When you discuss estate planning, conversations often revolve around wills, with little talk about what should be a cornerstone in your estate planning — powers of attorney.
“Powers of attorney don’t get nearly enough attention in my opinion,” says Jason Heath, managing director at Objective Financial Partners in Toronto.
A recent survey by Scotiatrust bore that out, finding that 69 per cent of affluent Canadians aged 50 and older have an up-to-date will. That number falls to 59 per cent of those with a power of attorney (POA) over their finances, and 53 per cent having a POA over personal and medical care.
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A POA is a legal document that gives a designated person or persons the authority to act on your behalf.
Ontario has two types of these legal documents: property POAs which deal with financial matters, and personal care POAs that oversee medical care.
Heath says that your POAs come into play if you have lost the capacity to make decisions on your own.
“ It’s not a sure thing that just because you have a will, you’ve got a power of attorney,” says Heath. “If you don’t know, it’s important to double-check and also make sure you know where those documents are.”
There’s no standard form for creating a POA, says Heath.
A good place to start, he says, is to download the free POA kit available at the Ontario ministry of the Attorney General website. Community Legal Education Ontario also offers a free online tool to create a POA.
The person or persons you choose should be people you can trust to act on your behalf, such as a family member, spouse or a longtime friend.
“Whether it’s the same individual or whether you choose different individuals for either one, it is simpler when there’s one POA acting, as opposed to spreading it across multiple people, who then have to confer, who have to have a consensus around decisions,” says Rob McGavin, managing director at Scotiatrust.
McGavin adds that you’ll also need to engage a lawyer to make the POA legally binding.
You can also appoint a third party, such as a trust company, as a POA, says McGavin.
But regardless of who you name, he says, it’s important to talk with this person about the responsibilities of the position.
“ You might want somebody who’s your POA for property to be … strong in managing finances,” says McGavin. “Your POA for personal care might be a little bit more sensitive and somebody who is much more familiar with your own personal values.”
The trick to finding a good POA candidate, says Heath, is to picture how that person would handle things if suddenly dropped into the situation.
“Do they know what your wishes would be,” says Heath, and “how could you make it easier for them if they ever need to make a hard decision?”
Heath adds that you can also include an explicit memo with your personal care POA to ease that person’s burden in making a decision.
This note can include details on the types of health care decisions you want your POA to make, such as honouring an end-of-life, do-not-resuscitate wish.
“ When a POA is needed, oftentimes it’s because somebody’s becoming incapacitated and might not be able to explain their motives,” says McGavin. “It’s never too early to be prepared.”
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