Episode 5

June 13, 2022


005 - Leaving a legacy – the practical steps you can’t avoid

Hosted by

Vincent Heys
005 - Leaving a legacy – the practical steps you can’t avoid
Financial Wellness with Vincent Heys
005 - Leaving a legacy – the practical steps you can’t avoid

Jun 13 2022 | 00:30:33


Show Notes

In this episode we're talking about the practicalities of drafting, storing and updating your Will, Power of Attorney, Living Will and more. Adam Cappelli, Managing Partner of the Estates Group, gives down-to-earth advice on why these legacy-impacting decisions and documents are so important, and how to set them up properly.  

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Episode Transcript

Vincent Heys: [00:00:00] From wealthstack.ca Welcome to the financial wellness podcast series, where we discuss all kinds of financial principles, concepts, and products. Our aim is to make money matters. Simple again. Vincent Heys: Hey there, we have such a great opportunity to script and plan our legacy before passing away. Yet many people don't take the time to sit down and plan. As all of us know when a loved one passes away, there are so many emotions and sorrow. One of the best things I could do for us is to give us clear instructions. Vincent Heys: What needs to happen after the passing in today's podcast, we are going to explore the basic concepts of walls and. At the end of the podcast, we will also share some complicated situations with you when it comes to walls. In my remote studio, I have Adam Cappelli founding [00:01:00] partner of Cambridge law firm in Toronto. Vincent Heys: Adam is a Certified Specialist in Estates & Trusts Law. Hey Adam. Adam Cappelli: Good morning, Vincent. Vincent Heys: How you're doing, Adam Cappelli: I'm doing well. Thank you. How about yourself? Vincent Heys: It's great to have you on the show. Adam why don't you to briefly just introduce yourself to the listeners. Adam Cappelli: Sure. Um, I have been practicing law for 27 years and the very first day I recognized a need in the estate and trust world. Adam Cappelli: And so I, right, right from day one, I've been practicing in the states and trusts and which, you know, in the most basic level includes estate planning and, uh, a state administration and a state litigate. And I've built a team of 10 lawyers as it stands today, practicing, uh, predominantly in the area of estate and trust. Vincent Heys: Great. So, um, let me, let me start [00:02:00] the, uh, the fire side chat today with a, with a quick story. I'm fortunate to have my parents still alive and over the decades, my parents frequently came to my brothers and I explained the updated will, which is really fortunate. And so in earlier years, I didn't really appreciate, um, this work that they've done for us, but in my last few years, I, um, I really see the benefit of that, uh, you know, top of things. Vincent Heys: And, and that is, um, it gives us so much peace and security as brothers to know that they've looked after their affairs. It's an order. If they pass away, we know that there's not going to be any strive. Uh, we've also seen that. For example, my, my mother have up all the jewelry equally between the grandchildren and they, um, and they know what they will inherit from ouma one day. Vincent Heys: And, um, you know, so that, so I have a very good view about roles and power of [00:03:00] attorneys. And it's not a scary thing for us as a family. It's something that we opened in total. What I can see that, you know, many people just don't feel comfortable in terms of speaking about wills and power of attorneys and last wishes and these kinds of things. Vincent Heys: And so, Adam, you know, what I've seen on the, on the stats is that about, I don't know, like 55% of Canadians don't have a will. And when people completed dashboards on wealthstack.ca, and we also asked the question, would they have a well and powerful. It's between 40 and 50% of the people don't have a, will, what is, what is that? Adam Cappelli: Uh, Vincent that is human nature at its finest. The postponing to another day is an easy, easy habit to get into procrastination as we like to call it. Uh, I, I believe that's, that's the number one, um, uh, reason for that high stat. And when you think about. Let's face it, [00:04:00] planning, mortality, planning. One's mortality is, is a very, very difficult thing to face and do. Adam Cappelli: So if you're going to procrastinate something it's, you know, going to the dentist and, uh, doing a state planning. Vincent Heys: Okay, so Adam, um, in terms of a, will, what are the main, so let us dive straight into it. You know, let's talk about, uh, well, firstly, what are the main elements