In a recent conversation with a financial advisor we discussed the importance of having current Powers of Attorney and a Will at all stages of your adult life.
I mentioned I know several people who have disclosed to me that they have no:
• Power of Attorney for Personal Care
• Power of Attorney for Property
Subsequent to our discussion, I thought this would be a worthwhile topic on which to write a post.
What is a Power of Attorney?
A Power of Attorney is a legal document in which you give someone the power to act on your behalf. This person is called your “attorney”.
What is a Power of Attorney for Personal Care?
A Power of Attorney for Personal Care is granted to someone who will make personal care decisions (ie. health care and medical treatment, diet, housing, clothing, hygiene, and safety) on your behalf if you become mentally incapable of making them yourself. This is sometimes called a “personal power of attorney”.
What is a Power of Attorney for Property?
A Power of Attorney for Property is a legal document in which you give someone the power to act on your behalf if you become mentally incapable of managing your property.
I reside in the Province of Ontario, Canada. I this jurisdiction you can have a General Power of Attorney for Property or a Continuing Power of Attorney for Property.
The General Power of Attorney for Property is a legal document that lets your attorney manage your finances and property only while you are mentally capable. If you become mentally incapable of managing your property, the General Power of Attorney for Property ends and your attorney can no longer act for you.
A Continuing Power of Attorney for Property allows your attorney to continue acting for you if you become mentally incapable of managing your property.
In 1996 the laws changed in Ontario so most people who want to make a Power of Attorney for Property make a Continuing Power of Attorney for Property.
If you reside in the Province of Ontario, I suggest you access the CLEO (Community Legal Education Ontario) site. The following are links to their site.
You may also want to check the following Government of Canada site:
Don’t let the title of the article put you off. Age has nothing to do with having Powers of Attorney in place.
What if I have no Powers of Attorney?
The court will usually step in although you should be aware the rules in every province and state are different. The court will deliberate and appoint someone (known as a conservator) to take care of your medical and financial decisions for you.
While the court will often appoint a close family member to this role, the following are important disadvantages that should be sufficient to dissuade you from letting this happen.
- the judicial steps that lead to the appointment of a conservator can be lengthy. They can drain your friends and family of time and money.
- you have no say in who will be your conservator and the party appointed by the court will have broad authority to act on your behalf.
- the family member might not be sufficiently responsible to make important decisions.
In addition, you may not want the same person making medical and financial decisions.
What is a Will?
A Will is a document that states your instructions about what should happen to your property upon your death. A Will can be used to:
• Name an executor.
• Name guardians for children and their property.
• Decide how debts and taxes will be paid.
• Provide for pets.
• Serve as a backup to a living trust.
What if I have no Will?
Passing away with no Will is known as dying “intestate.” When this happens, the intestacy laws of the province or state where you reside will determine how your property (bank accounts, securities, real estate, and other assets you own at the time of death) is distributed upon your death. Real estate owned in a different province or state than where you resided will be handled under the intestacy laws of the province or state where the property is located.
The laws of intestate succession vary greatly depending on your marital status and whether you have children. In most cases, your property is distributed in split shares to your “heirs”, which could include your surviving spouse, siblings, aunts and uncles, nieces, nephews, and distant relatives. Generally, when no relatives can be found, the entire estate goes to the province or state.
As you can see, the ramifications of not having these documents in place are significant. There is just no excuse for not taking action!
Just as damaging are poorly crafted Powers of Attorney and Wills as these can create significant problems. While there are various online resources which offer products and services which help you create your own documents so as to save legal fees, in my humble opinion, this is tantamount to performing dental surgery on yourself. Why would you want to undertake the creation of something so important without having expertise?
Think of how complex the preparation of these documents can become when you factor family dynamics, blended families, divorces, and/or property ownership in multiple jurisdictions (including other countries) into the equation.
In my opinion, the cost to have properly prepared legal documents pales in comparison to the cost and grief that can arise from having no documents or poorly prepared documents. Keep in mind the British saying “Penny wise, Pound foolish”.
Have you been faced with a situation where proper Powers of Attorney and/or Wills were not in place?