Estate planning saves money and aggravation
By AdvocateDaily.com Staff
Toronto lawyer Peter Murphy knows first hand how easy it can be to avoid making a will.
Despite having a lawyer in the family, Murphy’s own parents were well into their 70s before his mother asked him about preparing her will — and only after she was prompted by a friend.
“This friend was a little surprised that my mother hadn't completed her estate planning, and I was a little chagrined to think it was something that we had never focused on,” Murphy, a partner with Shibley Righton LLP, tells AdvocateDaily.com.
“We immediately started the process of estate planning and drawing up wills and powers of attorney for my mother and father.”
Murphy says his parents’ experience is far from unique.
“I think many people don’t understand the importance of having a will and powers of attorney. They tend to put off thinking about these types of issues,” he says.
Even if they appreciate the importance of estate planning, it’s easy to avoid taking action.
“People see it as an expense they would prefer not to incur," says Murphy. "They don't realize that estate planning will often save money and a great deal of aggravation in the long run. Every adult should have their will and powers of attorney in place.”
Murphy says the savings on taxes alone more than justify the cost.
"Steps can be taken to ensure certain assets will not be subject to estate administration tax, which, in Ontario, is the highest in the country," he says.
"The estate planning process can also identify and take advantage of other opportunities for tax planning, minimizing the amount of taxes that will have to be paid out on death.”
Dying without a will can lead to court proceedings to sort out the appointment of executors and guardians, which could have been simply directed in a will.
"Without a will, additional time-consuming procedures may be necessary, which can really be a problem for beneficiaries who depend on the deceased financially," Murphy says. "People can avoid unnecessary aggravation and expense by taking the time now to ensure their affairs are in order."
Murphy says that by drawing up a will, testators can also ensure their wishes are carried out after death.
“If you die without a will, the government decides how your estate will be divided,” he says. “Those results may not be what you intended, particularly if you were separated after marriage, or have a common-law spouse.
"If you have minor children, a process will have to be carried out to decide who becomes their guardian. Most people will achieve peace of mind knowing they have made arrangements for their wishes to be carried out, particularly when dependents are involved," Murphy adds.
He says a lawyer can also offer guidance to individuals on choosing the best person to act as executor of an estate.
“People tend to underestimate the responsibilities and time involved in the role. A lawyer can help you make an informed decision,” Murphy says.
In addition to tax planning and will preparation, an estate plan usually includes drawing up powers of attorney for health care and property, he says.
“These are documents that authorize someone to make decisions on your behalf if you ever become incapable of governing your own affairs, so it’s important to get these in place while you’re still of sound mind,” he says. “You can’t grant powers of attorney or make a valid will once you’re no longer mentally capable, and unfortunately, loss of mental capacity can happen at any time, without warning.”
In the case of Murphy’s parents, the timing of their estate planning was fortunate. His mother fell ill unexpectedly a few years later and, after a period in hospital, died. Her hospitalization revealed health issues suffered by Murphy’s father, who was soon diagnosed with dementia.
Although it was a difficult time for the family, Murphy says things would have been much worse had his parents not completed their wills and powers of attorney in advance.
“My parents' health deteriorated much more rapidly than we would ever have expected, so it was fortunate that our legal planning was in place,” he says. “The whole experience drove the message home to me that everyone needs to prepare for these kinds of issues," he says.
"I take pride in knowing that by assisting clients with their estate planning, I am helping them achieve some peace of mind that will be a real help to their loved ones in the future when they need it most," says Murphy.