that, that goes into that will and what happens practically? Vincent Heys: If I, and, or my spouse, if we pass away and we don't have a Canadian will? Adam Cappelli: Well you, you can rest a little easier because. If you don't make a will yourself, don't worry. The province of Ontario has scribed one for you. Um, I'm being cynical, but in reality, that's, that's the truth. There's legislation that doesn't just leave wealth into [00:05:00] the, uh, proverbial black hole. Adam Cappelli: Um, there is a means to. To get it into the hands of your, a lineal descendants, which would include if you're married a, a spouse and. Natural born children, whether with that spouse or not, it's just, there's an immediate tax consequence. As you know, when you, if you have a spouse and you die and you have a will that passes everything to your spouse, there's a tax deferral associated with that. Adam Cappelli: And that's very attractive rather than, you know, one of our tenants of wealth creation. As, as I've heard you talk about many times, Is to defer tax as far down the road as you can. So there's a, there's a tax consequence. There is a real crisis that's created, you know, accounts are not accessible. Uh, benefits are not payable, uh, parties, legal, uh, uh, [00:06:00] uh, account holders and plan holders and administrators, can't just say, yeah, I know. Adam Cappelli: You know, you're the spouse of the deceased and we feel terrible for you and we'll release the money to you legally. They cannot do that. There are creditor issues. There are contractual issues. There's the tax authorities. There are parties that have a claim on the estate and it will be frozen. Uh, there's a legal proceeding that you must commence to get an administrator appointed so I could go on and on and on and, and, uh, terrify our viewers. Adam Cappelli: I think it's pretty widely known that, um, you know, there's certain things in life that you musn't do and that you must do, uh, making a will is one of those must do's, you know, uh, not drinking alcohol and accesses, one of the ones that you should follow. And this is right up. Vincent Heys: What are the most common power of attorneys that we need and [00:07:00] what happens if we don't have them? Adam Cappelli: Oh, okay. The powers of attorney or go hand-in-hand with a will. Uh, people often think, uh, you know, they're going to die and they don't think that they're going to suffer an illness or disease or a catastrophic health situation that, that renders. Incapable they're still alive, but they're unable to make financial decisions or healthcare decisions. Adam Cappelli: So certainly powers of attorney, um, you know, are, are I, I would, I would say I don't know the statistics exactly, but I would think that, um, 85% of powers of attorney are activated at one point or another. Um, you know, if, if you're one of those people, that's fortunate enough to live to the ripe old age of 95 and then drop dead suddenly, you know, you've never activated your power of attorney. Adam Cappelli: You've never had to suffer through a, a period of incapacity. Where you're dependent. And [00:08:00] we all think about that and we don't want that in our lives, but, you know, powers of attorney are quite often activated. I'm sure a lot of our listeners are seeing themselves thrust into that position for an aging parent. Adam Cappelli: So you definitely need to have those in place because if you don't, again, there has to be a court proceeding initiated no different than if you die without a will. And. Uh, person appointed is, is not that easy, especially when there are family members that want to step up and they can't agree on who's to step up. Adam Cappelli: So there's a lot of conflict created. Vincent Heys: What is the difference between a living will and a power of attorney for property? Adam Cappelli: So a living will is, is the term that is, um, really derived from American jurisprudence. It's a term that, uh, Uh, is associated with a health care power of attorney except your healthcare power of attorney, [00:09:00] uh, nominates someone to make your healthcare decisions. Adam Cappelli: The living will is the portion of the healthcare power of attorney that describes to that. Decision-maker the types of decisions you would want in certain scenarios. So for example, in your living, will, you might set out, I don't want to receive. Uh, Kurt coronary or, uh, a feeding tube or a, I don't want to be resuscitated with chest compressions. Adam Cappelli: I do not want to be put on, uh, a ventilator, uh, if I have an incurable injury or disease. So you can get very specific and precise about your healthcare wishes and the so much so that the demand