Something that we must all face once we become adults is assuring the protection of our assets, health, and loved ones as we age. When young, we tend to ignore this. We assume that we are safe until we reach a ripe old age, but that can be a huge mistake.
There is no way we can predict medical emergencies or accidents, and they can happen at any age. In Canada, 56% of adults do not have a Will. It’s a shocking statistic.
Every adult should have an estate plan, including a medical and financial Power of Attorney in place.
What Is a Power of Attorney (POA)
A Power of Attorney provides legal authorization for a person you choose to make decisions on your behalf if you become unable to do so. There are many advantages to having this document in place, including:
- The security of knowing that if something should happen making you incapable of taking decisions, your interests will be protected
- The convenience of having someone who can handle financial decisions for you
- Saving your loved ones thousands of dollars they may incur if they have to appear in court to request a trusteeship
- You can control the amount of power your POA delegates and for what duration
- Documents are custom made to fit your specific needs
There are various types of Power of Attorney, and you need to decide which one is appropriate for your needs.
Different Types of Powers of Attorney in Canada
It is important to make sure you have the appropriate Power of Attorney documents prepared so that all your needs can be met if and when it becomes necessary. Essentially, there are two types of POA: continuing and non-continuing.
Continuing Power of Attorney
This type of POA remains legally binding even if, for whatever reason, you become incapable of making your own decisions.
Non-Continuing Power of Attorney
Such POA is often used for specific tasks and has a specific length of time during which it stays active. If you become mentally incapacitated, it will be revoked automatically. Now, let’s explore the various sub-types.
A healthcare Power of Attorney, aka Healthcare proxy, sets forth your medical needs. The person you appoint will have the authorization to make medical decisions for you if you become unable to do so.
This person will determine what type of health care you receive. This may include hospitalization, surgery, home health care, psychiatric treatment, etc. They will select your doctors and primary care providers, and determine where you reside. This may include long-term residential care and nursing homes.
Financial Power of Attorney
The purpose of a financial Power of Attorney is to provide authorization for someone to handle your financial responsibilities.
They will have access to all your financial accounts and can be responsible for paying all of your bills, housing, and other creditors. They can also file your taxes, handle your investments, and if appropriate apply for you to receive public benefits.
Springing Power of Attorney
A springing POA is a general Power of Attorney that is sprung into action by an event that leaves you incapable of making decisions on your own. Both Healthcare Proxy and Financial POA are often the Springing type.
Specific Power of Attorney
This type of POA handles a specific type of transaction. An example would be your employer sends you overseas for work, and you need someone to sell specific assets while you are away. A POA can be created in which only these transactions are permissible by the person you designate.
What Does a Power of Attorney Allow You to Do?
A Power of Attorney is necessary if you, at some point in your life, lose the ability to make decisions on your own. Because this is something that you cannot predict, having a POA prepared is recommended.
You may live your entire life without your Power of Attorney ever being put to use. At the same time, you could be in a severe accident tomorrow and become unable to make medical or financial decisions on your own. By placing appropriate Power of Attorney documents into your estate plan, you protect your medical and financial needs.
It also provides protection for your loved ones in the event you become permanently incapacitated. Disease and illness such as Alzheimer’s, stroke, or severe brain trauma can leave your spouse unable to take necessary steps if you have no POA in place.
How to Set up Power of Attorney in Canada
A Power of Attorney must specifically state that the document is a Power of Attorney. It must include the powers you are granting to the person you designate and indicate when those powers take effect. For the Power of Attorney to be legal, you must sign it in the presence of two witnesses.
There are specific rules for the creation and legality of the Power of Attorneys and there are differences in each Canadian province or territory. For that reason, you should use a professional service that knows and understands the rules and laws of each province. One way to accomplish this is through a lawyer.
If the inconvenience of having to meet with an attorney and pay substantial legal fees is not something you wish to do, there is another alternative. Epilogue Wills is an online service that allows you to create a Last Will and Testament and two Powers of Attorney, one for your financial needs and the other for healthcare needs. The process takes about 30 minutes and costs under $200 for all three documents.
You will need to print each document and sign it before two witnesses. The documents are custom made to meet the requirements of your province and your personal situation.
Epilogue Wills is only available in Alberta, British Columbia, Manitoba, Ontario, and Saskatchewan, so you may need to hire a Power of Attorney lawyer if you reside outside these provinces. The attorney will meet with you to create a custom Will and Power of Attorney that fulfills your needs. According to Canadian Lawyer Magazine, the average rate for an attorney to prepare a POA is $150 to $200 per hour.
