Feud-Free Estate Plans

Most families would rather put off discussions about what happens as their parents age, become critically ill or incapacitated, or pass away unexpectedly. But it is important for aging adults to make the effort to lay out a plan while they are healthy, lucid and still able to articulate their wishes. This includes dealing with such isses as downsizing to a smaller home or moving to a retirement home, preparing a will and powers of attorney for property and personal care, drafting a financial plan to ensure that their money outlasts them.

Leaving these issues unresolved can lead to division and conflict within families.  A recent article in the National Post ("Last will and testiness") makes an unfortunate link between the growing debt load carried by Boomers and their unseemly desire to get their hands on their inheritances as soon as possible. Reports indicate that Canada's baby boomers are expected to inherit approximately $1-trillion dollars over the next 20 years. This will be one of the largest wealth transfers to a generation of Canadians in history.  But there are some pressures on that inheritance. And fights among siblings over who gets what are becoming more common. One important way to minimize and tone-down fights among siblings over their inheritance is to prepare, in writing, solid, clear estate planning documents.

Here are some tips for feud-free estate plans.

Eight tips for feud-free estate plans

Time for the 'talk'
James Pasternak, Financial Post  Published: Wednesday, January 06, 2010

Successful family gatherings are those in which family members know what not to say. Family restraint, after all, leads to civility. But in matters of estate and financial planning, silence and delay may not be golden.

"You want [a conversation] when the parents are healthy and still able to articulate their own wishes and desires and are still comfortable in having this type of conversation with their own adult children," says Lee Anne Davies, head of Royal Bank's retirement strategies. "You could leave it too late. And then it becomes impossible to have because someone has become ill."

And even when health holds out, increasingly complex family arrangements, sibling rivalries, second marriages, car accidents, among a host of other curve balls, can make a mess out of a retirement and financial planning strategy that seemed so simple just months before.

There are countless strategies and options that parents and their children should discuss to reduce the risk of turning retirement into a nightmare and estate planning into a fiasco. But following are eight things every family should discuss sooner rather than later.

1. WHERE TO NEXT, MOM AND DAD?Just the hint that a parent should consider a retirement facility can sour any family gathering. But absence of a game plan can result in the depletion of an estate and cause deep acrimony among siblings.

Sons and daughters of aging parents should consider the scenario of Stephen Smith, a financial advisor with Port Hope, Ont.-based Yorkminster Insurance Brokers. Mr. Smith and his wife purchased longterm care insurance in 1997, paying a premium of about $400 per month. In declining health, Mrs. Smith had to be institutionalized in 2006 due to Alzheimer's disease. Mr. Smith is no longer paying premiums and is now receiving a $6,000 cheque each month from their insurance carrier for the $4,000 per month cost of his wife's institutional care. "[Long-term care planning] is a no-brainer as far as I'm concerned," says Mr. Smith.

Nevertheless, many parents balk at long-term care insurance, so sons and daughters could suggest a plan that includes the kids paying the premiums. And why not? This is a great hedge against depleting an estate and most plans have a "return of premium" provision if a claim is never made.

2. HOME CARE INSTEADIf the discussion about long-term institutional care doesn't go very well, there's always the less expensive option of home care and home-care insurance. Some long-term care plans have a built-in home-care option and dad can stay parked in his La-Z-Boy.

Home-care plans provide services ranging from registered nursing care to visits from an in-home personal companion. One need not be disabled or critically ill to be eligible for benefits. But while home-care insurance is less expensive than long-term care insurance, a home-care policy holder who is transferred into a nursing facility would not be able to carry any unused benefit.

3. END OF EARNINGSBy choice or necessity, more and more Canadians are working into their late 60s and 70s. Disability insurance replaces about 60% of lost income due to injury or illness. Disability can occur at any age, but the best time to consider buying this insurance is when someone is at their earning peak as a salaried employee. Even if one's income drops during "retirement" working years, the benefit paid will be based on earlier-recorded income level.

A weakness in disability insurance is that one can have a life-threatening illness and not be disabled. That's when critical care insurance comes up.

The bad news with critical care insurance is that to qualify you have to be stricken with one or more illnesses, such as cancer, kidney failure, heart attack or stroke. The good news is that you'll receive a tax-free lump sum. Toronto-based insurance broker and financial advisor Yirmi Cohen delivered a $300,000 cheque to a policyholder who had a benign brain tumor. Not only did the client receive a windfall, he recovered, went on a vacation and went back to work.

4. WHO GETS THE COTTAGE?No family wants the last memory of the cottage to be of a brother and sister hitting each other over the head with a fishing pole. Ms. Davies says that clearing the air early is essential: "What you might find is that some children are not interested in a certain property because they live somewhere else or it doesn't fit their lifestyle. Why not understand that before hand?"

Bruce Gilboord, a Toronto-based Sun Life retirement income specialist says that the most efficient way to buy out family members -- and settle any estate taxes -- is through the purchase of a permanent life insurance policy. And to make sure this solution runs smoothly, sons and daughters should consider sharing the cost of the premiums.

5. FAMILY REFEREEThere are few easier, cheaper and effective financial planning options than getting all family members to execute a power of attorney for property. Estates and wills lawyers Barry Fish and Les Kotzer, of Toronto- based Fish and Associates, urge families who have not executed a power of attorney to visit www.familyfight.comand read the horror stories. In the absence of a power of attorney, the public guardian might step in. Not a good move. The 2004 Annual Report of the Office of the Provincial Auditor of Ontario found that there were numerous examples of poor investments and the draining of estates in that province's Office of the Public Guardian and Trustee. Fish and Associates sell power of attorney kits for $50.

