Estate planning tips that can help protect LGBTQ+ individuals

Transcript

Intro Speaker:  

Hello, and welcome to Matters Beyond Wealth with your host, Leanne Kaufman, president and CEO of RBC Royal Trust. For most of us, talking about subjects like aging, late life, and estate planning isn’t easy. That’s why we’re going to help get the conversation started on this podcast while benefiting from the insights and expertise of some of the country’s top experts. We want to bring you information today that will help to protect you and your family in the future. Now, here’s your host, Leanne.

Leanne Kaufman:

Legal rights vary across Canada when it comes to how estate and incapacity laws treat common law and married couples. Many LGBTQ+ couples are common law and are impacted by those differences, including how they relate to formed families. LGBTQ+ people can face further challenges in their senior years, or when incapacity strikes when it comes to finding caregiving services or retirement homes where they feel safe in their lifestyle. To help protect themselves, proper estate and late life care plans are a must. And for those who have them already, they’re worth a review to see if they should be updated. The reality is that estate and incapacity laws can treat and impact the LGBTQ+ community differently than those outside of that community, and some of those laws need to change to address many of these issues.

Hello, I’m Leanne Kaufman and welcome to RBC Wealth Management Canada’s Matters Beyond Wealth. With me today is Darren Lund, a partner at Miller Thomson LLP, who specializes in estates law. Darren frequently speaks and writes on estate planning for spouses and couples, the effective use of trusts, Will drafting, charitable giving, family law matters in estate planning and administration, estate planning for those with disabilities, assisted reproduction and posthumous conception. His expertise has been recognized by Best Lawyers in Canada and the Canadian Lexpert Directory. Darren is the current chair of the Estates and Trust section, executive of the Ontario Bar Association, and a former chair of the Statutory Review Committee of the Estate and Trust executive. In 2022, he was co-recipient of the Widdifield Award from the Ontario Bar Association Foundation for the article, “Why Estate Planning Matters for the LGBTQ+ Community.” Darren, thanks so much for being here with me today to talk about estate and late life planning for the LGBTQ+ community and why this matters beyond wealth.

Darren Lund:

Thanks very much, Leanne, it’s my pleasure to be here.

Leanne Kaufman:

So why don’t we start with kind of where I started. How are things potentially different for families with LGBTQ+ relationships versus heterosexual relationships?

Darren Lund:

Thanks, Leanne. I think it’s important to think about this in the context of a broad trend towards equality of treatment for couples in Canada. We initially saw this starting back in the ’60s, ’70s, a trend to bring common law spouses to give them equal treatment with married spouses in the opposite gender context. That then progressed and eventually the same rights were extended from opposite gender common law spouses to same gender common law spouses, and of course we now have civil marriage for same gender couples in Canada as well. There’s this general trend towards equal treatment, but there are still areas of the law where married spouses and common law spouses are treated differently. When you look at the stats as far as relationships within the community, even in the 2021 census, it indicated that still 37 percent of same gender couples are married compared that with 77 percent of opposite gender couples are married.

So there’s still a predominance of common law relationships within the community. So where those relationships are treated differently there’s a potential for a differential impact of those laws. I also just like to mention in the context of family formation with the advancement in assisted reproduction technologies, this is something that more and more LGBTQ+ families are using to form their families. Also there has been a trend towards reducing the hurdles to recognize children born where assisted reproduction is used. There are still requirements that have to be met, so there is again, a potential for a disproportionate impact on the community.

Leanne Kaufman:

Right. Let’s give some examples about what some of those differences might be. I realize some of them are just common law versus legally married and not necessarily related to whether the relationship is opposite gender or same gender, but for example, how might it be different when it comes to whether you have a Will or not?

Darren Lund:

That’s a great question, Leanne, and I think that’s a really good point that you raised. We’re talking here not about express discrimination, but a disproportionate impact on a particular community. If we look at the example you gave of not having a Will, I think one of the biggest misconceptions that I encounter in dealing with clients is people are often surprised to find out that married couples and common law couples are treated very differently, in Ontario at least, in terms of who will inherit an estate if there isn’t a Will in place. Now, I should point out that these laws do vary by province, so it’s important for people to know what the rules are in their own province.

