What happens to CPP and OAS benefits after death?

Thanks to our friends over at http://www.allaboutestates.ca/ for this practical guide to the two government benefits received most often by Canadian seniors. The more "how-to" information out there for executors, the better! Click here to read the article.

Seniors & veterans will still get cheques despite Canada Post lockout

Global News is reporting that on Monday, June 20, there will be delivery of government cheques including CPP, OAS, Veteran's Affairs, tax benefit cheques etc. Click here for details. This is definitely good news for those living on limited incomes who really can't sit out a strike or lockout waiting for their money.

Choosing CPP start date requires the whole picture

Retirement planning takes a lot of calculating and planning. One of the factors that must be considered is CPP retirement benefit, particularly as the plan underwent some changes this year. Click here to read an article from the Globe and Mail about taking your CPP start date into consideration.

Retiring some pension options

For those of you keeping an eye on what the Canadian governnment is doing about reforming the Canada Pension Plan, click here for an update.

Why 68 or 70 should be the new 65

This article from the Globe and Mail makes the point that the CPP eligibility age should be raised above its current age 65. The author makes a persuasive, informed argument, in my view. See if you agree by clicking here to read the article.

Alternatives to court-ordered guardianship and trusteeship for an aging parent

The legislation setting out policy and procedures for becoming a guardian and/or a trustee for aging parents is made provincially, not federally, so it differs across the country. One concept that is present in the legislation of most parts of Canada is that a full guardianship and trusteeship is a last resort. Other, less intrusive, means of helping an aging parent should be tried first, or at least considered.

The idea behind this is that taking away full control of a person's money and life is going overboard. It's like doing a major surgery when all you needed was a few stitches. The amount and type of help offered should be appropriate to the person's specific situation.

Now that we've established that looking at alternative solutions is a good idea, let's look more closely. What exactly are those alternative solutions?

Enduring (Continuing/Durable) Power of Attorney - this document allows a senior to choose the person who will make financial decisions once the senior loses the ability to do that for himself. It enables someone to do all of the things - and more - than someone could with a court appointment as trustee. It's cheaper and quicker, but best of all it allows the senior to exercise control over important decisions.

Health Care (Personal/Medical/Advance) Directive - this document allows the appointed person to make decisions about health care, medical procedures, place of residence and many more matters when the senior can no longer do that. Again, it allows the senior to choose who represents him.

Representation agreements/Supported decision making - under this kind of arrangement, the senior can choose someone to help him or her with decision-making to the extent that he or she wants help. Unlike powers of attorney or health directives, this arrangement enables the person to make decisions with the senior, rather than for the senior. This is available in one form or another in BC, Saskatchewan, Yukon and Alberta.

Informal trusteeship - this refers to an arrangement whereby a person gains legal authority over another person's pension or benefit income, to use those income sources on behalf of the person who owns them. He or she may collect the pensions, deposit them and use them to pay the owner's bills. Informal trusteeship is available for Old Age Security, Canada Pension Plan, Guaranteed Income Supplement, Spouse's Allowance, Survivor's Allowance and Veteran's Affairs benefits. I posted about informal trusteeship once before - click here to read it.

In-Home Support - (sometimes also called Aging in Place support) - this refers to any combination of medical services, housekeeping services, companionship and transportation that allows an aging person to continue living in his or her own house rather than moving to a seniors' residence. If the problems are more severe, medically speaking, the in-home care might have to be a full-time live-in caregiver.

Renovations to the senior's home - making appropriate renovations might make it possible for a senior to stay in his or her home longer, particularly when teamed with in-home support. A variation on this is to renovate the home of one of the senior's children and have the senior move in there.

Custodial bank account - this is a type of account offered at most banks that provides additional services, such as managing the investments, getting the annual tax return filed and paying bills.

Joint assets - those of you who read my blog often know that I'm not generally in favour of placing a senior's assets in joint names with anyone but his or her spouse, but from time to time it's the right solution. Placing assets in joint names gives both people a right of survivorship of the assets, so it should only be used when the senior has an opportunity to talk to a lawyer first.

