Do you need someone to manage your finances and assets for you if something happens and you are no longer able to do this yourself?
For most people, the answer is yes. They consider a Power of Attorney (POA) essential to their estate planning. A POA is a legal document that enables you to give someone you trust, called Power of Attorney, the authority to make decisions on your behalf if you become incapacitated. It’s important to know the limits of a POA and how to maximize its benefits.
Who should be your POA attorney?
The ideal POA attorney:
- Has experience managing money
- Will manage your assets to protect you and your estate
- Is comfortable dealing with lawyers and accountants
- Can commit to years of managing your assets
- Has the time to pay your bills
- Has the time and patience to communicate with the people who take care of you
Often, the same person you name as your executor is a good choice for your attorney. Another option is to have the lawyer who writes your power of attorney to also serve as your attorney, especially if your personal or business affairs are complicated.
There are two types of Power of Attorney
Power of Attorney for Personal Care
The person you decide to appoint as your attorney for personal can make decisions about your health care if you become mentally incapable of making these decisions. This includes housing, food, health, safety, hygiene, and clothing. This person should be someone you trust, perhaps a family member or a close friend. Talk to the individual and make sure that (s)he is willing to take on this responsibility if needed. Certain people, if you pay for their services, are not allowed to be your attorney, unless that person is also a family member. This includes your:
- Social worker, counsellor, teacher
- Doctor, nurse, therapist, or other health care provider
- Homemaker or attendant
Important legal note: An attorney for personal care is only allowed to make medical or long-term care decisions if a medical professional or evaluator finds you mentally incapable of making the specific decision. An assessment is required. For all other types of personal care decisions, the attorney can step in if they believe you are incapable — no assessment is required.
Power of Attorney for Property
The person you name as your attorney for property can make decisions about your financial affairs, including paying your bills, collecting money owed to you, maintaining or selling your house, or managing your investments. Make sure the person you choose understands your wishes and agrees to this important responsibility, which includes keeping detailed records of all transactions involving your money and assets.
Continuing Power of Attorney for Property
A Continuing Power of Attorney for Property (CPOA) covers your financial affairs and allows the attorney you name to make decisions for you, even if you become mentally incapable.
Non-continuing Power of Attorney for Property
A non-continuing Power of Attorney for Property covers your financial affairs, but can’t be used if you become mentally incapable. You might give this Power of Attorney, for example, to someone to look after your financial transactions while you’re away from home for an extended period of time. Important legal note: Be careful signing a Power of Attorney for property, because unless you specify otherwise, the person you name as attorney can start making decisions immediately. You may want to include a statement in your Power of Attorney document that says your attorney can only make decisions if you become mentally incapable. For example, “Before my spouse can use this POA, they have to get a letter from a medical doctor that indicates that I am incompetent.” You can limit that restriction to various people. “I’m appointing my spouse – no restrictions. But for my daughter or son to use it, they have to get a letter from the doctor.” Another option is to use a trust company to act as your attorney. The trust company charges a fee but will be professional and impartial.
You can limit your POA to a specific task. For example, you may be planning to leave the country, and want to sell your house. You can appoint an attorney and give that person full control until your house sells. After the house sale, the POA ends. The same principle applies to a house purchase or mortgage refinance. You can limit the time, to one year, for example, for a specific task.
Cannot be amended
A POA cannot be amended. It has to be rewritten. Therefore, when you appoint an individual to be your attorney – for instance, your spouse, child or other family member – it’s wise to include a number of alternates within the same document so that you don’t have to worry in the event that your first choice for attorney is no longer available.
Howard Nightingale Professional Corporation, your POA specialist
If you want to create a POA document and decide on who would be the best attorney for your estate planning document, or have been asked to become an attorney yourself, we can advise you on what is required and how to avoid or minimalize the challenges. You can reach our Toronto office at 416-663-4423 or toll free at 1-877- 224-8225. We look forward to helping you get your POA done efficiently and effectively; and advising you on what is involved in being an attorney.