Most individuals have heard about Wills and estate planning, but according to a recent survey, half of Canadians say they do not have a Will. We know estate planning isn’t the most exciting task, but you could risk everything you’ve worked for without one. As a dentist and business owner, you’ve invested a lot of time and money into your practice. Protecting that investment means understanding the importance of Wills and Powers of Attorney.
But don’t worry. This understanding doesn’t have to be complicated. In this blog, we will break down these essential documents and show you how they can protect you, personally and professionally.
Wills
First, let’s look at Wills. Think of a Will as the treatment plan for your assets. It ensures everything is handled according to your wishes after you’re gone. A Will is a legally binding document that outlines how your assets and responsibilities will be distributed and managed after your death. Your Will lets you specify who will receive your property, who will care for any minor children, and how any outstanding debts or taxes should be paid. Your Will also names an executor, who is the person responsible for carrying out your wishes.
When you own shares in a private corporation, such as a dentistry professional corporation, it is important to consider creating multiple Wills, often referred to as Dual Wills. Dual Wills allow you to minimize the amount of Estate Administration Taxes your beneficiaries will have to pay for your estate. You do this by creating Primary and Secondary Wills.
Primary Will
The most common type of Will, a Primary Will, is the cornerstone of your estate plan. A Primary Will deals with your personal assets which are maintained or regulated by third parties, such as your home (e.g. the government’s land registry office), vehicles (e.g. the ministry of transportation), bank accounts (e.g. government regulated banks), and investments (e.g. government regulated investment firms). A Primary Will is essential for all individuals, as it ensures that your assets are distributed according to your plan. Without a Primary Will, your estate is subject to the rules of intestacy, which may not align with your wishes. For example, if you want to leave certain assets, gifts, or mementos to specific people, you must clearly outline these details in your Primary Will. Additionally, this Will ensures that your loved ones avoid unnecessary legal complications during an already challenging time.
Secondary Will
A Secondary Will addresses assets that do not need to go through the estate administration process, such as shares in your dentistry professional corporation and household/personal items. By having a Secondary Will, you can manage these assets separately from your personal estate, reducing probate fees and streamlining the distribution of your business assets.
Estate Administration
Administering an estate in Ontario requires validating a Will and confirming who has been appointed as Estate Trustee for the Will with the court. This process is necessary to give the Estate Trustee the authority to distribute your assets. Estate Administration Tax is calculated based on the total value of your estate. Setting up a Secondary Will to contain your corporate assets, which are not subject to Estate Administration Tax, will lower the total value of the estate managed in the Primary Will. This can result in considerable savings. For more details on this process and the steps involved, please read our articles on Estate Administration Basics.
Powers of Attorney (POAs)
In addition to Wills, Powers of Attorney are another critical element in ensuring the smooth transition of your assets. A Power of Attorney (POA) is a legal document that grants another person the authority to act on your behalf in specific situations while you are still alive. In Ontario, legislation sets out two basic types of POAs: one for property and one for personal care.
Power Of Attorney for Property: Protecting Your Business and Finances
A POA for property grants an individual the authority to manage your business and finances if you are unable to do so. This includes paying bills, managing bank accounts, dealing with investments, and overseeing real estate transactions. For a dentist, a POA for property can also include managing your dental practice and any associated assets and business operations.
In the event that you become incapacitated, having a POA for property ensures that your dental practice can continue operating without interruption, protecting its value and the continuity of your business.
Power Of Attorney for Personal Care: Ensuring Your Well-Being
A POA for personal care designates someone to make decisions about your healthcare and personal well-being if you cannot do so yourself. This can include decisions about medical treatment, living arrangements, and end-of-life care.
While it may not directly affect your business, a POA for personal care is an essential part of comprehensive planning. It ensures that your healthcare decisions are made by someone who understands your values and wishes, giving you peace of mind that your personal care will be handled according to your intentions.
How do I Get Started?
At DMC, we know that creating estate documents can feel overwhelming, so we try to make it as easy as possible.
First, we will send you a confidential intake form to guide you through questions about the common areas covered in your Wills and POA documents. Examples include:
- Personal Details: Full legal name, date of birth, and address.
- Family Information: Details about your spouse, children, and other beneficiaries.
- Assets and Liabilities: A complete list of your assets (property, investments, bank accounts, and dental practice) and any liabilities (mortgages, loans).
- Executors and POA Agents: Names and contact information of the individuals you want to appoint as your executor(s) and POA’ attorneys’. For your dental practice, this might include a trusted colleague or family member familiar with the business.
- Guardianship: If you have minor children, you’ll need to designate guardians.
- Funeral Arrangements: Any specific wishes regarding your funeral or burial.
We will use this information to draft your Primary and Secondary Wills and POAs. Once we have initial drafts, we will meet with you to review them, answer any questions you may have, and make any necessary changes.
Once you are happy with the documents, it’s time for signing. To make the documents legally binding, they must be signed by you and two witnesses.
What Happens After I’ve Created My Wills/POAs?
Review and Update Regularly
It’s important to review your Will and POAs regularly, especially after significant changes in your life or business, such as marriage, the birth of a child, new business partners, selling shares of your dental practice or the death of someone named in your Will or POA. Regular reviews ensure your documents continue to reflect your current wishes and circumstances.
Communicate Your Plans
Make sure that your executor(s), POA agents, and close family members know that you have an estate plan and where it is. Clear communication can prevent disputes and ensure a smoother process during difficult times.
Bottom Line
Wills and POAs are foundational elements of any comprehensive estate plan. For Ontario dentists, these documents are essential for safeguarding personal assets and ensuring the smooth continuation and eventual transition of your dental practice. By clearly outlining your wishes in these documents, you can help prevent legal disputes, reduce the burden on your loved ones, and preserve your personal and professional legacies.
With years of experience assisting dentists in Canada, DMC offers personalized estate planning for dentists. We designed our services to ensure that your practice remains secure and your personal assets are protected. We not only help draft your Wills and POAs but also provide strategic advice tailored to you. Ready to protect your practice and your loved ones? Reach out to us today, and we’ll help you get started.
