With the seriousness of the pandemic, many Canadians are concerned about how to manage their finances, property, and real estate as uncertainty grows all over the world. As we are getting older, life may become unpredictable such as a work or vehicle accident or sudden illness and you are unable to deal with your finances. This is a good time to plan ahead by managing your affairs and protecting your future with a Power of Attorney.
What is a Power of Attorney?
As a Canadian, the term Power of Attorney can be confused with different definitions, so our TR Lawyers have broken down the word into simple terms. A Power of Attorney is a legal document that you sign to give one or more than one person the authority to manage your finances, property, and real estate on your behalf. In most of Canada, the person you appoint (a spouse, family member, close friend, etc) is called an attorney.
What Types of Power of Attorney are there?
Here are the 3 main types of Powers of Attorney commonly used for finances, property, and real estate in Canada:
General Power of Attorney
The first one is called a General Power of Attorney which is a legal document that can give your attorney authority over all or some of your finances, property, and real estate. It allows your attorney to manage your finances and property on your behalf while you are mentally capable or mentally incapable of managing your affairs. The Power of Attorney is immediately cancelled upon your death.
A General Power of Attorney can be specific or limited to how much authority is given to your attorney such as respectively selling a house or give them authority for a specific period. The Power of Attorney can start as soon as you sign it or start on a specific date that you have stated in the legal document.
Financial Power of Attorney
The second one is called a Financial Power of Attorney where you can appoint an attorney in advance to ensure that you name someone who will responsibly take care of your finances when you can’t. This is important if you have medical expenses or costs associated with long term care. This document must be written while you are mentally capable. The Power of Attorney is immediately cancelled upon your death.
Healthcare Power of Attorney and Advance Directives
The third one is called a Healthcare Power of Attorney and Advance Directives also known as a Living Will, where you will appoint someone to make medical decisions on your behalf should you become unable to make them. This document is often accompanied by your wishes for end-of-life care.
What Can My Attorney Do?
Your attorney can do almost everything with your finances and property unless you limit their authority. If you don’t put any limitations in your Power of Attorney document, then your attorney can do the following:
- Banking
- Sign Cheques
- Buy or Sell Real Estate in your Name
- Buy Consumer Goods
Even with this authority, you should note that your attorney doesn’t become the owner of any of your finances or property. They only have the authority to manage it on your behalf. Also, your attorney can’t make a will for you, change your existing will, change a beneficiary on a life insurance plan, or appoint someone else as a new power of attorney on your behalf.
When should I have a Power of Attorney?
Here are some examples when you should consider getting a Power of Attorney
- You want strict instructions or specific limits on how your finances, property, and real estate are managed if you’re debilitated.
- You want to someone you can trust to manage and control your finances, property, and real estate
- Arranging a vacation or your job requires you to travel to another country
- Your medical condition can affect your mental capabilities
- You own a business that can impact its operation in the event of your absence
What are the Advantages and Risks of having a Power of Attorney?
Advantages
- Makes it clear who is responsible for managing your finances, property and real estate even if it’s temporary
- Your attorney must manage your finances and property for your benefit and can be required by law to account for and explain how they’re managing it
- You can appoint two or more attorneys and they will jointly make all decisions together or separately if one of them is unavailable. You can also appoint alternate or successive attorneys
- Overall, it is Convenient and Flexible
Risks
- The attorney can mismanage your finances and property if you choose someone untrustworthy or don’t make decisions that are in your best interest
- If you don’t provide strict instructions or not enough information, then this can make it difficult for your attorney to take care of your finances and property the way you wanted it
- If you appoint more than one attorney to act jointly then there can be disagreements between them which could cause problems and delays in the management of your affairs
- Not keeping your Power of Attorney up to date. If it is not reviewed regularly, your Power of Attorney document might not meet your current needs or the requirements of the law
Protecting your finances, property and real estate is an important step to secure your future from all sorts of uncertainties. When appointing your Power of Attorney, you should ask someone you trust such as a spouse or a family member. However, it is also important to understand the laws and regulations when signing this legal document.
You may want to consult a lawyer when entering into a Power of Attorney to make sure your document is valid and you understand what type of authority is given to the attorney. TR Law Firm will help our clients prepare all documents and legal work to ensure you have all your finances, property, and real estate protected and properly managed for any unpredictable life event. Contact us to answer any of your questions at (905) 463-2088 or info@pmlawyers.ca.
Sources: https://www.canada.ca/en/employment-social-development/corporate/seniors/forum/power-attorney-financial.html
