All About Estates

Canadians are living longer, Estate Planning considerations

Canadians are living longer. Current life expectancy is approximately 83 years.[1] This number has been steadily increasing annually and is expected to continue to do so[2]. One of the questions in the trivia game Outsmarted[3] played over the holidays was: “Approximately how many people over the age of 100 live in Canada?” The game’s answer was 11,500. While this number shocked the players, it is in line with what Statistics Canada reports.[4]

What does this mean for estate planning?

Regardless of projected life expectancy, we all know that everyone needs a will and powers of attorney. Once these documents are in place, they must be reviewed periodically. The rule of thumb I tend to hear is to review a will (there is usually no mention of reviewing powers of attorney) every 5 years, or on the occurrence of a major life event: a birth, a marriage, or a death. Assuming testamentary capacity, more frequent reviews of all estate planning documents should be undertaken later in life, not only to remind will makers of the provisions in their wills, but to help prevent unintended outcomes.

Wills

Moving into a retirement home or long-term care facility is a major life event. As part of this transition, one or more pieces of real property owned by the will maker may be sold. If a property that is the subject of a gift in a will is not owned by the will maker when they die, the gift will adeem. If the property was sold by the owner’s attorney, the intended recipient may have recourse to anti-ademption provisions such as those contained in s. 36 of the Ontario Substitute Decisions Act, 1992[5].

Large legacies to friends, organizations and distant family members may be disproportionate if the will maker’s estate value has substantially decreased from the time the will was written, due to, among other things, the cost of their care. Little may be left to the residual beneficiaries after the payment of taxes and expenses. To avoid shortchanging the residual beneficiaries in situations where an income stream will not keep pace with care costs, before testamentary capacity is lost, consider structuring the will to tie legacy payments to the value of the estate.

Powers of Attorney for Property (POAP)

Many POAP documents are short, running only one or two pages in length. Some of these brief documents are written using fill-in-the-blank kits, but even some professionally drafted POAP documents lack specific wording on topics such as support for dependants, gifts, and charitable donations. Legislation in some provinces, such as Ontario[6] and British Columbia[7],  gives guidance and puts limitations on the gifts an attorney may make from an incapable person’s property. If ongoing payments, or occasional gifts are part of an older client’s life, consider whether the wording in their POAP is sufficient to allow their attorney to follow through with existing or intended plans[8].

Beneficiary Designations

Beneficiary designations are efficient. They get funds into hands of the named persons quickly and without the need to pay probate tax or executor fees (if appliable) on those amounts. Beneficiary designations can be changed quickly and easily without the need to see a lawyer. However, these designations need to align to the rest of the estate plan and should not be viewed (or changed) out of context. It may be counter-intuitive to those focused on saving probate tax, but having proceeds from registered plans payable to the estate can provide much needed liquidity and can channel the funds into testamentary trusts for vulnerable beneficiaries. Asking older clients if they have changed their beneficiary designations recently may help to avert not only unintended outcomes, but also difficult situations for their families, such as the need for parents to obtain a guardianship order for a minor beneficiary who lives outside Canada.

While none of us should take a “once and done” attitude toward our estate planning, there may be more changes in older clients lives than just births and deaths of loved ones. These events will be covered off by good drafting, but there may be other happenings that require bigger adjustments before clients lose capacity.

Written by Holly Allardyce

[1] Canada Life Expectancy 1950-2025 | MacroTrends
[2] https://www.macrotrends.net/global-metrics/countries/CAN/canada/life-expectancy
[3] https://www.ca.outsmarted.com/
[4] https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1710000501
[5] Substitute Decisions Act, 1992, S.O. 1992, c. 30 | ontario.ca
[6] Section 37 of the Ontario Substitute Decisions Act: https://www.ontario.ca/laws/statute/92s30
[7] Section 20 of the B.C. Power of Attorney Act: Power of Attorney Act
[8] See, for example Derreth (Re), 2024 BCSC 1033 2024 BCSC 1033 Derreth (Re)

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