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Protection situation

Do you have a protection mandate in case of incapacity? Do you have a power of attorney?

Without a protection mandate in case of incapacity

If you were incapacitated, any interested person (spouse, parents, public curator, etc.) could ask the court to open a protective regime for you. Medical and psychosocial evaluations would be obtained and you would be questioned. A group of relatives, kin or friends – known as a family council – would be convened. Finally, a judgment would be rendered declaring you incapacitated and naming a curator, tutor or advisor to a person of full age, depending on the type of protection deemed appropriate by the court. It is likely that your spouse will be chosen to administer your property and take care of you, but he or she would have to report to the public curator every year. Furthermore, if most of the family assets and income is in your name, your spouse will have to justify their use for his or her personal benefit!

With a protection mandate in case of incapacity

The protection mandate allows you to avoid the involvement of the public curator and to choose for yourself who will take care of you and your property should you become incapacitaded – for example, your spouse. You can also provide for a replacement in the event that your mandatary is unable to fulfil this role. You can state that your mandatary can use your assets to meet the needs of your spouse. You can also decide how much latitude to give to your mandatary in the administration of your property. For example, will you allow your mandatary to sell your house?

Power of attorney combined with a protection mandate in case of incapacity

It is possible to combine a power of attorney and a protection mandate in case of incapacity in the same document. The advantage of this is that the power of attorney comes into effect as soon as it is signed and remains valid until the protection mandate is ratified. Care is in order, however, as a mandatary who has been granted extensive administrative powers may take advantage of this situation. To avoid such abuses, certain solutions should be considered, including:

  • Limit the powers to simple administration in the general power of attorney
  • For powers that exceed simple administration, subject the execution of the mandate to the approval of a professional (e.g., a notary)
  • For a notarized power of attorney, ask the notary not to issue any copies unless the mandator gives formal authorization and not to alert the mandatary of the existence of the power of attorney until the need arises
  • Name two or more mandataries, including a professional, and stipulate that they must always act by majority or unanimity, as the case may be

 

Do you know the amount of the monthly benefit you will receive in the event of a short-term disability? A long-term disability? Is it enough to cover your needs?

Your disability insurance coverage should be sufficient to maintain your current standard of living and your retirement savings. Since disability insurance benefits generally end at age 65, it is important to provide for retirement capital (registered or not) to allow you to maintain your standard of living in retirement. To do this, you need to purchase retirement protection.

If you pay your own disability insurance premiums, the income you need to protect in the event of disability is equal to your monthly work income less taxes and other deductions – in other words, your net income.

If your employer pays part or all of your disability insurance premiums, your disability insurance benefits will be taxable, so you will need to protect your gross or before-tax income.

Calculation of disability insurance needs – loss of income when benefits are not taxable:

 
Example 1
Example 2
Monthly work income from all sources
$2,500
$5,000
Less taxes and other deductions
$550
$1,800
Income to protect
$1,950
$3,200
Less existing insurance (individual or group)
$1,000
$2,500
Additional insurance needs
$950
$700

 

Calculation of disability insurance needs – loss of income when benefits are taxable:

 
Example 1
Example 2
Monthly work income
$2,500
$5,000
Less existing insurance
$1,000
$2,500
Additional insurance needs
$1,500
$2,500

  

If you travel outside of Quebec, do you purchase travel insurance?

According to the Régie de l'assurance maladie du Québec website, when travelling abroad:

"The Régie de l'assurance maladie reimburses at pre-set rates the cost of hospital services received as a result of a sudden illness or an accident, as follows:

  • a maximum of CA $100 per day for hospitalization;
  • up to CA $50 per day for healthcare received at a hospital outpatient clinic. For hemodialysis and the required medication, the Régie reimburses up to CA $220 per treatment, regardless of whether the person is hospitalized."

Before you leave, you should check whether your group insurance includes travel insurance that repays medical and hospitalization costs abroad. If not, buy individual insurance.

Good travel insurance includes cancellation insurance (before the trip) and interruption insurance (during the trip).

The example below, from the Régie de l'assurance maladie website, is a good illustration of the risk you are taking if you travel without travel insurance.

Example of what the Régie pays when an insured person is hospitalized in intensive care for three days in Florida after a heart attack:

 
Amount charged
Amount covered
by the Régie
Amount payable
by the patient
Hospital services
$25,000 CA
$300 (100 CA par jour)
$24,700 CA
Professional services
$1,000 CA
$435 CA
$565 CA
Total
$26,000 CA
$735 CA
$25,265 CA


 

If you are the owner of an incorporated company... Do you have a shareholders agreement? Does it still reflect your situation?

A shareholders agreement (or partnership agreement, for unincorporated businesses) is a legal document. Its main purpose is to set out in advance how to handle various situations that may occur among the shareholders, such as a death, a retirement, a temporary or permanent disability, or a conflict. If there is a conflict, the agreement must provide the means to resolve it.

Why should shareholders who see the future shining before them sign such an agreement? Well, we could answer this question by saying that this kind of agreement allows them to determine now, while relations are still good, how they can effectively resolve conflicts that may occur if their current optimism were one day to become tarnished.

 

Have you taken all necessary measures to ensure the survival of your business in the event of your disability?

If you have a business, you should have a disability clause in your shareholders agreement. This clause should spell out the conditions for the redemption of your shares if you become disabled permanently or for a long period of time, such as two years. The clause should also provide a special management mechanism during your absence due to disability or incapacity. It is a good idea to consult a legal expert on this matter.

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