Estate Planning: The Power Behind a Power of Attorney

Scotia Private Client Group expert offers advice on what to include in a Power of Attorney and what to know when appointed as an attorney

TORONTO, Nov. 22, 2011 /CNW/ - The importance of having a will is widely understood, but fewer people realize the value of a power of attorney.  A power of attorney is a legal document that gives someone else the right to act on your behalf. It is an important tool for estate planning because it can be used to provide personal or financial protection in the event that a person becomes incapacitated and cannot make decisions for themselves.

A power of attorney ensures that important decisions about finances and personal care can continue to be made by a trusted person or persons chosen by the individual appointing the attorney. Scotia Private Client Group outlines the scenarios in which a continuing or enduring power of attorney for property is most useful and offers advice both for those who wish to create the document and those who have been asked to act as attorney on another person's behalf.

Canada's Aging Population

Statistics Canada has predicted that Canada's population will age rapidly until 2031 and that within the next 25 years more than a quarter of the country's population will be seniors. This increases the likelihood that Canadians will be caring for aging parents, planning for future care, or may need care themselves.

"The biggest challenge is that continuing or enduring powers of attorney for property often do not get the consideration they deserve," says Elaine Blades, Director of Fiduciary Products and Services at Scotia Private Client Group.  "It's understandable that this is a difficult topic, but it is an important one.  Most people think of their wills, which don't come into effect until after they're gone, while a power of attorney is incredibly important because it affects your life and preferences for that life while you are still alive."

Planning for Life

A power of attorney can be useful for a variety of reasons. Anyone can be unexpectedly afflicted with an illness, disease or accident and without proper planning this could lead to even more stress placed on family members.

"I often hear my clients say that their biggest fear is to be a burden on their children and one of the best ways to avoid that situation is to have an effective estate plan that includes a power of attorney appointing the best choice of attorney for you," adds Blades. "This can often be just as important as keeping an up-to-date Will."

It is important to carefully consider and talk to a prospective power of attorney. This role carries significant responsibility to carry out personal decisions that can be time consuming and difficult. It is important to discuss your wishes with your family and seek advice from professionals to ensure that you appoint the right person and that everyone is on the same page.

"Appointing and accepting the role of power of attorney is a very personal decision, and one not to be taken lightly," said Blades. "Our role is to help individuals and families navigate through this area in a way that is objective, comforting and effective."

Advice for creating a power of attorney

  • In order to ensure the power of attorney is used only when needed or appropriate, consider providing a trusted family member or your family doctor with the authority to determine when your attorney should start acting. 
  • Understand the powers you are conferring and the responsibilities and obligations your attorney is expected to assume.
  • Most importantly, ensure you appoint a reliable and trustworthy institution or individual to act on your behalf.  Many people appoint a trust company as their attorney for property to take the burden off a family member.
  • Other options that can help are services such as asset custody, investment management, income and pension collection, bill payments, income tax reporting and filing.

Advice for executors of power of attorney

  • When acting as attorney you assume a number of significant duties and obligations; moreover you must always act with honesty, in good faith and in the best interests of the grantor.
  • It can be a very time consuming job which may last for months or even years. It is essential to understand exactly what your responsibilities and duties are before accepting.
  • Be prepared to make difficult decisions for which you may have little or no training or experience.
  • Keep records of everything.  You may be personally liable for any loss should you fail to properly execute the required duties and standard of care which includes a duty to account.
  • And last, you are not obligated to accept the role of attorney and should give serious thought to the time, responsibility, and expertise involved before assuming the role.  Always get expert advice to clearly understand the laws and rules governing the role of an attorney before you commit.

About Scotiabank:
Scotiabank is one of North America's premier financial institutions and Canada's most international bank. With more than 73,000 employees, Scotiabank Group and its affiliates serve some 18.6 million customers in more than 50 countries around the world. Scotiabank offers a broad range of products and services including personal, commercial, corporate and investment banking. With assets above $567 billion (as at July 31, 2011), Scotiabank trades on the Toronto (BNS) and New York Stock Exchanges (BNS). For more information please visit www.scotiabank.com.

About Scotia Private Client Group
Scotia Private Client Group consists of private client services from The Bank of Nova Scotia, The Bank of Nova Scotia Trust Company, Scotia Asset Management L.P., Scotia Asset Management U.S. Inc., ScotiaMcLeod Financial Services Inc., WaterStreet Family Capital Counsel Inc., and ScotiaMcLeod, a division of Scotia Capital Inc.  Scotia Capital Inc. is a member of CIPF.  Estate planning services are provided by The Bank of Nova Scotia Trust Company.  Scotia Private Client Group is a registered trademark of The Bank of Nova Scotia, used by its affiliates under license.

SOURCE Scotiabank

For further information:

Shelley Thomas, Narrative Advocacy Media, 416-922-2211 x 3364, shelley.thomas@narrative.ca


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