Fighting the new normal

This article in the National Post discussed the financial pros and cons of different retirement ages, particularly with respect to pensions. If you're wondering how the new CPP rules will affect your choice of retirement date, check it out. Click here to read the article.

What federal benefits are available to the family of a deceased person?

An executor should maximize the value of the estate he or she is working on by applying for all federal government benefits that are available. Family members, with or without the help of the executor, may want to apply for other benefits that are available to them. Here is a list of benefits available from the Canadian government. Not every estate is eligible for every type of benefit, as that will depend on the circumstances of each estate:

1. CPP Death Benefit. A one-time, lump-sum payment of up to $2,500. Paid in order of priority to the estate, or the person paying for the funeral, or the spouse, or the next of kin. Click here for more info.

2. Survivor Allowance. A monthly benefit for a low income spouse between the ages of 60 and 64. Click the link under #1 for more information about eligibility and amounts.

3. Survivor Benefit. A monthly pension that can be paid either to a legal/common law spouse, or the deceased's children under 18, or children between 18 and 25 who are in school. Click here for more information.

4. Veteran's Affairs Death Benefit. Lump sum of up to $267,000 paid to the spouse or children of a Canadian Forces member who died in service or of injuries sustained in service. Click here for more info.

5. Last Post Fund. This non-profit program provides funeral, burial and a military gravemarker for the family of a Canadian Forces who died in service. Click here for more info.

6. International Survivor Benefit. If a deceased person worked or lived in another country, his or her estate might be entitled to a death benefit from that country. To find out more (you can select the country from a drop-down list) click here.

Most funeral homes give their customers the forms to apply for the CPP Death Benefit, but most do not provide the forms for the other benefits. Using the links I've provided, you will be able to download forms. If you don't want to do that, you can go into any federal government service office and pick one up.

What is informal trusteeship?

Informal trusteeship is a practical, low-cost way of putting an individual in charge of handling finances for a person who doesn't have the mental capacity to deal with his or her own finances. It's suitable for a person who doesn't have much in the way of assets, but does have income from a government pension or program.

For example, an elderly person who has very few assets but receives CPP and OAS benefits might need an informal trustee just to deal with those benefits. The elderly person doesn't have real estate or investments to be managed so doesn't really need a full court-appointed trustee, and would have trouble affording that. The elderly person just needs someone to help with receiving the government benefits and paying the bills with the benefits.

The federal government programs that allow for informal trusteeship are Canada Pension Plan (CPP), Old Age Security (OAS) and Department of Veteran's Affairs. You would have to contact each one separately. In Alberta, the provincial programs that allow for informal trusteeship are Assured Income for Severely Handicapped (AISH), Alberta Seniors Benefit, and Employment & Immigration. Other provinces allow informal trusteeship for their programs that are similar to these Alberta programs.

Putting an informal trusteeship into place is nothing like putting a court-appointed trusteeship into place. A court application is not required and there is no cost involved. The arrangement is put into place by contacting the government program in question and filling in their requested documents.

However, the responsibilities of the trustee put in charge are very much the same as they apply to the income stream that the trustee manages. The trustee is still managing money on behalf of another person and must act in the best interest of that person. For example, a person who is made an informal trustee may not use the money for his or her own purposes and may not make loans to him/herself with it.

It's important for anyone who is, or is planning to be, an informal trustee to understand the limitations of his or her authority. He or she can only deal with the benefit paid by the government department that has appointed him or her. An informal trustee CANNOT:
- sell the elderly person's home or car
- look after any investments
- look after any bank accounts except the one that receives the benefits
- handle any sums of money (e.g. inheritance, gift, lottery winnings, insurance pay-out) that are payable to the elderly person
- sell or give away the elderly person's personal and household belongings
- sign any contracts on behalf of the elderly person.