is so great that we have. In, in my, firm a full-time healthcare consultant, who is somebody with over 30 years experience drafting policy and mediating disputes in the hospital setting in palliative [00:10:00] care situation. Adam Cappelli: So a lot of clients are reaching back and saying, we want, we want to set up a detailed plan in the healthcare. Vincent Heys: And then on the, um, power of attorney for property, that's physically two bank accounts, um, anything to do with assets in terms of, you know, do you have someone to, to give authority in terms of how to release funds or selling a property while you're still alive? Adam Cappelli: Right? That's right. So while you're still alive and you can. Uh, make financial decisions and there's legal test to make that determination. But assuming a person's in a coma in a hospital bed, they're obviously not able to make decisions. Power of attorney for financial decision-making is activated and not only giving advice or sorry, uh, giving instruction to someone like yourself about how to structure investments, but there's also, you know, uh, communicating with government agencies. Adam Cappelli: Uh, starting a lawsuit. If the reason for the [00:11:00] incapacities result of an accident where someone was negligent. So you need a power of attorney to deal with all those property decisions. It's not just asset management, it's really anything to do with, uh, other than healthcare, Vincent Heys: Adam, maybe just quickly on, on these two power of attorney. Vincent Heys: Is it then fair to say that your spouse is maybe the first person to be that power of attorney and then another family member, if, if they are not there. Um, how many, how many rolling people do you normally put into a power of attorney? Adam Cappelli: Well, we always recommend that you have an alternate. So you name a PR a primary decision-maker, that's usually a spouse, or if you're not married, uh, or in a relationship, uh, like it could be a common law. Adam Cappelli: But if you're not in a relationship, you, a lot of people default to their children. Um, and a lot of people, you know, mistakenly, [00:12:00] uh, you know, assume that, uh, blood makes a good fiduciary or decision maker, and it's often times doesn't work out to be the best choice. So you can think of. I trusted advisor. Adam Cappelli: I'm a lawyer and accountant financial advisor. And if you're not even comfortable, you can go to a corporate trustee that all the, uh, there are trust companies in business to serve this need. For those that don't have a suitable family member or financial, uh, or a trusted advisor. Okay. Vincent Heys: Thanks Adam. Let's um, let's just jump back to the creation of the wills. Vincent Heys: Um, and, uh, especially with parents with minor children, that's always a complication. Um, also if, uh, you know, in Canada, a lot of people immigrate here. Uh, they have, uh, obviously some of those [00:13:00] guardians are in the country of birth and might not be in Canada, maybe just quickly talk to us, um, around guardianship and then also. Vincent Heys: Uh, a well normally allude to a testamentary trust to be set up for minor children. Adam Cappelli: Yeah. Earlier. And I don't think I actually got into the details or detailed answer of your question of, you know, what is in a will. And the first thing that you're doing in a will is you're addressing, uh, all those. Uh, arrangements that you might have designated a beneficiary. Adam Cappelli: So for example, someone might say, why do I need a, will I have everything in joint names or I've designated my registered plans and my pension plans to my spouse? Well, there, obviously, if you died together, that's a problem. Uh, there's no contingent name. So the first thing in a will you want to address are. Adam Cappelli: Plan designations that are out there where you've named a primary, but not a contingent [00:14:00] beneficiary. So you want to take care of your contingent beneficiary appointments. You want to nominate an executor. Um, and that executor might be someone who is the same, who carries the same responsibilities as trustee for your children. Adam Cappelli: You want to make sure your children don't receive. You know, 500,000 at the age of 18. So you want to set up a trust as you pointed out and you may want to consider who's the best trustee. Um, for that trust, uh, it may not be the executor could be a separate person and then you want to look at okay, who would be the best person there to guide and raise. Adam Cappelli: B the BA you know, B, B uh, a great substitute parent, and those are the guardians. And you want to make sure you designate them, uh, in the will as well. If you have