When it comes to planning your estate, you should have two goals. First, you want to make sure your wishes are respected. And second you want to make sure your family isn’t put through unnecessary pain and anguish.
That’s why it’s so important to have a will that clearly sets out what you want done with your estate upon your death. The problem is that too many people think their job is done once their will has been prepared.
That’s a dangerous fallacy.
They forget about the very real danger of becoming incapacitated and unable to manage their affairs. It’s this possibility that makes a power of attorney – or a mandate in Quebec – an equally important part of your estate planning.
A power of attorney—which, again, is known as a mandate in Quebec—legally entitles a person, or persons, to act on your behalf, and conduct your financial affairs.
You can give a power of attorney or mandate to someone when you’re still of sound mind and body. It can be limited to only certain assets. For example, you might want to give control over a bank account to your spouse.
Or, it can be general—covering all of your financial assets. For example, an elderly person might want to give a general power of attorney to an adult child.
This type of an arrangement ends automatically when either you or the person you’ve chosen to handle your affairs dies or becomes incapacitated.
Another kind of legal document is needed when you are preparing for the possibility that you will one day be unable to manage your affairs. It’s called an enduring power of attorney, or a protection mandate in Quebec.
It gives an individual, or individuals, the authority to take control and manage your property and finances. It allows them to access your bank accounts, pay your bills, manage your properties, oversee your investments and so on.
Why is it so important? Because not having one creates such a mess for your loved ones.
Let’s say you have an unexpected event such as an accident or a stroke that leaves you mentally or physically incapacitated and unable to make decisions. Many people assume their spouse or close family members could simply act on their behalf. This is not the case.
Without a power of attorney or a protection mandate, your affairs would be in limbo. Your family would have to go court, or the provincial government, to have someone appointed to manage them.
This can be expensive and take weeks or even months. And it would be occurring at the worst possible time – when your family is dealing with the pain of what has happened to you. Not only is that stressful, but it can lead to conflict.
So you need an enduring power of attorney, or protection mandate.
The person, or persons, you choose to take control of your affairs can be your spouse, another family member, a trusted friend, a lawyer or even a trust company. But, obviously, it should someone you trust completely because of the risk of abuse or outright fraud.
Besides being trustworthy, they should also be financially responsible and familiar with you and your family circumstances. You should name an alternative in case your primary attorney or mandatary can’t fulfill his or her responsibilities.
It’s also important to let your family and other close ones know the arrangements you’ve made, so there are no surprises if the worst should happen.
You should also be careful to keep this document up to date. Things change over the years—the person you’ve designated might die or become incapacitated themselves. Or you might have a falling out with that person or simply prefer someone else.
Finally, you want to make sure your spouse, children and other close ones also have a will and powers of attorneys or mandates. You don’t want to be the one dealing with the mess that comes when these essential document aren’t in place.
Just a word about common law spouses—legislation regarding common law relationships varies across the country. But it’s possible that if a spouse who owns the house, or has control over the finances, becomes incapacitated, the common-law partner might not be recognized by a court to take control. Having a power of attorney or mandate naming your common-law spouse could save a bunch of trouble.
It’s also important to get one other document – a living will. It has different names and forms in different provinces, but it provides instructions regarding your medical care if you were to become ill or incapacitated and unable to state your wishes.
It’s a good idea to also discuss this document with your loved ones and your doctor. Most families will be very grateful you have taken this step.
Your will, power of attorney or mandate, and living will are essential documents. Get them all done at the same time and keep them updated. It’s definitely an item on the checklist we go through with clients at PWL every year.
It’s easy to put this off, but you and your family will feel better when you all get it done.
