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What Happens If The Grantor Becomes Incapacitated?

When an elderly person (grantor, will-maker, or trustee) becomes incapacitated due to illness or sudden events, they may no longer be able to manage their own affairs. 

This raises the important question: What happens if the grantor becomes incapacitated? Who will manage their wills and estates?

A complete financial and estate plan is essential to address these concerns. Planning for incapacity involves documenting your wishes in advance through healthcare directives, powers of attorney, and representation agreements. This ensures that your desires are honoured and your estates are managed according to your preferences, even if you can no longer make decisions yourself.

Today, we’ll break down the right course of action upon the grantor’s incapacity, the important documents required, and the role of a ‘trust attorney near me’ in Surrey in ensuring your family’s future is secure.

Successor Trustee Takes Over Upon the Grantor’s Incapacity 

When a Grantor (or the will-maker) sets up a Living Trust, they usually appoint themselves as the Trustee to manage the Trust’s assets during their lifetime, as long as they remain mentally capable. Upon the Grantor’s incapacity, the Successor Trustee must take over. Here’s how that process works:

Determining Incapacitation 

The Trust document defines how to determine incapacitation, often requiring certification from one or more physicians.

Gathering Documentation

Once incapacitation is confirmed, the Successor Trustee collects the important documents to prove the Successor Trustee’s authority. Necessary documents include: 

  • Medical certifications
  • The Trust document
  • Power of Attorney papers

Assuming Responsibilities 

The Successor Trustee then takes over managing the Trust’s assets. The primary goal is to act in the best interest of the Grantor and the Beneficiaries to preserve or increase the value of the Trust’s assets.

Duties of a Successor Trustee

1. Communicating with the Other Party

Honest and open communication with family members and estate lawyers helps maintain trust and avoids misunderstandings. This is crucial, especially when dealing with wills and estate planning.

2. Managing Day-to-Day Affairs

The Trustee must align these activities with the Grantor’s established patterns and wishes to ensure compliance with estate planning needs.

3. Making Medical Decisions

If the existing power of attorney document allows, the Trustee may need to make healthcare decisions for the Grantor. This includes working closely with health care professionals and respecting the Grantor’s wishes as outlined in their representation agreement.

4. Keeping Records

This is essential for transparency and for providing the annual account to beneficiaries and the court. Accurate documentation supports the estate administration process and ensures that actions can withstand scrutiny, particularly in cases of wills variation claims or trust litigation.

5. Filing Taxes

Ensure that the Grantor’s personal income tax returns and the Trust’s tax returns are filed on time. This responsibility is critical to managing the family’s estate and adhering to estate planning and real estate law.

6. Preserving the Assets

The Trustee must protect and preserve the assets, which may involve managing investments or property within the Trust. This duty is essential for maintaining the Trust’s value, in line with the Grantor’s estate plan.

7. Preparing for Court Supervisions

In some cases, a court requires supervision of the Trust’s management. The Trustee should be ready for this possibility and manage the Trust’s affairs to withstand court scrutiny, ensuring compliance with the succession act and avoiding issues of undue influence.

Importance of Power of Attorneys

A Power of Attorney (POA) is a lawful document that grants an individual the authority to act on the Grantor’s behalf in financial or legal matters, including estate planning. In British Columbia, having an existing power of attorney can simplify the management of the Grantor’s estate (no need for court order), ensuring that their financial and estate planning needs are met without delay.

Types of POA Documents

General POA

For managing assets after an incapacity of a person, appointing an agent (or attorney-in-fact) to handle your financial affairs.

According to your representation agreement, your agent essentially acts as your representative to conduct any financial transaction you would normally handle.

This ensures continuity in estate planning and asset management, providing peace of mind for you and your family members regarding your estate administration and legal fees.

Immediately effective POA

You must trust your financial agent implicitly before granting them this authority. To protect your assets and maintain estate planning integrity, ensure the power of attorney is durable, meaning it stays valid even if you lose capacity.

Springing POA

This ensures that no one can handle your finances or personal affairs unless necessary due to your incapacity. The documents should specify the proof of incapacity required.

You should rely on an estate planning lawyer to determine incapacity. This will ensure smoother estate planning and the protection of assets for your beneficiaries and loved ones.

