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Estate Planning For A Significant Demographic Shift

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It has been estimated that $750 billion will be inherited in the next decade by the Baby Boomer Generation. Within those same ten years, the Boomer Generation will also approach retirement age and the consequences of this tremendous wealth transfer will be significant. It is projected that most of the wealth expected to be transferred in the coming years will be in the form of real property. Appropriate estate planning can reduce the risk of litigation resulting from the transfer of wealth from Baby Boomers to the next generation. It is crucial that aging parents of the Baby Boomer Generation have estate plans in place. Baby Boomers themselves, if they have not already done so, should also turn their attention to their own estate planning, whether or not it is expected that they will benefit from the upcoming transfer of wealth. The earlier that estate planning is contemplated, the more capable that it may be of addressing problems or changes in circumstances that may arise in the future.

Statistics Canada estimates that over 16 per cent% of Canadians were over the age of 65 last year and that this demographic outnumbers those aged 14 and under. The elderly population continues to increase steadily. As this segment of the population continues to age, challenges to the validity of Last Wills and Testaments and property transfers are expected to become more frequent. Task-specific degrees of mental capacity are necessary to validly execute documents relating to an estate plan or otherwise dispose of property. Alzheimer’s disease and other progressive medical conditions associated with both aging and dementia provide fertile ground for estate litigation. Such illnesses can deprive someone of the capacity to dispose of property and, potentially, invalidate parts or all of an estate plan made during alleged mental incapacity. Creating a will and other testamentary documents prior to the onset of symptoms of these illnesses affecting capacity will play an increasingly important role in preventing litigation. In estate litigation, court cases frequently involve disputes over capacity and allegations of incapacity appear to be on the rise. This trend will only increase as the population ages.

A power of attorney is a crucial document to supplement one’s estate plan. A person who is named as an attorney for property, personal care, or both, acts with legal authority on behalf of the person who executed the document. Powers of attorney for personal care should address end-of-life care so that the named attorney is provided with an understanding of the grantor’s wishes. The named person makes decisions corresponding to the powers given in the document and the Substitute Decisions Act. Appointing people we trust as attorneys for property and personal care can help protect against elder abuse during a subsequent period of vulnerability.

Powers of attorney for both property and personal care should be executed well in advance of the onset of capacity issues. Absent incapacity planning, guardianship proceedings may be required in order to determine who can make decisions on an incapable person’s behalf or personal care decisions may be made by family members who would not otherwise be selected as substitute decision makers. Sometimes, the Public Guardian and Trustee may become involved and make decisions on behalf of the incapable person. When one fails to ensure that valid powers of attorney are in place, he or she risks having a judge decide who will look after his or her affairs. The person whom the judge appoints as guardian may not have been the same person that the incapable person would have chosen him or herself. Within the context of our aging population, attorneyship and guardianship disputes have emerged in greater numbers.

In the coming years, cases involving predatory marriages and financial elder abuse will also increase in number. Predatory marriages can be especially problematic. In Ontario, marriage normally has the effect of revoking a person’s will. Financial elder abuse sees the exploitation of fear or the fact that the elderly may be more likely than the population at large to be dependent on one or more family members or friends and isolated from others, and seniors especially may be pressured into transferring large sums of money for fear of harm or neglect. Often this abuse goes unreported because of the fear or shame associated with being a victim of elder abuse. Older adults who experience capacity issues may be more vulnerable to such abuse.

The effect of the upcoming demographic shift is already being felt in the court system. Ontario is an exceptionally busy, but underfunded, jurisdiction. As the population grows, this problem will be exacerbated across the province. Estates matters, with the exception of the Estates List (now merged with the Commercial List) in Toronto, are generally heard as if any other civil matter. There is otherwise no separate system by which estate matters are heard. Proper estate and incapacity planning provide an opportunity to streamline any process that necessitates the involvement of the court. It also allows those who plan ahead to increase their chances of avoiding costly and lengthy litigation relating to their estate or the administration of their affairs during incapacity. 

Ian Hull and Suzana Popovic-Montag are partners at Hull & Hull LLP, an innovative law firm that practices exclusively in estate, trust and capacity litigation. To watch more Hull & Hull TV episodes, please visit our Hull & Hull TV page.

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