You need to take your time in choosing—remember, this person will have complete access to your money. (Part II of a three-part series.)
By Olev Edur
If you’re of retirement age, you should have a power of attorney (POA) for both your finances and your personal care—or be thinking about creating them. You need to consider exactly what your instructions should be in both cases, and you need to consider to whom you will give the necessary powers.
“This is a very important decision and needs a lot of careful thought,” an article on the Ontario Attorney General’s (AG) website cautions. “Remember, your attorney will have full access to your money and other property, or complete control over your personal care.”
If you’re fortunate, immediate family members have all the necessary skills and attributes; failing that, you still may have close friends or other relatives to fill the roles. In some cases, though, you may need to look further afield and consider a professional or a trust company, bearing in mind that the qualities you should seek are not necessarily the same for property as for personal care.
“You definitely want someone who is trustworthy and honest,” says Melanie McDonald, the vice-president and regional director of trust and estate services at BMO Trust in Calgary. “In the case of your property, the person needs the financial skills to deal with all of your assets. If you have a business or rental properties, it gets even more complicated.
“With health care, it’s a bit different,” McDonald says. “You want someone who knows your values, whether they are religious or other values, and who can make hard decisions based on your instructions.”
Leanne Kaufman, the president and CEO of RBC Royal Trust in Toronto, points to a number of other considerations: “Location is important, and so is the ability to travel if necessary; convenience or inconvenience; as well as the age or life stage of the appointee. For example, you may want to choose someone your own age, but as you get older, so, too, does that person, and he or she may not be in a position to act when the time comes.”
To some extent, the choice may be guided by circumstance. “Some people name all their kids when it comes to health care, but they name only one for finance,” McDonald says. “For example, if one daughter is an accountant, it makes sense to grant her the POA for finance, but if she’s squeamish about the sight of blood, you could appoint her brother for health care.”
“You also have to think about the family impact—what it can do to the family dynamic,” Kaufman adds. “If you choose one family member over another, can that create a family rift or resentment? If you appoint all your family members, is that practical with so many people involved?”
The Ontario AG’s website article notes that such conflicts can often be avoided by explaining the reasons for your choice to everyone, and then keeping all family members informed. “Sometimes conflict is created because the rest of the family doesn’t know what your attorney is doing with your money,” the article states. “To avoid this, some people name more than one family member and require that all decisions and transactions be approved by them all.
“This can reduce distrust, but it can also create conflict if they disagree about decisions,” the article continues. “Other people simply choose to specify in their POA that all the family must be kept informed about decisions and provided with full information. Another way to avoid family conflict is to name someone else, such as a close friend, a trust company or lawyer.”
The Ontario AG article suggests the following questions when considering suitable appointees:
• Does this person live nearby and is she or he easy to contact and readily available?
• Have you known this person long enough or well enough to feel that you can trust them?
• Does he or she have any personal issues (such as financial problems or health concerns) that may interfere with him or her properly managing your finances? Is this person able to act in your best interest?
• Does this person know how to manage money and property? Does he or she do it well for himself or herself? Does the person have the time to handle your money and property, as well as his or her own?
Once you’ve determined your needs for your property and personal care POA, it’s critically important that you talk with the prospective candidates about whether they’re willing and able to take on this responsibility, given the amount of work that may be involved.
“Whomever you choose, you need to talk to the people first,” Kaufman says. “Our experience is that everybody has the talk about their wills, but they often don’t talk about the POA. Yet it can be much more important, because it governs what will happen while you’re still alive.”
Finally, both Kaufman and McDonald stress the importance of appointing a backup. “When you create your powers of attorney, make sure that you name an alternate in case your first choice can’t act,” Kaufman says.