In Ontario, Wills, Executors (referred to as "Estate Trustees" in Ontario), and Powers of Attorney (POAs) are distinct but interconnected legal tools within the realm of estate planning. Understanding their specific roles and how they interact is crucial for ensuring your wishes are respected and your affairs are managed efficiently.
Wills in Ontario
A Will in Ontario is a legal document that dictates how your property will be distributed and who will manage your estate after your death. Seniors and our Friends Over 55 should all have or be in the process of getting a valid WILL set up.
Key Requirements for a Valid Will in Ontario:
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Written Document: Must be in writing (typed or handwritten). Electronic wills are not yet legally recognized.
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Age: You must be at least 18 years old (with some exceptions for married individuals, those in the military, or emancipated minors).
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Mental Capacity ("Sound Mind"): You must be of sound mind, understanding the nature and effect of signing a Will, the extent of your property, and who your beneficiaries are.
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Signature: You must sign the Will at the end.
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Witnesses (for Formal Wills): Most Wills are "formal wills" and require two witnesses.
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You must sign in the presence of two witnesses, who are both present at the same time.
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The two witnesses must also sign the Will in your presence.
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Witnesses cannot be beneficiaries in the Will, nor can they be the spouse or common-law partner of a beneficiary. If a beneficiary or their spouse witnesses the Will, the gift to that beneficiary might be invalid, though the rest of the Will generally remains valid.
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Virtual Witnessing: Since the pandemic, Ontario has allowed for virtual witnessing of Wills, provided at least one of the witnesses is a licensed Ontario lawyer or paralegal, and all parties can see, hear, and communicate with each other in real-time.
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Holographic Wills: Ontario also recognizes "holographic wills," which are entirely handwritten by the testator and signed by them. These do not require witnesses. However, they can be more susceptible to challenges if not clearly written or if they don't fully express testamentary intent. For complex estates, a formal will drafted by a lawyer is always recommended.
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Executor/Estate Trustee Appointment: Your Will names your Estate Trustee(s) (Executor(s)) to manage your estate.
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Guardianship: If you have minor children, you can name a guardian for them in your Will.
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No Will (Intestacy): If you die without a valid Will in Ontario, your estate will be distributed according to the rules set out in the Succession Law Reform Act. This means your assets go to specific family members in a prescribed order (spouse, children, parents, siblings, etc.), which may not align with your actual wishes. It also typically involves the court appointing an Estate Trustee, which can be a more complex, lengthy, and expensive process.
Estate Trustees (Executors)
in Ontario
In Ontario, the term "Executor" has largely been replaced with Estate Trustee (or Estate Trustee With a Will/Without a Will, depending on the situation). This person is the legal representative appointed in your Will (or by the court if there's no Will) to manage and distribute your estate according to your instructions or the law.
Seniors and our Friends Over 55 should have thought through who they should have as Estate Trustees (Executors) during the process of setting up their WILL.
Key Duties and Responsibilities of an Estate Trustee in Ontario:
The Estate Trustee has a fiduciary duty to act honestly, in good faith, and in the best interests of the estate and its beneficiaries.
Their duties include:
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Locating the Will: Finding the most recent and valid Will.
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Arranging the Funeral: While family usually handles this, the Estate Trustee has the legal authority to approve or make arrangements.
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Obtaining Death Certificates: Getting certified copies of the death certificate.
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Identifying and Valuing Assets: Locating, securing, and inventorying all assets (real estate, bank accounts, investments, personal property, digital assets, etc.) and liabilities (debts, mortgages, loans).
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Applying for a Certificate of Appointment of Estate Trustee (Probate): This is often required, especially if the deceased owned real estate solely in their name, or if financial institutions require legal proof of the Estate Trustee's authority. This involves filing an application with the Ontario Superior Court of Justice. Estate Administration Tax (formerly "probate fees") is payable on the value of the estate when applying for this certificate.
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Managing Estate Assets: Protecting assets, collecting income (e.g., rent, dividends), paying ongoing expenses (e.g., mortgage, utilities, insurance).
