You may think having a proper Will is one of the most important things you can provide your family with, in the event of your death. But appointing a suitable power of attorney to handle matters while you’re still alive could have an even greater impact on them.
What is a power of attorney?
When assigning a power of attorney, you’re choosing someone to act on your behalf and to take care of your financial affairs and medical care should you lack the capacity to do so. This person has enormous power and responsibility over your life, because he or she will be charged with ensuring your needs and wishes are met while you’re still alive. Choosing a power of attorney can be difficult and stressful. However, if done properly it can provide you with great peace of mind knowing your wishes and finances are on stable ground. Careful and proper communication with family members now can minimize or avoid family conflict at a very difficult time. To ensure your power of attorney is the best fit for you and your loved ones, consider these four important points:
In deciding whom to appoint, the most important question to ask yourself is: Who is trustworthy? Trust is paramount. You have to trust that person to carry out your wishes and be sure he or she has your best interest at heart.
2. Proximity and Age of the Individual
The person you choose should be close by – ideally someone from the same city or town – so that if a situation arises, he or she can be accessible as soon as possible. While it’s not legally required, it is desirable that the attorney at least be a resident of Canada. Avoid selecting someone much older than yourself, who may predecease you, or someone who lacks the kind of life experiences they’ll inevitably need to draw from in order to exercise good judgment on your behalf. For instance, someone who owns a home may be more familiar with the legal and practical considerations that come with this responsibility than someone who does not.
You should consider whether your power of attorney has the intellectual capacity and business acumen to manage your finances, and the ability to exercise sound judgment over your healthcare needs. Here are some criteria to think about: Investment knowledge and financial management skills An individual may be trustworthy but lack sufficient experience or knowledge to manage your financial affairs. Be sure your power of attorney has a level of financial literacy relevant to your financial needs. Nature and complexity of the assets of the individual Typically, if an individual is married his or her spouse will be the power of attorney – assuming there is confidence that the spouse will be capable of managing the financial affairs. If, for some reason, the spouse does not have sufficient knowledge of the other spouse’s financial affairs, it may be appropriate to appoint more than one attorney acting jointly.
4. Family dynamics
Your particular family dynamics are a crucial consideration. If some of your children or other family members do not agree with one another, a neutral person outside the family may be considered. Appointing family members jointly may result in an impasse and further strain family relations. On the other hand, appointing some family members over others could arouse suspicion or jealousy, and lead to further conflict or litigation. Take your time when choosing a power of attorney. A financial advisor can help you assess your situation objectively and communicate your wishes to your family. This will provide reassurance that you’ve made a well-thought-out decision, taking the best interests of all into account. Want to know more?
Emerita Mercado, CFP, TEP specializes in trust and estate planning issues. She helps clients protect their assets by setting up family holding companies, private foundations and family trusts as a means of intergenerational wealth transfers. Emerita also collaborates with families and executives to create dynamic total wealth management solutions.
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