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|Are Your Assets Protected?
An Introduction to Powers of Attorney
A Power of Attorney is an often overlooked but important part of a complete estate plan. A Will ensures that your financial affairs are managed according to your wishes after your death, but what happens in the event illness, an accident or an extended absence makes it impossible for you to manage your own affairs while alive? A Power of Attorney can provide for the proper management of your property and financial affairs should you become mentally incapable.
What is a Power of Attorney?
A Power of Attorney is a document, separate from your Will, in which you authorize another person or trust company to manage your financial affairs on your behalf. The Power of Attorney can cover all of your assets or can be limited to only certain assets or to a specific period of time, such as when you are out of the country on an extended trip.
The Power of Attorney may also authorize the attorney to continue acting on your behalf should you become incapable of managing your own affairs. In some provinces this is called an Enduring Power of Attorney or a Continuing Power of Attorney. In B.C. it may also be called a Representation Agreement. In Quebec it is called a Mandate in Anticipation of Incapacity.
Why Do You Need a Power of Attorney?
It is a common misconception that, in the event you lose capacity, a family member would automatically be able to deal with your property. If you have not granted a Continuing or Enduring Power of Attorney to a family member, he or she will not be authorized to manage your property without obtaining a court order or the approval of a provincial government official. This process can be costly and time-consuming, and the family member could be denied the authority to act.
Another popular misconception is that, because all of your property is held jointly with your spouse, your spouse will be able to manage your property if you lose capacity. This is not a complete plan. Your spouse may be able to deal with joint bank accounts, but would not be able to sell or mortgage a jointly-owned home or other real property. These transactions require the signature of both owners or, if one of them is incapable, the signature of his or her attorney.
Choosing the Right Attorney
The tasks that your attorney will have to perform may be time-consuming and complex. It is important to appoint someone whom you trust and who has the skills and knowledge necessary to manage your assets. Your spouse, adult children, lawyer, accountant, other family member or friend may be appropriate, depending on your circumstances.
The Power of Attorney should provide for an alternate attorney and can also contain specific instructions to your attorney or specify when the document is to come into effect.
Ensuring you have a valid Power of Attorney in place is an important part of your overall estate and financial plan. Speak to your Investment Advisor for help in locating the right estate planning professional for you.
The comments included in this publication are not intended to be a definitive analysis of tax law. The comments contained herein are general in nature and professional advice regarding an individual’s particular tax position should be obtained in respect of any person’s specific circumstances.