Let me just give you an example of what that could mean. This was an example that really brought this issue home to me. I had a client who came to me, her spouse was very ill with cancer, which had progressed quite rapidly. Her spouse had come from the US to Canada about 20 years ago. They had been together for 15 years, recently incorporated a company, bought a franchise, and were looking to build a business together when her partner was diagnosed with cancer. Now, by the time they came to see me, her illness had progressed to the point that it was questionable whether she had the capacity to make a Will at that point. We actually contemplated whether she should consider getting married because it was clear that she didn’t have capacity to make a Will, and if she died without a Will, her spouse would be excluded from the division of the estate.

This was a particularly stark example because she was permanently estranged from her family and had been for many, many years. And because of the way the law works, the very people that she did not want to benefit through her estate were the people that would stand in priority to receive her estate because she didn’t have a Will.

Leanne Kaufman:

Just to be clear—to unpack that a little bit—because they were common law and not legally married, the spouses had no rights to each other’s estate. If they died without a Will, it would go to the intestacy legislation, which in this case wasn’t going to recognize the relationship, it was going to go to blood relatives.

Darren Lund:

Exactly.

Leanne Kaufman:

And that’s the case in Ontario, but it’s not unique to Ontario, right? There’s other provinces in Canada where a similar result would occur if they didn’t have Wills in place?

Darren Lund:

Yeah, it’s quite a patchwork across the country. Some provinces have extended the right to inherit an estate to common law spouses. The rules are different for how long you have to cohabit to qualify as a common law. But there are provinces where—like Ontario—you have to be married for a spouse to automatically inherit if there’s no Will.

Leanne Kaufman:

Wow. The other thing about the example you gave is you mentioned that the ill spouse may not have had capacity to do a Will, but she may have had capacity to get married. What I think many people in our audience might be interested to learn is that the test for capacity for different kinds of decisions is different and that it’s actually a lot lower test of capacity to get married than to make a Will. You have to a higher level of cognitive function to make a Will than you do to get married, so that’s interesting too and challenging for this situation.

Darren Lund:

It is, and it’s a good point. Capacity is something that is specific to the type of decision a person’s making, and yes, it is a higher test to make a Will.

Leanne Kaufman:

So multiple hurdles for this poor couple.

Darren Lund:

Yes.

Leanne Kaufman:

Now, let’s just flip it for a minute and talk about that capacity. Let’s assume that the unwell spouse had now been declared incapable of managing her financial affairs. What happens if they haven’t put powers of attorney in place?

Darren Lund:

That’s a great question, and it’s another example of where it can be problematic to rely on what the default law provides in terms of who would have the ability to make decisions on your behalf. If a person makes a power of attorney, they’re able to appoint the person who they would want to make decisions about management of their finances in the case of property, but then also healthcare decisions—where they’re living, what kind of social activities are engaging in the case of a power attorney for personal care. One of the issues if you don’t have a power attorney is that the default law tends to prioritize spouses and next of kin in terms of who can either make those decisions or apply to be able to make those decisions. Spouses in this context does generally include common law spouses, which is a good thing.

Leanne Kaufman:

So that’s different, the law applicable to who can have priority to step into your shoes when you’re alive but incapacitated is different than the law about how who inherits your Will, so there’s another nuance that people need to be aware of, right?

Darren Lund:

Exactly. Then just to complicate it further, common law spouses are, and again in Ontario, included in who could apply to be an executor of an estate if there’s no Will, or the estate trustee I should say, but they might not then inherit from the estate. It’s a bit unusual. And the issue here really is that in many cases this will be fine, but in cases where there is any type of family alienation, the law may be privileging the people that a person would not want to be making those types of decisions for them.

Leanne Kaufman:

So, I think…I mean first of all, the difference in rules is enough to confuse anyone, so definitely getting some really good expertise advice I think is one of the key takeaways from this. But also just really educating oneself about what happens, the what ifs, right? Because I mean, especially in the example you gave where people are estranged from the very people that have all the rights and privileges under the way the laws are set out in some provinces.

Darren Lund:

Exactly. I think here it might be a good place to sort of introduce the concept of the chosen family. Often in our community, the chosen family, your network of friends and allies and supportive family members, they might be the people you want to be making key decisions for you if you’re not able to make them for yourself. Although there may be lots of overlap, the chosen family might be very different than your legally recognized next of kin. This is very, very important for transgender members of the community because the wrong person making decisions can have quite a significant and detrimental impact on a person. In the context of an executor, for example, that’s the person who has the legal authority to make decisions around memorialization, funeral arrangements. There’s a real risk of a person’s identity being erased on death, even what photos are displayed at the memorial service, things like that.

