Blog Enduring Power of Attorney and Personal Directive
January 27, 2020Our previous article dealt with the importance of having a will and what decisions need to be made in drafting a will. This article is going to discuss two other crucial estate planning documents: an Enduring Power of Attorney and Personal Directive. As with our previous article, it’s important for you to prepare these documents with a qualified lawyer since these articles are not intended to be legal advice!
Enduring Power of Attorney
An Enduring Power of Attorney allows someone else (your “attorney”) to make financial decisions on your behalf if you are alive, but become unable to make them yourself due to a disability, illness, extended absence, or other incapacity. Your attorney will become responsible to pay your bills, manage investments, take care of property you own, etc. for as long as you’re unable to do so yourself. Once this document takes effect, it stays in effect from the time you’re incapacitated up until you terminate it or you pass away.
The main decision to be made in this document is who will be your attorney. Often it is the same person as executor, since it’s a very similar skillset that is required (namely, managing money, paying bills/debts, tax returns, etc.). As with the executor, it’s most common for spouses to delegate each other as the primary attorney (if there is a spouse). Then you’ll need to choose someone else to act as a secondary attorney in case the primary attorney is unable to act. Geography can also be a factor in choosing an attorney as it is easier to act as an attorney if you live near the person who appointed you.
As you prepare this document you’ll want to consider if there are any special circumstances you’ll want the attorney to be aware of. If so, have your lawyer incorporate that into the document. For example, it can be worthwhile to instruct your attorney to make charitable gifts on your behalf, provide gifts to a relative like you did when you managed your finances, etc.
Personal Directive
A Personal Directive is a similar document, but it delegates another person to make decisions on your behalf regarding your healthcare and well-being. The person you delegate is often referred to as your “agent”. Your agent decides what health care you will receive, life support decisions, etc. They only have the authority to act if you’re unable to. As with executor and attorney, when a person has a spouse they will often choose the spouse for this role with someone else as a backup. The backup you choose for your personal directive might not be the same person as the executor or power of attorney since this is a slightly different skill set (compassion vs. financial acumen). That said, there is no reason it should not be the same person if that’s what you’d like.
Tie Break
Ensure you discuss with your lawyer who has the final decision between your power of attorney and personal directive. There could be a scenario in which you require medical care that comes with a significant cost – and your Power of Attorney says it’s too expensive, whereas your agent says it’s the only care option that will work. Who gets to make the choice?
Conclusion
Hopefully this article and the previous one have provided some insight regarding decisions required for your Will, Enduring Power of Attorney, and Personal Directive. After you decide on people to act in these roles, you should discuss that with them and confirm that they’re willing to serve. If they agree, make sure you let them know where they can obtain copies of the documents when they’re needed.
If you have questions about estate planning, the advisors at Three60 Wealth & Estate Solutions can help. Our team of Calgary-based wealth and estate planners can integrate its vast experience and network to create a customized plan for you, your family and your business.
Authored by: Wayne De Boer, Wealth & Estate Planner at Three60 Wealth & Estate Solutions Inc.