young children, uh, children under the age of 16, it's not 18, um, need [00:15:00] to have a guardian appointed, uh, after 16 there in the eyes of the law, able to move out and live on their own. Adam Cappelli: And. You know, refrain from being under parental control. Uh, that's one of our greatest fears as a parent, you know, you die, you leave your child at a very vulnerable age and they have a difficult time with it. And, and, and they don't, uh, find a, uh, compatible guardian and they end up, uh, on their own way too young, trying to look after them. Vincent Heys: And then just quickly, the question around, uh, guardians in different countries is that, is that a complication? Adam Cappelli: It is a complication because as you can appreciate, it's not an easy administrative task to exit a country and end up, uh, in, uh, another country under guardianship. Like in other words, you might, you know, the Canadian government is not bound by for.[00:16:00] Adam Cappelli: Guardian appointments. So if you, if you came to this country, uh, from another, uh, let's say South Africa, for example, and you've nominated your guardians in that, in your home country, your country of birth, when you die here and your children are here, the government authorities need somebody to immediately step in and look after your children. Adam Cappelli: And then a court proceeding has to be. To officially appoint those guardians. So it's not insurmountable to have the children move back to South Africa, particularly if they have citizenship there, but if they don't have citizenship there, it becomes an, an immigration issue. And, uh, it's more complicated. Adam Cappelli: So all the more reason why you need to have a will, that that puts in place a temporary guardian to look after your child. Until such time as those foreign [00:17:00] residents can come here, get through, get the, the paperwork through the courts so they can take the children home with them. Vincent Heys: I think that's also for me and my family, you know, coming to Canada in the earlier years, it was definitely the case of that. Vincent Heys: They will go back to South Africa, you know, to the guardians of. But now being a few years, you know, and making friends and having family here, it's a lot easier and a lot better for them to stay here. And so that might be just another thing to always, um, within that, Adam, if we can just, uh, talk about the executive ship, Mike, my question here is, is there a difference or what is the complication of appointing an executive versus a, a professional example? Vincent Heys: Can I appoint any executor and I have to go and sorted out, or is it better to appoint a professional executor? Adam Cappelli: That's a, that's a really good question. And it [00:18:00] really depends on the client's circumstances. So a lot of clients, uh, again, are, uh, you know, penny wise, pound foolish, as the saying goes where. Adam Cappelli: They don't want to pay for a professional, pardon me, trustee or executor. And when you're, when you're paying for professional, what are you getting? First of all, you're getting experience that counts for a lot. Secondly, you're getting someone independent, somebody who's not conflicted. You know, if your son has been borrowing money from you and is now your executor, often they get in conflict with their siblings because. Adam Cappelli: The siblings are wondering, well, why is an interest being paid on those amounts and where they not supposed to be repaid? And there's all, uh, there's a whole host of reasons why your family members might be conflicted. Independence is very important and that's why you would appoint a trust company. And as well, you know, they're, if they make mistakes, they can be sued. Adam Cappelli: They have [00:19:00] insurance, uh, deep pockets. Um, and it's a lot less awkward, you know, if you can envision a situation where one son is the executor, one son is not that son, who's not as wondering what's going on with mom's estate. Why haven't I received any reporting? Why haven't I received my inheritance? And then they make that, you know, that call to their brother and the brothers, you know, very sensitive. Adam Cappelli: You know, uh, about his one brother insinuating, he's not doing a good job and next thing you know, they're in conflict. So your legacy is, you know, a conflicted family now, um, sometimes independence can avoid that awkwardness and that dynamic, you know, if you're, if you're telling a trust company, listen, I think my brother, uh, has borrowed money. Adam Cappelli: You may want to make inquiries. They can make those inquiries as part of their due diligence without. Uh, fragmenting the [00:20:00] relationship