6. LOOKING OUT FOR NO. 1Designating a power of attorney for personal care reduces the guesswork and arguments that arise when a parent is incapacitated. It assigns someone the power to express wishes, values, religious beliefs or preferences toward medical intervention and long-term care.

7. YOUR WILL IS MY COMMAND"Creating a will isn't the most enjoyable thing you do with your time," says RBC's Ms. Davies. However, the consequences of the absence of a will are far more serious.

An out-of-date will can be worse. First and second marriages, step children and common-law arrangements can make for some complex inheritance situations. "Family structures change and as they change you want to make sure the right people are getting the right information so your intentions are well understood," says Ms. Davies.

8. HANGING UP THE CAR KEYS"Other than a death in the family or being evicted from your home, there are few life events more upsetting than hanging up your car keys for the last time," says Bob Paterson, a retired sergeant with the Ontario Provincial Police. But a low-speed collision involving a senior driver can result in medical bills, litigation and loss of income.

When a parent just won't let go of the keys, suggest a third-party diagnostician such as DriveAble. This fee-based service provides substantial data on whether a person should still be on the road, and their results may be easier for a parent to digest.

We MUST face the health care crisis

Ontario has just lived through another provincial election, with more tenuous results than we normally achieve.  Living with a minority government likely means we'll face another election within the next two years.  The question is, will any of the political parties choose to actually acknowledge, never mind address, the elephant in the campaign room?  Neither the Liberals, nor the Conservatives, nor the NDP gave any serious thought or discussion to the crisis facing our health care system in this most recent election.  They're all afraid to tackle the issue head on.  They all cower in fear that the health care issue will cause them to lose an election. Yet, really, this is the biggest, most serious issue confronting this province today.  And it will only get worse as our aging population puts increasing pressure on the system.

I've recently started reading a book by health care analyst, Michael Rachlis, called Prescription for Excellence.  The book was published in 2003.  As I started to read it, I was astounded that the problems in the health care system that he identified way back then are exactly the same problems our health care system is facing today:  emergency room backlogs;  chronically sick older patients taking up beds in hospitals because there's no place else for them to go; not enough long-term care facilities; an inability to properly manage and treat individuals with chronic illnesses; too little attention paid to palliative care; centralization of health care delivery in the hospitals, rather than in the communities where people live; a focus in our hospitals on what's good for the administration, rather than what's good for the patient; very little attention paid to the need for home care. 

The cost of health care is rising every year, but the problems within the system don't get better. In fact, they're getting worse and approaching a critical level.  And older patients are often the ones who feel the brunt of the problems. My 91 year old mother-in-law recently was forced to spend hours on a gurney in a hospital emergency room with a broken hip while she waited for a doctor to look at her. Another elderly lady in the Niagara Falls area was told to call for an ambulance after she fell and broke her hip in the hospital lobby. 

Christie Blatchford, a reporter and columnist with the National Post, recently wrote about the abysmal way our health care system treats older patients.   Read her column, The plight of the unbending health care system.


Please feel free to comment about your experiences with the health care system. 

12 Steps to Chair Safety at Home

Many seniors who live in their homes often worry about being injured as a result of a fall.  This is a concern to their children too, especially in homes with staircases.  Falls are caused by a lack of balance, or an inability to recover when the senior loses his/her balance.  Poor balance can be related to side effects from medication, some physical or cognitive diseases, environmental hazards or impaired mobility or vision. 

Statistics show that falls present a significant health risk for seniors.

• 1/3 of people aged 65+ typically fall once a year or more
• falls are the most common cause of injury and the 6th leading cause of death in seniors
• the Canadian health care system spends about $6-billion a year on injuries sustained by seniors because of falls
• almost half of admissions to long-term care facilities are related to falls
• most falls occur in seniors' homes, while they are doing normal daily activities
• 40% of falls that require hospitalization involve hip fractures
• women are 3 times more likely than men to be hospitalized for a fall

Seniors are at particular risk of falling on stairs, and more likely to suffer severe injury when they fall. In fact, seniors aged 65+ account for 70% of the deaths resulting from stair accidents.

The Public Health Agency of Canada offers 12 tips on how to improve your safety on stairs in your home. 
1.  Have well lit staircases.  Install lighs and switches at the top and bottom of your stairs.
2.  Make sure your steps are in good repair.  There should not be an uneven surfaces, cracks, bunched-up carpeting or protruding nails.  Hardwood stairs can be slippery when walking in stocking feet, and can cause more injury if you fall.  Consider adding a well secured runner down the staircase.
3.  Make sure all the steps are the same size and height.  Uneven steps are a hazard.
4.  Enhance the visibility of each step so you can clearly see the edges.  This can be done by painting the edges a contrasting colour or by applying special strips to enhance the visibility of the step.
5.  Make sure your carpeting or runners are well-secured.
6.  Have a solid, well-attached handrail that you can get your hand around.
7.  There should be a handrail on at lease one side of every staircase, and the height should allow you to comfortably hold it with your arm slightly bent at the elbow.
8.  Avoid leaving any clutter on the staircase.
9.  Remove throw rugs and loose carpeting from the landings.
10. Don't rush on the stairs.  Go slowly, holding the handrail.
11. Limit what you carry up or down the stairs.  You should be able to see the stairs, and have a hand on the handrail.
12. Remove your reading glasses when going up or down stairs.

For more information about the prevention of falls in seniors:
Injury Research in B.C.
Public Health Agency