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The 50 Biggest Estate Planning Mistakes . . . and How to Avoid Them Add to ...

In The 50 Biggest Estate Planning Mistakes . . . and How to Avoid Them, authors Jean Blacklock and Sarah Kruger look at the simple missteps and faulty assumptions behind the common will errors


MISTAKE #1: Failing to face the need to delegate your decision-making ability while you are still able to do so

AS WE RESEARCHED THE BOOK, this very first mistake of not planning for the possibility of mental incapacity was mentioned time and again in a heartfelt way. In speaking to us about being the delegated decision maker for his own mom, one seasoned trust professional said, "You know, I even had to decide if she should have a fl u shot! Even though I have been in the trust and estate business for years, I had no idea what was really involved in the incompetency part of it. I wish Mom and I had talked about her views on the end of life before she became senile."

Making the mistake of not planning for incompetency is entirely normal in our society. We like to avoid thinking about being senile even more than we like to avoid thinking about our death. Flipping through a friend's photos of the River Ganges-where some of India's sick and elderly choose to die-makes us shudder and switch to talking about those Flames . . . or those Leafs . . . or how we got the bubble gum off the carpet!

In 2009, the Alzheimer Society of Canada released research noting that Alzheimer's disease and related dementias are not normal parts of aging and yet even so, in 2009, 1 in 11 Canadians over the age of 65 had Alzheimer's disease or some form of mental disorder. As the baby boomers age, the relative number will, of course, increase: playing a guessing game as to whether any of us will be personally aff ected is not a smart move. The good news is that the incompetency hand is a much better hand to play if you plan in advance. With that in mind, Part 1 of the book covers the mistakes you will want to avoid in planning for a time of possible mental incompetency in your life.

In this first mistake, let's cover some basic principles and set out the shorthand terminology we'll use for ease of reading.

Basic principles to know and keep in mind:

  1. Planning ahead and preparing the required documentation for a possible time of incompetency does not mean that you will lose control now against your wishes. In fact, with health care delegation, the delegation cannot come into effect unless and until it is determined that you are incapable of making the required decisions on your own. Our legal system is (thankfully) based on the notion that people should be free to make their own decisions as long as they wish to and are able to do so.
  2. The reluctance of the law to interfere with the decision-making ability of a person and the recognition that personal care decisions are different from property or financial decisions have resulted in legislation across Canada, which in most, although not all, provinces sets out separate processes and documents for the two types of decisions: those decisions that are personal in nature-like health, grooming and diet-and those that affect property and financial matters.
  3. For simplicity throughout the book, we use the term power of attorney to mean a document that is valid in your province for the appointment of a delegated decision maker for your financial affairs. And no, your attorney doesn't need a law degree: the word attorney in this term means agent rather than lawyer.
  4. Also for simplicity, we will use the term personal directive to mean a document that is valid in your province for the appointment of a delegated decision maker who will make all the decisions about your health and personal care, such as where to live, diet, medications, medical treatments and so on.
  5. A power of attorney ca n come into effect as soon as it is signed, if you want, and continue for whatever time period you like. If you are going to Europe and want to sell your house while travelling, you may sign a power of attorney appointing an attorney that is effective for, say, two weeks. Alternatively, and more commonly, a power of attorney can either become effective when it is signed and continue past the occurrence of mental incompetency until the date of death or it can become effective later (maybe when two physicians declare in writing that mental incompetency has occurred) and continue until the date of death. (Deciding which way to go will be part of the discussions you have with your lawyer. The document you sign will then reflect your wishes.)

No matter what you decide to do in your power of attorney and personal directive, if the day comes that you do indeed need some decisions made for you, it may be comforting to know that our laws reflect the belief that a person's decision-making ability is not a simple thing to assess. Comparing the decisions that we make every day for ourselves across a range of topics is not comparing "apples to apples": it is more challenging for a surgeon to carry out open heart surgery than to decide which birthday cake to make for her child. This lifelong reality is taken into consideration when a person's mental abilities begin to diminish. For example, 85-year-old Mary may no longer interact effectively with her investment advisor, but she may certainly be capable of deciding what she wants to wear when she goes out to dinner and what to order once she gets there.

As the next few chapters indicate, it is not as difficult to plan for the possibility of incompetency in your future as you may imagine; instead, it is an aspect of your estate planning that you can think about and plan for one step at a time.

Points to take away:

  • Right now in our North American society, we are really not comfortable with talking about being incompetent. We would prefer to die peacefully in our sleep-or keel over while hitting a hole in one!
  • The benefits to planning ahead for mental incompetency outweigh the difficulty of the process: legislation on the subject in most provinces is designed with simplicity in mind.
  • Two types of advance planning need to be covered: one for property-related decisions and one for personal care decision making.

Excerpted from The 50 Biggest Estate Planning Mistakes…And How to Avoid Them. Copyright (c) 2010 by Jean Blacklock and Sarah Kruger.

Excerpted with permission of the publisher John Wiley & Sons Canada, Ltd.

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