Why you need a Power of Attorney - Kerr Financial
Estate & Trust
Why you need a Power of Attorney
Category: Estate & Trust, Financial Planning Tags: Estate Planning, Financial Plan, Integrated investing, integrated wealth management, POA, Power of Attorney, Risk Management, Will

Why you need a Power of Attorney (“POA”)

When reviewing financial affairs from a legal standpoint, most individuals ensure that their will is up to date.  While a will provides instructions as to the distribution of your property after death, what happens to your property if you became incapacitated or unable to act for yourself?  Activities that we take for granted such as banking, paying bills or filing tax returns might not get done.  In this case, it is important to draw up a legal document, generally known as a power of attorney, so that another individual can act on your behalf if you are unable to do so.  In Quebec, such a document is called a protection mandate, formerly a mandate in case of incapacity.

Two Types –  Power of Attorney (“POA”)

In general, there are two types of POA’s:

POA – Property – which addresses decision-making around managing your property and

POA – Personal Care – which addresses decision-making relating to your personal care.

A Power of Attorney for property, is where you assign someone else other than yourself, the legal authority to make decisions about the management of your property should you become incapable. 

What does property generally include?  It includes decisions about your bank accounts, investment accounts, real estate, and items such as your tax returns. It is important to note that a POA can come into effect upon signing so the person granting power should carefully choose their attorney.  Although the person who acts on behalf of another is called an attorney, there is no requirement that this person be an attorney or lawyer.

Under a power of attorney for personal care, you grant someone the power to make decisions about  your personal care and well-being.  This includes decisions about the type of care received, personal hygiene, whether you want to be placed in a private or public nursing home as well as end of life decisions.  The person or persons chosen under the power of attorney for property can be different than those chosen with respect to personal care.

Another important point to note is that the rules governing powers of attorney vary from province to province.

What are the advantages of having a power of attorney?

  1. It gives you peace of mind, as you have a plan in place on how your affairs will be managed if you are incapacitated.

  2. It gives you control, as you can name a specific person you trust to act on your behalf. As a result, when choosing someone to act for you,  it is important that the person is knowledgeable, responsible and understands your wishes.

  3. The documents themselves are flexible. In your power of attorney document, you can specify the activities covered which can be very specific or broad-based.

Risks of having a power of attorney

  1. Where the POA is too specific, it may cause problems or delays for the attorney to take appropriate action. It is important to work with someone who is experienced in this area when drafting your POA.

  2. If more than one attorney is appointed, disagreements between the attorneys may cause problems and delays in the management of your affairs. The risk of disagreements can be minimized by either selecting one person as your attorney, or by selecting an odd number and requiring a majority to act.

  3. If the document is not reviewed regularly, it may not reflect current circumstances.  It is therefore important to review every 3-5 years and to consider appointing a replacement attorney should your primary attorney be unable to act.

Risk of not having a power of attorney

  • If you have not named someone to act for you, an attorney may be appointed by the court. Such a person may not understand your needs or have the knowledge to act in your best interests.

In conclusion

A Power of Attorney is an important document and should be given the same priority and importance as your will.  In addition, in drafting a power of attorney, it is important to obtain professional advice to ensure that you understand the powers being delegated, the conditions or triggering events that will allow the attorney to act for you, along with your rights and the obligations of the attorney chosen.   

 

Kerr Financial

About Kerr

Kerr Financial Group was formed in 1979 for the purpose of assisting individuals to maximize their personal financial resources, alleviate their financial and retirement concerns and simplify the administration of their affairs.

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