Why everyone needs a power of attorney
People have finally caught on to the importance of having a valid will. Now the push is on to ensure that Canadians also set up another important document called a "power of attorney."
"A power of attorney allows you to appoint someone else as your representative and give him or her the legal authority to make decisions on your behalf," says Christine Van Cauwenberghe, LL.B and Director of Tax and Estate Planning at Investors Group. "Power of attorney responsibilities can include managing your investment portfolio and, in some cases, handling payments."
A powerful document
This single document could save your family from untold emotional and financial hardship if you become incapacitated or otherwise unable to make decisions for yourself. Without a valid enduring power of attorney, your family (or business partners) would have to petition the court for permission to administer your finances. This could be time-consuming, inconvenient, and costly. Setting up this document now means you get to choose who will make decisions on your behalf.
Flexible scope
A power of attorney is a flexible document that can be made as broad-reaching or as limited as you need it to be to accomplish your objectives.
A restricted power of attorney narrows your representative's duties to a specific set of responsibilities. For example, you might allow your representative to manage your investment portfolio but not your real estate holdings. "This can be especially useful if you own a business and want to keep it separate from your personal finances," advises Van Cauwenberghe.
In some provinces, you can also specify that your power of attorney take effect on a given future date (such as when you leave the country) or only in the case of a specified triggering event. This is sometimes called a springing power of attorney because it "springs" into effect when the specified event takes place.
Making changes
A power of attorney usually takes effect when it is signed. If your circumstances change, and you wish to revoke your power of attorney, you can do so, in writing, at any time—as long as you are mentally competent.
If you become mentally incapacitated, the power of attorney is automatically revoked, unless it's an enduring power of attorney. "Also called a continuing power of attorney, or a 'mandate in anticipation of incapacity' if you live in Quebec, an enduring power of attorney stays in effect regardless of any changes in your mental competence," says Van Cauwenberghe.
Professional assistance essential
Drafting a power of attorney document is not a "do it yourself" project. Anomalies in provincial law make professional assistance critical. For example, if you've named your spouse as your representative in an enduring power of attorney, some provinces won't permit him or her to sell your primary residence.
As well, many provinces require that the witnesses to your enduring power of attorney must be members of specific professions. To learn more about how to protect your investments and your family with a power of attorney, please contact your Investors Group Consultant.
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This article, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.
© Copyright 2007, Investors Group. All rights reserved. Do not reproduce without the express written consent of Investors Group.
