A Power of Attorney (POA) is a written, legal document which authorizes a trusted representative (or “attorney”) to make financial, legal, and healthcare decisions on your behalf. The POA document (sometimes called a personal directive, health care directive, representation agreement, or living will) is created separately for property matters and healthcare. These are important documents needed to protect your finances, health and personal decisions as you age.
If you were to become incapacitated or mentally incompetent due to illness or injury, having a POA in place ensures that your attorney can begin acting immediately.
That’s a lot of power – hence, it’s important to choose someone you trust.
Are there different types of Powers of Attorney?
Yes. The main types are:
Enduring Power of Attorney for property (financial)
• This person can make decisions about your property and financial affairs, such as paying your bills, managing your bank accounts and investments, and collecting any money owed to you if you are unable to do so yourself … even if you were to become mentally incapable.
Power of Attorney for personal care (health care)
• This can be a spouse, relative or close friend with good judgment, who will be the voice for your healthcare decisions if you are unable to communicate. The individual can make decisions regarding your health care, housing and meals.
You are able to decide how much power you would like to give to your appointed attorney. For example, many Canadians use a limited power of attorney when they need short term assistance to look after their affairs due to travelling or if they are injured.
When and Why Do I Need A Power Of Attorney?
Naming a POA is an important task that should be completed by every adult sooner rather than later in life. In a way, it’s a form of disability insurance, since you are making arrangements to take care of your affairs during your lifetime if you are unable.
Without a POA, a family member would likely need to apply to become your court-appointed guardian. As a result, your finances might be inaccessible and your wishes for healthcare treatment or life support might go unheard during a critical time.
Who Can I Make My Power Of Attorney?
People often appoint their spouse, a family member, or a close friend with good judgment to be their attorney. Keep in mind that the person you appoint can decline the role, so make sure to discuss it with them first. And consider alternates if your primary POA is unable to act when needed.
Generally speaking, your Power of Attorney should be:
• The age of majority (18 in many provinces, 19 in BC)
• Aware of your personal interests and affairs
• A reliable and trustworthy person
• Someone with the time to oversee their responsibilities
• Someone who lives nearby or can be accessible with short notice
Choose someone comfortable with the responsibility. It’s also important to consider the capabilities, reliability, and communication skills of potential POAs. Often the financial POA is someone different from one’s health care POA.
Like your will, you should review and update your POA documents as life changes. Monumental moments such as the birth or adoption of a child, moving to a new home, marriage or divorce may necessitate changes to your documents.
Make sure your attorney is aware of the types of decisions they may need to make, so they will feel educated and confident to take on the responsibilities if called upon.
Can I Choose More Than One POA?
It is possible to appoint two individuals as your POAs. In this scenario, both individuals must either act jointly (meaning they must both agree on decisions being made) or individually, as stated in your POA documents. Be aware that naming joint POAs can lead to indecision and arguments in times of immediate need.
What Are The Risks Of Having A POA?
When you appoint someone as your attorney, you’re giving them the ability to make big decisions on your behalf. This is why it’s important to choose someone you trust and feel confident would have your best interests as their number one priority.
It can be reassuring to know that your POA is legally required to act in your best interest and exercise the care and skill of a reasonably prudent person. They have a duty to act diligently and in good faith for your benefit, following your directions and provincial laws. If your attorney fails to do so, they may be required to provide compensation personally.
In conclusion, a Power of Attorney is a critical component of estate planning for every adult. By understanding the value of POA documents and selecting attorneys wisely, individuals can protect themselves and their loved ones during unforeseen events. Establishing a POA empowers trusted individuals to act on your behalf when you cannot, ensuring that your wishes are respected and upheld.
It’s an essential tool for safeguarding one’s interests and ensuring peace of mind in times of uncertainty.
