Written by Chris Turnbull on Jul. 28, 2016
A power of attorney for property is a written document by which a grantor appoints an attorney to act as a substitute decision maker with respect to the grantors property or financial affairs.
This grant of power becomes effective immediately upon the grantor signing the document unless otherwise indicated. While a General Power of Attorney ends when the grantor becomes incapacitated, an Enduring Power of Attorney (EPA) remains in effect, allowing the attorney to continue to act on behalf of the grantor, if they are no longer able.
Generally speaking, a power of attorney terminates on the death or bankruptcy of the grantor who may also revoke the power of attorney at any time, providing there is capacity.
In the absence of a power of attorney, the financial affairs of an incapacitated person enter a void until the public trustee is involved and an applicant is subsequently granted legal guardianship over the incapacitated persons financial affairs. Proper estate planning including a power of attorney can thus, prevent delays, additional costs, potential financial loss, loss of choice and financial hardship for beneficiaries.
In the absence of a power of attorney, the financial affairs of an incapacitated person enter a void until the public trustee is involved
Let’s consider a real life example. Mr. Smith has been showing significant memory loss. Fortunately, Mr. & Mrs. Smith had previously updated their Wills and Enduring Powers of Attorney. Although they had traditionally managed their finances separately, the family decided that Mrs. Smith should start administering both portfolios.
A few points to consider from this example.
First, Mr. & Mrs. Smith saved themselves a considerable amount of work, frustration and potentially money by pro-actively having enduring powers of attorney. Could they locate, complete and submit an application for guardianship through the Public Trustee in the absence of an EPA in order for Mrs. Smith to legally administer her husband’s portfolio? Sure. But, in their 80’s and slowing down, it would have been a stressful experience! Contrast that to the relative simplicity of providing me, their Portfolio Manager a certified copy of the EPA, thereby, granting authority to Mrs. Smith over all of Mr. Smith’s accounts, which included a Cash account, TFSA and Registered Retirement Income fund.
Second, through this experience I began a conversation with Mrs. Smith about her investments, which were spread out between two RIF’s, two Cash accounts and an underfunded TFSA at several financial institutions. It became clear that if she were to become incapacitated, and if the only adult daughter were to be given authority over her parent’s financial affairs, things would be difficult to manage, despite having a proper EPA.
The daughter would have to locate all of her mother’s portfolios at the various financial institutions, make an appointment with each, visit each location and provide them a copy of the EPA granting her decision making authority over that account. Thus, having an EPA is important and so is some organization. By consolidating her portfolios into one cash account, one RIF and a TFSA at a single financial institution, they have avoided the considerable extra stress that would have been caused had Mrs. Smith become incapable of managing their financial affairs.
If you would like more information or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email.
Thanks to Chris Turnbull of The Index House for providing this article.
The Index House is a division of Polaris Financial Inc.
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