Power of attorney (POA) gives someone else the authority to make important financial decisions on your behalf. Here’s why you may need one, and how to choose the right person, the attorney, for the job.
What if, because of an illness or accident, you weren’t able to make decisions relating to your finances or health care, either temporarily or permanently? You would want someone to step in.
The solution is to establish an enduring or continuing POA that appoints someone to manage some or all of your finances and property either as soon as you sign it or if you become mentally incapable of managing your own affairs. Your attorney does not become the owner of any of your assets.
According to the limits you set, your attorney may be authorized to do everything from taking care of your banking to buying consumer goods as well as buying and selling real estate.
Designed to meet your needs: A lawyer can customize your POA. It can be as general or as specific as you need it to be. You can appoint a single person, or more than one who act “jointly” where decisions are made together, or “jointly and severally”, with the option of each making decisions on their own. The key is that it is clear who will make decisions on your behalf, and to hold that person responsible for their actions under the law. Responsibilities include complying with legislation governing powers of attorney, day-to-day management of your assets, following directions set forth in the POA document and maintaining clear records. Often, the attorney is entitled to compensation, something you should consider carefully ahead of time and spell out clearly.
Choosing your attorney: Because a POA grants considerable authority, your attorney must be someone you trust. Other characteristics to look for are; minimum age requirement, demonstrated ability to manage finances and property responsibly, a shared philosophy about money and investments, willingness to put your interests first, absence of financial or health issues that could interfere with their duties, and availability in terms of time and geographic location. In other words, someone who is honest, open, capable and reliable.
Talk to the person or people you would like to appoint about the responsibilities of an attorney. Then ask if, given their understanding of what’s expected, they are willing to take on this important role. Consider naming a substitute if for any reason your first choice may not be able act for you.
Staying up to date: As your life changes, take the time to regularly review your POA. If you’ve moved to a different province or territory, do you need to create a new POA? Does it still reflect your wishes? Is the attorney you appointed still capable and available? Keep in mind that, while you are mentally capable, you can change or add attorneys or cancel your POA altogether. When you make these kinds of changes, be sure to inform the financial institutions you work with.
Another important document that coincides with a POA is a personal or health directive that appoints someone to make non-financial decisions on your behalf. This ensures that your wishes with respect to medical intervention or choosing a long-term care facility can be met.
As with all things legal, consult with a qualified lawyer to ensure compliance with provincial legislation.