A power of attorney may be the most important document to preserve wealth. I believe that every adult should have a power of attorney for finances, because you do not know when you might have an accident and need someone to handle your affairs. A power of attorney is a document whereby you appoint someone to act on your behalf. You may be unable to act by virtue of being out of the country or illness, for example. If there is no power of attorney in place, then no one can act on your behalf in circumstances where you become incapacitated. In the event that you are in a situation where someone should be taking action on your behalf and there is no power of attorney, then your assets may end up being managed by someone you have not chosen. In this scenario, family members may have to apply to the court to obtain the powers to have control of your assets, because no one will have the authority to act as your attorney unless they are given that power by law. The person who is appointed may make decisions that are not aligned with your wishes or values, or that end up being quite costly. This person may even make health decisions that do not align with what you would want to have happen.
There are two types of powers of attorney: for finance, and for health care. The power of attorney for finance is used to authorize financial decisions on your behalf; a power of attorney for health care is used to authorize health care decisions on your behalf.
Many people assume that if they become incapable of acting, their spouse will automatically have the ability to manage their affairs, but such is not the case: a power of attorney is necessary. Thus, all married couples should have a primary and an alternative power of attorney for when the primary power of attorney is unable or unwilling to take on the role as power of attorney; while the primary power of attorney may well be granted by the court, a formal application is still required. In instances where permission is granted by the court, the rights granted may be limited. Lastly, when there is no power of attorney in place and an applicant is seeking power of attorney from a court, the application to the court may cost thousands of dollars, while a drafted power of attorney represents a cost of a few hundred dollars. It is also important to note that while you can have a power of attorney without a will, it is strongly recommended to have both because as shown in chapter 35, having a will is critical.
The person whom you appoint as your power of attorney should be a resident of Canada, knowledgeable about your assets, responsible, and trustworthy. Also, make sure you have an alternate power of attorney for instances where your primary power of attorney is incapacitated and unable to act; otherwise, again, someone who wants to act on your behalf will have to turn to the courts.
