading parents, scrimping on care (for example) in order to maximize their potential inheritance. If you think a family member might be the best POA for you at a time you really need help, think again.

Same with the role of executor. Go ahead and appoint your spouse, since s/he will likely be assuming your assets, but realize it’s a seriously dumb idea to name a child as executor for the estate. Unless your kid is a lawyer, financial wiz, accountant or has oodles of time of their hands, this could end up a complete mess. Being an executor is complicated, time-consuming and may result in litigation or tax liability.

As this blog has spelled out in the past, unless you’ve been an executor, it’s hard to appreciate how huge the task is. Settling someone’s estate can take several years, and involve work on a weekly, or daily basis. Sure, you need to handle the funeral arrangements, cremation or burial, death certificate, look after pets, dispose of personal assets, empty the residence, talk to the bank, credit card companies, merchant accounts, work pension, CPP, the CRA and insurance company, but that’s the easy stuff.

The will must be located, validated, and an estate account opened. All investment assets, stock certificates, account numbers, bonds, deeds and documents found. The terminal tax return must be filed within six months, perfectly, taking into account any past unresolved tax issues you may have been aware of (without investigation). There could be a requirement for multiple returns in many cases. In several provinces executors are personally liable for past obligations of the deceased for a period of several years. The CRA can go back most of a decade to determine what liabilities may exist, so you need to obtain a Tax Clearance Certificate.

As executor, you have a legal duty to find all beneficiaries and deal with them in a fiduciary capacity according to the dictates of the will (which may have to be probated and paid for). Beneficiaries can sue you, personally, if you fail in your task, or even if they don’t like the will and allege it’s not valid or was written under duress or during a time of foggy thinking. As executor, with keys to the estate’s assets, you can also become the target of greed, anger or family discord – amazing how such emotions bubble up, quickly overcoming grief.

Typically, being an executor takes about 18 months and can require fulfillment of sixty or seventy separate tasks, from dealing with insurance companies, to large pension plans, creditors and bankers and others sticking their hands out. So there are a great many reasons why appointing a family member – or your spouse, or child – is the worst thing possible. They may be incompetent to do all of these jobs. Or too busy. Too young and inexperienced, too old and unsteady. And do you really want to dump this kind of complicated, difficult job into the lap of a loved one who is struggling with your recent death? That seems grossly unfair, and a recipe for trouble.

Way better to appoint an institutional executor, like the estate & trust services division of your bank or investment company (all the big guys offer this). Yes, that costs money – perhaps 4% of the estate’s value (less above a million) – but there’s a 100% chance all of this stuff gets done. Or ask your lawyer if his/her firm will agree to settle the estate (often with lower fees). Then your heirs, beneficiaries, family and friends can concentrate on missing you rather than squabbling.

There you go. Attend to of all this, and you can die happy. Well, almost.

Garth Turner August 7th, 2020

Posted In: The Greater Fool

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