The last blog post was all about Wills. This post, as well as the next one, will focus on the other documents that normally form part of a standard estate planning package. When preparing estate planning documents, most people (including lawyers) spend more time thinking about and drafting the Will. However, Enduring Powers of Attorney and Personal Directives are also important estate planning documents, and should not simply be an afterthought. Let’s take a look at some basic information about Enduring Powers of Attorney.

What is an Enduring Power of Attorney?

An Enduring Power of Attorney is a written, signed, dated, and witnessed document that gives someone else the authority to deal with your financial affairs while you are still alive, but mentally incapacitated. It can give the power to deal with bank accounts, investments, cars, houses, and other important financial matters. It can give another person power to sign any legal document which you could legally sign. The document is called “enduring” since it still has legal effect if you lose your mental capacity and you are unable to care for your own financial affairs.

Why should you sign an Enduring Power of Attorney?

If you become mentally incapacitated without an Enduring Power of Attorney, your nearest relatives would have to bring a Court Application to be appointed as your Trustee. No one would be able to deal with your financial affairs, such as writing cheques on your behalf or selling your house, unless they obtain a Court Order.

When does an Enduring Power of Attorney come into effect?

You can state that the Enduring Power of Attorney is to take immediate effect and is to continue if you become mentally incapacitated. Most people state that the Enduring Power of Attorney will take effect only when they become mentally incapacitated. Usually, this event will occur if two medical doctors write letters to this effect. An Enduring Power of Attorney can be changed or revoked anytime you wish, as long as you maintain your mental capacity. The Enduring Power of Attorney cannot be changed if you have lost your mental capacity.

Who should you choose as your “Attorney”?

In the Enduring Power of Attorney, the Attorney is the person (or persons) you choose to handle your financial affairs. This person is most often a spouse or close family member. The person should know your wishes and you should trust them to make the financial decisions you would have made if you had maintained your mental capacity. You can choose more than one person or a corporate Trustee to act as Attorney, and if the first chosen Attorney is unwilling or unable to act, you can choose an alternate. In the Enduring Power of Attorney, you can specify the powers and direction you give to your Attorney.

Who should prepare your Enduring Power of Attorney?

It is wise to have your Enduring Power of Attorney drafted by a lawyer. A lawyer can ensure that you do not insert clauses in the Enduring Power of Attorney that could be inappropriate and that you have the clauses properly drafted to ensure that your wishes will be carried out. Also, it is important that when you sign the Enduring Power of Attorney, that you are fully aware of its legal effect. A lawyer will ensure that proper advice has been given. The lawyer will also document the interview to ensure that you had the capacity to understand the Enduring Power of Attorney when it was signed. Many precedent Enduring Powers of Attorney are available at stationary stores and they are legally valid if signed in front of a witness. However, this can be an important document in your estate planning and it should be carefully drafted.

Summary

Regardless of the amount of assets you own, I recommend having a properly drafted and executed Enduring Power of Attorney in place. I find it quite surprising that a lot of people I speak with, from various walks of life, do not have these estate planning documents in place.

I can honestly say that I have an Enduring Power of Attorney in place. Not only do I have a sense of reassurance that my wishes are in writing, I also take comfort in knowing that the situation will be easier for my family members to handle if I become mentally incapacitated. We all think “nothing will happen to me!”. The truth is: anything can happen and it can happen suddenly. It is better to be prepared, not only for yourself, but also for your family members.

I also want to mention that if your primary residence is in Alberta, and you have assets in another jurisdiction, you may need to draft and execute an Enduring Power of Attorney in that other jurisdiction. This will depend on the laws of the jurisdiction of where the assets are located, and whether that jurisdiction recognizes extrajurisdictional Enduring Powers of Attorney. If you have concerns about property you own outside of Alberta and whether your Alberta Enduring Power of Attorney will be recognized, you should talk to a lawyer and get some advice about your particular circumstance.

That’s a lot of information, so I think that’s enough about Enduring Powers of Attorney. Keep your eye out for my next blog post about Personal Directives.

Yours truly,

Crystal Schening