between the two brothers, Vincent Heys: Adam, it sounds like there's a lot of, um, not so good stories when it comes to implementing and executing these walls. And maybe not so much the power of attorneys, but maybe more the wills. Vincent Heys: And it kind of leads me back to the story of my parents. You know, it does create somewhat security and peace. If, if the parents do, their wills upfront and I talked to them, Uh, as opposed to leave it, no one sees it. And then there's a surprise one day when the wall is read. And maybe then the kids that were friendly, become unfriendly. Adam Cappelli: There's so many practical steps that, you know, we don't have time for today and maybe we'll have time on another session together, but the, you know, locating the original will, you know, some parents are so secretive. The children don't even know. You know what lawyer they were dealing with. The hopefully, you [00:21:00] know, moving through, uh, their private papers, all that can be figured out, but we're now entering in a paperless age as you know, uh, entering we're well into a paperless age and sometimes piecing together, uh, what, uh, a person's financial footprint is a lot more difficult today. Vincent Heys: So just to recap, so a family, so let's then nuclear family, husband, wife. So they need each a will. So there are two wills and then each parent will have their own two power of attorney. So that six documents in total. What is the, just what you also mentioned this earlier in terms of saving the will, having a hard copy, soft copies. Vincent Heys: How does that run with, you know, which one is the valid one or both? Where do they need to store it? What is the best, uh, practical steps there for people? Adam Cappelli: In most cases, the originals are left in [00:22:00] safekeeping with the lawyer. And the reason for that is so that, um, you know, they're, they're stored properly and they're not destroyed in a fire or, um, stolen in a, uh, home, uh, robbery. Adam Cappelli: So safekeeping is, is, is very important. And the other reason is, you know, when clients have documents in hand, sometimes they will make handwritten alterations and it, it has an unintended, um, result where they revoked the document in, in error, or they amended in a way that's ambiguous. So lawyers like to control the document so that when the client wants to make a change, they call. Adam Cappelli: Uh, an, uh, you know, a solid discussion occurs to make sure they don't, um, uh, inadvertently, um, you know, put matters into their own hands and create an error and a bigger problem. So document control is so important. Most institutions will not [00:23:00] accept a photocopy. They want a certified lawyer copy anyway. Adam Cappelli: And so if you're holding the original and you have to get certified copies, then you have the 10 at the lawyer's office with that. Whereas if the lawyer has the original, they can make the certified copies on this, on the spot and in a quick way, get them out to the family members. Vincent Heys: Great. Um, Adam, for those people that, that already have a, will, uh, what is the process going forward with them normally or often? Vincent Heys: How frequently, when do they need to update that will and power of attorneys? Adam Cappelli: Well, the obvious, um, milestones that you trigger an update are if your wealth increases. Uh, substantially, uh, that you can look at, you know, tax minimization strategies because you're a higher net worth individual. You can change your will plan because of that. Adam Cappelli: If you, you know, separate divorce, those are obvious reasons to amend your [00:24:00] will. If a child is struggling with mental health or substance abuse issues, um, then you want to look at, you know, should they have a trust moving forward? That's a good time to amend your will. Um, if your children are old enough to be or executor and you have, uh, you know, you're, uh, you know, one of your best friends named and they're getting older and they may not be around and willing to do it, that's an obvious trigger. Adam Cappelli: Um, if you acquire assets in foreign jurisdictions, do you want to update your will, uh, you know, guardians that you once were. Very close contact with that. You're not so close with, or you're not impressed with some of the decisions they've made with their own children and you don't want them raising yours. Adam Cappelli: Those are other reasons to update your will. And so you've, you know, you've acquired, uh, life insurance, more life insurance. You should update your will. Those are the obvious triggers. [00:25:00] Vincent Heys: That is, that is great. You know, maybe just the last, last point