In the case of personal care, you want a person who will ensure that you’re getting gender-affirming healthcare, that you’re presenting to the world the way you want to be presented if you’re incapable, so really important decisions for a person’s dignity.

Leanne Kaufman:

Okay, so let’s turn this into positive and say how do people who may be impacted by these discrepancies in the way the law would treat them on default, how do they go about protecting themselves?

Darren Lund:

Great question. I think it is important to remember that there are steps that people can take to mitigate some of these problems. A lot of these problems can be addressed through good planning: making a Will, making powers of attorney, making sure that you’re putting the right people in charge of those very important decisions, ensuring that the people who you make decisions will know who your chosen family is, will know who your key contacts are, so that they’re making appropriate decisions on your behalf.

Leanne Kaufman:

One tip, I always like to leave people with is: don’t just choose one executor or attorney, make sure you have an alternate in place, because if your primary named executor or attorney can’t act then you’re back to the default laws. Right?

Darren Lund:

Exactly. Having a robust, I say, set of alternates is very important because life can unfold in unexpected ways and the people who you think might be there, they may not be for whatever reason. So having alternates is very important.

I think also documenting if there’s any people you would not want to be making decisions, too. You want to be thinking about who should be making decisions for me, but also other people who should expressly not be making decisions for me.

Leanne Kaufman:

Great point. Okay, so when we’ve done some surveys around why people don’t get these documents in place the number one answer as to why they haven’t done it is because they don’t know where to start. So tell me where you think anyone listening who thinks they may be in this difficult situation and hasn’t yet started their journey of estate planning, but now you’ve frightened them into action, where should they start?

Darren Lund:

I think it is good to get advice when you’re putting together your Will and your powers of attorney. I always say to clients that the first step is always gathering together information, because that’s the basis of any good plan. Obviously, you want to be pulling together information about your assets and liabilities and who you want to benefit—that’s the core of any plan. As I said, thinking about those other very important issues, making a list. Who are my chosen family? Who are my key contacts? Going through thinking about decision makers, that list of alternates we spoke about. Also thinking about, do I have any special care needs or housing needs? This is a particular issue for older members of the community who may be thinking about retirement housing or retirement residents, long-term care. Do some research, look and ensure that you know what the options are for housing that will be supportive of your identity or not. There’s this phenomenon of people having to go back into the closet if they have to go into a group home setting that isn’t a supportive environment, so doing that kind of research. I think it’s important also to think about these issues, but then also communicate them to the people that you’re thinking of including in your plan. There’s no substitute, I don’t think, for people having heard directly from you what your wishes are and what your needs are. It’s one thing to read it on paper, but it’s another to have that conversation. I think that that helps people who may be then charged with making those decisions for you.

Leanne Kaufman:

Yeah, I couldn’t agree more. Well, if you wanted our listeners today to remember just one thing from our conversation, what would that be?

Darren Lund:

I think the key takeaway is that although there are areas where the law may affect the community differently, the good news is that those can be addressed with good planning. There are tools and there are options to deal with these issues and lead to good outcomes.

Leanne Kaufman:

And there are experts like you who have given a lot of thought to the matter.

Thank you, Darren so much for joining me today to talk about these estate planning and late life considerations for the LGBTQ+ community and why this matters beyond wealth.

Darren Lund:

Thanks, Leanne, it’s been my pleasure.

Leanne Kaufman:

You can find out more about Darren Lund on LinkedIn, at millerthomson.com or by searching the #MTPrivateClient on LinkedIn.

If you enjoyed this episode and you’d like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. Until next time, I’m Leanne Kaufman. Thank you for joining us.

Outro speaker:

Whether you are planning for your own estate, the needs of your family or business, or you are an executor for a loved one’s estate, we can help guide you, simplify the complex, and support your life’s vision. Partner with RBC Royal Trust and ensure your legacy will thrive for generations to come. Leave a legacy, not a burden™. Visit rbc.com/royaltrust.

Thank you for joining us on this episode of Matters Beyond Wealth. If you would like more information about RBC Royal Trust, please visit our website at rbc.com/royaltrust.