You will need to select two adults to witness you signing your Power of Attorney. The person you designate as your attorney may not serve as a witness. In Manitoba, the rules are different.
In Manitoba, your witness must be a person who has qualifications to be registered or is registered to solemnize marriages, is a justice of the peace, a magistrate, or a judge in Manitoba. Other persons who qualify to witness include notary publics, lawyers, police officers in the municipal police force, or members of the Royal Canadian Mounted Police.
The following persons can not serve as a witness:
- A spouse or common-law partner
- A child or someone who you treated as if they were your child
- Your attorney
- Your attorney’s spouse or partner
- Anyone who has a “guardian of property” appointed to manage their property because of medical reasons
- Anyone who is under the age of majority in your province or territory
Your witnesses must be brought together at the same time to witness your signing of the document. They do not need to read the POA or know what it contains. They simply witness the fact that it was you signing the document.
When signing, you should place your initial on the bottom left corner of each page and sign the last page while the witnesses are observing your actions. The witnesses then need to place their initial on the bottom left corner of each page and sign the final page.
Can More Than One Person Have Power of Attorney?
You are able to select different people to have varying Powers of Attorney under each POA document. For instance, you may designate one person to serve as your Medical Power of Attorney, but have someone else handle your Financial Power of Attorney.
You can designate a secondary POA, so in the event the first person you designate is unable to serve, the next person will take action.
How Long Is a POA Good For?
The Power of Attorney is for the handling of affairs while the document's principal is alive.
If the principal passes away, the Power of Attorney ends immediately. The person who is the executor of the decedent’s estate, as shown in their Last Will and Testament, takes over in handling all financial affairs to finalize the estate.
Can a Power of Attorney be Overwritten?
The principal is able to override their POA at any time. If the designated agent is acting in a manner that family members deem inappropriate, they may file a petition in court challenging the agent’s position. If the court determines the agent is not acting in the best interests of the principal, the court may remove that person as an agent and appoint a guardian.
Power of Attorney Requirements for Banks
Banks will usually accept a Power of Attorney that conforms to the requirements of the province. The POA must provide the ability to the agent to conduct financial transactions.
If the agent’s conduct raises concern, such as paying substantial amounts of money to themselves, the bank may decline the transaction. If you are capable and a conflict arises, you may be able to have a new POA made that meets the bank's requirements. If you are not mentally capable to make changes, your attorney or another interested person may apply to the court for an appointment to serve as your trustee or guardian.
Life Insurance Is a Part of Estate Planning
In addition to appointing a Power of Attorney when doing your estate planning, be sure you have life insurance in place. Life insurance provides financial assistance to loved ones left behind after you pass away. The money they receive from the insurance will enable them to pay mortgage on your home, care for your children, or pay your funeral expenses.
The amount of life insurance you need and the cost will depend on your situation and the benefits you want your family to have after you die. There is a wide variety of policy options available making it easy to find one that fits your needs.
If You Are a Snowbird
More than 500,000 Canadians travel to warmer climates during the winter months. If you are one of those Canadians who head south for the winter, you need snowbird travel insurance. Make this type of insurance part of your estate plan, so that in the event you encounter an unfortunate event while travelling you have coverage.
Snowbird travel insurance provides coverage for out-of-pocket expenses in the event you lose your luggage or suffer injuries or illness while away from home. If you will be outside your province for more than seven months, your provincial health insurance may no longer cover you.
You could end up with thousands of dollars owing in medical bills, and that is where snowbird insurance comes into play. Snowbird insurance will provide coverage for you to be medically evacuated to Canada or another appropriate location for treatment.
How to Pay for Your Funeral
Instead of leaving your loved ones with the burden of paying your funeral expenses, you can provide help by purchasing a funeral insurance policy. Simply pay a premium to maintain coverage until you pass away. The insurance provider will then pay out the lump-sum to your beneficiary, which they can use to cover your funeral expenses.
The small cost of the insurance is insignificant when you compare it with the cost of a funeral. In Canada, a funeral including transportation, flowers, a reception, and cemetery costs could be well over $10,000. Just the purchase of a casket, transportation of the casket, and cost for the cemetery is in excess of $3,000. If you choose cremation, that will cost anywhere from $500 to $5,000 depending on the location and the chosen urn.
Prepare For The Unexpected
Once you prepare your Power of Attorney, put it in a safe location such as your safe or a safety deposit box. POA is just one step in the estate planning process necessary to provide you and your family with financial security.
It's also important to make sure that all your insurance needs are being met. One of our experienced agents is looking forward to working with you, fill out our quote form now.