Transferring assets into joint tenancy (where you and anyone else owning the property own an equal, undivided interest in the property) has the benefit of being relatively inexpensive, ensuring that the property passes directly to the surviving joint tenant on death, and allowing you to maintain some control over the property because of your continued ownership interest in the property. However, there can be disadvantages to owning property in joint tenancy simply to avoid probate fees. Where one of the joint tenants becomes incapacitated, the joint tenancy will continue until one of the joint tenants dies. Because it is an absolute gift of one half of the property, there is a loss of some control – you cannot undo the transfer unless the recipient agrees to transfer their share back to you. The transfer of capital assets to joint tenancy is considered a disposition for tax purposes, and so may attract capital gains or other income tax consequences. Putting an asset into joint tenancy also exposes part of the asset to claims of the other person’s creditors. In the case of a child who has financial or marital difficulties, this can result in your asset being tied up as a result of those claims.
We recommend that you consult a lawyer if you are contemplating transferring an asset into joint tenancy for the purpose of minimizing tax consequences on your death.
A section 7 representation agreement signed can be made by an individual who has diminished capacity. A section 7 agreement allows a representative to make decisions with respect to simple financial matters, legal matters, health care and certain business or property matters. In this instance, if the person has sufficient capacity to communicate that they want a representative to assist in making certain decisions, if they have the ability to express certain preferences, and if they are aware of the nature of the agreement they are making to give authority to another person to make certain decisions on their behalf, and it is clear the individual trusts the person who is to be appointed a representative, then that person, even though they are of diminished mental capacity, can make a section 7 representation agreement.
The term “capacity” means the ability of a person to act freely and to understand fully the nature and effect of their actions. The term ”incapacity” means an inability to understand the nature and effect of your actions; an inability to exercise independent judgment. There are degrees of diminished capacity.
A representation agreement is a legal document that allows you to appoint someone as your representative to make health and personal care decisions for you.
There are two types of representation agreement: a section 7 agreement and a section 9 agreement.
A section 7 agreement gives limited powers to a representative to deal with certain aspects of a person’s estate and their personal needs. A section 7 agreement can be granted by a person who has diminished capacity.
A section 9 agreement can provide more detailed instructions regarding how you would like your representative to help you manage your health and personal care needs. A section 9 agreement can dictate under what circumstances your representative can act and what input they must seek from you and others in making decisions.
We encourage you to seek legal advice if you are contemplating a representation agreement, as a representation agreement may not be effective if it is improperly drafted
A power of attorney is a legal document that allows you to appoint someone to make financial and legal decisions for you.
There are two types of power of attorney: general and enduring.
A general power of attorney gives another person the ability to deal with your affairs while you still have the capacity to make decisions for yourself. For example, if you are on vacation, you can grant someone a power of attorney to deal with certain matters while you are away. A general power of attorney has the benefit of being relatively inexpensive and can be revoked at any time. Because it gives the other person significant control over your assets, a high degree of trust is required. Creating a general power of attorney does not protect your assets from the claims of creditors or other parties; it simply gives your attorney the power to deal with those assets on your behalf.
An enduring power of attorney is similar to a general power of attorney; however, an enduring power of attorney continues to operate even if you are no longer able to make decisions for yourself. To be an enduring power of attorney, the document must specifically provide that it is meant to continue operating if you become mentally incapacitated. It cannot be revoked once you are incapable of making decisions for yourself. As with a general power of attorney, it is very important to have a high degree of trust in the person to whom you grant an enduring power of attorney.