Healthcare Directives

A healthcare directive, also known as a living will, outlines the Grantor’s wishes regarding medical treatment if they become incapacitated. This ensures that your loved one and healthcare professionals know your preferences within the estate administration process.

Necessary Documents for Your Estate Plan

Healthcare Power of Attorney Also known as a healthcare proxy, which appoints a healthcare agent (your loved one) to make medical and personal care decisions for you if you cannot make them yourself.
HIPAA Release Allows appointed individuals access to your protected health information, so medical providers can keep them informed of your condition.
Living Will (Advance Directive) This document outlines your wishes regarding life-sustaining treatments, such as artificial life support, when there is no hope of recovery.
Updating Documents Regularly update your disability planning documents to keep up with the law. Ensure you have the correct documents at the province you’re living in, to cover your complex estate plan effectively.

Other Important Elements in Case of Grantor’s Incapacity

Representation Agreements

In Canada, a representation agreement is a legal document, allowing Grantors to designate someone to make personal and healthcare decisions on their behalf. This is important in British Columbia, where it complements the POA by covering areas that the latter might not, such as healthcare and personal care decisions.

Probate and Estate Administration

When a Grantor becomes incapacitated, the probate and estate administration process must be managed carefully. This involves:

Filing necessary documents Ensuring all required legal documents are filed correctly
Managing probate fees Understanding and managing any probate fees that may arise
Coordinating with beneficiaries Ensuring that all beneficiaries are kept informed and their interests are protected
Addressing disputes Handling any estate litigation or disputes that may arise, such as wills variation claims

Joint Ownership and Trusts

Joint ownership and trusts, such as alter ego trusts, can impose significant benefits in estate administration during incapacity. These arrangements can help avoid probate, reduce fees, and ensure a smoother transition of assets. An estate lawyer can provide legal services and guidance on the best strategies for incorporating these into your estate plan.

Role of Estate Lawyers

Having a competent estates lawyer is necessary in navigating the complexities of incapacity planning and estate administration. Estate lawyers can assist clients in drafting POAs, healthcare directives, and representation agreements. You can rely on their legal services to ensure all papers are legally binding and reflect your wishes.

  • Estate lawyers are knowledgeable about the regulations and laws surrounding incapacity planning, probate, and estate administration. They can ensure that all legal papers are drafted correctly and in compliance with the law, including real estate law and family law.
  • Wills and estate lawyers provide guidance tailored to your specific needs and wishes. They can help you understand the implications of incapacity and ensure that your intentions are clearly documented and legally enforceable.
  • Court Representation: In cases where the management of the Grantor’s affairs requires court involvement, such as estate litigation or challenges under the Wills Variation Act, lawyers can represent your interests.


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Secure Your Surrey Wills and Estate Ahead

Designating a Successor Trustee and understanding how POAs, representation agreements, and health care directives work allow a person to secure their estates in case of incapacity. These actions can help protect the assets and ensure adequate provision for the family.

Getting legal services from an experienced team of estate planning lawyers can help clients manage their estates appropriately in the event of incapacity or death. A reputable law firm like NG Sidhu can help you navigate estate planning and estate litigation to protect your rights and interests while assuring your family’s future.

Frequently Asked Questions

Does the power of attorneys have limits?

POA grants significant authority but has specific limitations to protect the grantor’s interests:

  • Scope of Authority: The agent’s actions must always align with the grantor’s best interests and avoid abuse of their position.
  • Prohibited Actions: Agents cannot alter the grantor’s will, act against their best interests, commit fraud, or replace themselves as the attorney.
  • Termination on Death: An agent’s authority ends upon the grantor’s death unless specified as an executor in the will.

Is overriding POA possible?

The authority granted by a Power of Attorney (POA) can be overridden under specific conditions. If the grantor remains mentally and physically sound, they retain the right to revoke or modify the POA at any time.

In Ontario, additional safeguards exist where healthcare providers or long-term care authorities can take action through the Consent and Capacity Board if they deem the agent is making inappropriate decisions. This board has the authority to direct corrective measures and if necessary, the court can ultimately remove the agent from their role as Attorney.

Is it possible to create a POA without a lawyer?

Creating a Power of Attorney (POA) without a lawyer is possible using forms provided by the Ontario government, available online (e-mails) or by mail upon request. However, working with lawyers is still advisable for complex situations like business management, challenging family dynamics, or handling foreign property.

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