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Paying Debts and Taxes: Paying all legitimate debts of the deceased and the estate, including final income tax returns for the deceased (T1 terminal return) and the estate (T3 trust return), and obtaining a Clearance Certificate from the Canada Revenue Agency (CRA) before distributing assets. This is critical to avoid personal liability for the Estate Trustee.
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Maintaining Records: Keeping detailed and accurate accounts of all transactions related to the estate.
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Communicating with Beneficiaries: Keeping beneficiaries informed about the estate's progress.
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Distributing Assets: Distributing the remaining assets to the beneficiaries as per the Will or the Succession Law Reform Act.
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Compensation: Estate Trustees are entitled to reasonable compensation for their time and effort, usually around 2.5% of the capital and 2.5% of the income of the estate, but this can vary depending on the complexity of the estate and the work involved.
Powers of Attorney (POAs)
in Ontario
A Power of Attorney (POA) in Ontario is a legal document that allows you (the "Grantor" or "Donor") to appoint someone (your "Attorney," who doesn't have to be a lawyer) to make decisions on your behalf while you are alive. POAs become invalid upon your death. Seniors and our Friends Over 55 should have thought through who they should have firmed up who they would like to have as their POA during the process of setting up their WILL.
Ontario recognizes two main types of POAs under the Substitute Decisions Act, 1992:
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Continuing Power of Attorney for Property (CPOA for Property):
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Purpose: Grants your Attorney the authority to manage your financial affairs and property. This includes banking, investing, paying bills, selling real estate, and handling taxes.
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"Continuing" Aspect: This is key. It means the POA remains valid even if you become mentally incapable. This is the most crucial type of POA for financial planning and incapacity planning.
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When it Takes Effect: You can specify if it takes effect immediately upon signing (for convenience) or only upon a determination of your mental incapacity. For incapacity planning, it's generally best to have it take effect immediately.
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Power of Attorney for Personal Care (POAPC):
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Purpose: Grants your Attorney the authority to make decisions about your personal care, such as healthcare, medical treatment, housing, nutrition, clothing, and safety.
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When it Takes Effect: This type of POA only takes effect if and when you are determined to be mentally incapable of making those decisions yourself.
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"Living Will" / Advance Directive: While Ontario doesn't have a formal "living will" document, you can include your wishes and instructions regarding specific medical treatments and end-of-life care within your Power of Attorney for Personal Care. Your Attorney is legally required to follow these instructions unless they are impossible to carry out.
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Key Aspects of POAs in Ontario:
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Age to Grant: You must be at least 18 years old to grant a Continuing Power of Attorney for Property and at least 16 years old to grant a Power of Attorney for Personal Care. You must also be mentally capable at the time of signing.
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Witnesses: Both types of POAs in Ontario require two witnesses (not the Attorney, their spouse, or a minor). Virtual witnessing is also permitted, with a licensed Ontario lawyer or paralegal as one of the witnesses.
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Duties of an Attorney: Your Attorney must act honestly, in good faith, and in your best interests. They are accountable for their actions and must keep detailed records of all financial transactions. They generally cannot transfer your money or property to themselves unless explicitly authorized and it is in your best interest.
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Importance: Without a valid POA, if you become mentally incapacitated, your loved ones may have to apply to the court to be appointed as your guardian or statutory guardian, a process known as a "guardianship application." This is a public, costly, and time-consuming legal proceeding.
How They Work Together
in Ontario
Wills, Estate Trustees, and Powers of Attorney form a cohesive estate plan:
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During Your Lifetime (and Incapacity): Your Powers of Attorney are active. If you become mentally incapable, your appointed Attorney(s) make decisions about your finances (Continuing POA for Property) and personal care (POA for Personal Care). These documents ensure your affairs are managed by someone you trust, avoiding court intervention.
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Upon Your Death: Your Powers of Attorney immediately cease to be valid. At this point, your Will becomes the governing document. The Estate Trustee named in your Will then takes over to gather your assets, pay your debts and taxes, and distribute the remaining estate according to your specific instructions in the Will.
In summary, having all three documents properly drafted by an Ontario estate lawyer is essential for a comprehensive estate plan that covers both potential incapacity during your lifetime and the orderly distribution of your estate after your death. Seniors and our Friends Over 55 should either have all these things set up properly or in the process of taking care of these important estate planning matters.