from my side, and it's a softer point and it might be also just speaks into this thing of, um, this decision making and, and, and being more comfortable in terms of talking about these difficult things about passing and mortality is actually something that I've done a few years now is to write letters to my kids, but I don't give it to them. Vincent Heys: Uh, I write, uh, I want to say a year earlier it later to my three kids and, and I just keep it in safe keeping it's it's part of the will that I will see one day and maybe it's a good memory of a letter that I've wrote to them, but it just helps me, I think, just to kind of think about mortality and think about what I want to leave them. Vincent Heys: Yes. There's legacy in terms of finances, but then there's also legacy in terms of. You know who Karen and I [00:26:00] are and what to leave them with that last final thought kind of thing. Adam Cappelli: That, that is, uh, I'm so happy. You mentioned that. Um, I I've done the same, my worst fear, and I think you're telling me your worst fear is passing suddenly without having those last words of goodbye. Adam Cappelli: And I have, uh, letters drafted, uh, to my wife and to each of my daughters and. They're there messages that you would want, uh, to most definitely, uh, you would want to resonate with them and take them forward. And well are a lot of our listeners should say, well, the two of you should just be better communicators while you're alive. Adam Cappelli: You should be telling them these things every day. And, and, and I'm sure, uh, we do, but to have it in to have it scribed in there and physically written is a lot more meaningful. Um, but you've hit, you've hit a real, real good point. And that [00:27:00] is, it's not just about, you know, the legalees written will, you need to have these letters of wishes even I have even gone so far as to, you know, specify, um, you know, the final arrangements and the music that I'm a, I'm a music lover and, um, and the people that would be invited. Adam Cappelli: Because you're putting your family in a period of crisis where, you know, my wife would not know, you know, which, uh, w who to, who to notify and who to, uh, invite to a celebration of life, party, that type of thing. So I'm so happy. You mentioned that Vincent that's so much an integral part of your legacy, you know, w w I can't believe how people will plan. Adam Cappelli: We'll spend hours and hours and hours. Events that are so much a less significant. Vincent Heys: Maybe just the last thing on the, on [00:28:00] the, uh, on the, on the lettuce. And, um, and that's it. I don't write neatly, so my, my kids can read into my handwriting, whatever they want to read into it one day. Adam Cappelli: So that's why, that's why there's a podcast you could do, uh, uh, uh, you know, electronic file. Adam Cappelli: They just need to know where. Vincent Heys: That's right. That's right, Adam, thank you so much. I know that we can talk about this thing for hours and days. Um, just because we like to talk about legacy and, you know, help people to move forward in life and to plan well, but, um, I want to thank you so much for your time. I know that you also have a webinar once a week and maybe just, uh, give us a view on that and where people can. Adam Cappelli: Sure. Thanks. Thanks for bringing it, bringing it up. Uh, every Wednesday between 4:00 PM and 4 30, 30 minutes, we, uh, Cambridge LLP get on a live webcast and talk about [00:29:00] estate planning issues and estate litigation issues. So we're a fairly new, uh, at this, uh, we are now I think entering episode six. So you're not too. Adam Cappelli: We've been on air for five weeks, six weeks coming up. Um, and this next one, we'll talk about, uh, common law versus married. Are they the same thing? And we have our senior litigation counsel, Dr. Douglas Elliott. Who's being interviewed by Tim Fallon. Who's an estate litigation lawyer on my team, and I'm sure a lot of our listeners would. Adam Cappelli: We enlightened by that discussion. Vincent Heys: Thanks Adam. Yeah. There's so many things that we can talk about disability in a family and foreign assets. And as you say, you know, different power of attorneys and family trust. So there are plenty of staff and, um, listen, thank you so much for your time. Really appreciate it. Adam Cappelli: Thanks for having me. And I'm sure we can. Uh, we're going to talk again.[00:30:00] Vincent Heys: Hey, thank you so much for listening to our podcast today, you can find our content on wealthstack.ca or on LinkedIn. I'm Vincent Heys and you've been listening to the financial wellness podcast series.

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