It's Your Money  

Get a power of attorney now

A key component of any well-constructed financial plan is to make sure you have an up-to-date power of attorney for financial decisions.

This is a document where people give someone else the power to make financial decisions on their behalf.

If you don’t already have this type of document, you should make sure you speak to an estate lawyer or notary as soon as possible.

Here are some of the reasons why you should address this now.

Loss of mental capacity

If you wait too long to create one of these documents, you may no longer have the required capacity to sign the document.

Choosing a substitute decision maker is a big decision, and your lawyer will need to feel comfortable with your decision-making capacity before allowing you to sign one.

Additional burdens on your loved ones

If you don’t put a power of attorney or protection mandate in place, and you become incapable of making financial decisions, your family members will have to apply to court to take over your affairs.

This can be a time consuming and expensive proposition that adds a lot of stress to an already difficult time.

It is also possible that a court will choose someone you would not have chosen because they won’t know what your preference might have been and that person’s values may not align with your own.

Spouses are not automatically entitled to act

Understand that spouses don’t automatically have the power to act for one another.

Even if you’re in a committed relationship, be sure to sign a power of attorney or protection mandate giving your spouse the right to act on your behalf.

It’s also important to always have an alternate in case your primary attorney isn’t able to carry out this task for you for whatever reason.

No immediate loss of control

Don’t hesitate to sign a power of attorney document because of a fear of losing control over your affairs.

Having a power of attorney document in no way takes away from your ability to manage your assets, and in fact, you don’t need to even tell your attorney that they have the power to act immediately.

But you should let them know where you keep your important documents in case they need to access them at some point in the future.

The problem with waiting too long to put a power of attorney in place is that you may not have sufficient capacity to sign a document by the time you really need it.

When you designate someone as your attorney, that doesn’t detract in any way from your ability to manage your assets, so long as you have capacity to do so.

When updating your legal documents, speak to a lawyer or notary who specializes in estate planning, and if possible, has a Trust and Estate Practitioner (TEP) designation.

They will be able to ensure that the POA is done properly and also advise you of the risks associated with setting one up.

Under no circumstances would a do-it-yourself will or power of attorney be recommended.

If you complete the documents improperly, your family won’t be able to fix the problem once you’ve lost capacity or passed away.


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About the Author

Brett, designated as a chartered investment manager and certified financial planner, is the regional director (Okanagan) for IG Wealth Management.

In addition to his “day job," Brett was appointed to the board of directors of FP Canada (formerly FPSC) in 2014, named as the board’s vice-chair in 2017 and took over as board chairman in 2019. 

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy to understand explanations of the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the FP Canada board focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns by emailing him at [email protected]

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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