The words “power of attorney” can be unsettling if you don’t know what they do. A power of attorney (POA) is written authorization that enlists a trusted person to act on your behalf in the event that you are unable.
There are two types of POAs that you could appoint: one that deals with financial matters and another that deals with health care. They do not have to be the same person. This could be your spouse, best friend, sibling, or even a parent or child – so long as they are mentally capable, and generally at least the age of majority. You will want to ensure you discuss your wishes with them so that they act according to those wishes if they need to.
Ensuring your POA for banking and investments has the knowledge and capability on financial matters is important, as well as whether they can devote the time and are physically able. For example, if they need to sign papers at your financial institution, are they near enough to do the job?
Some things that a POA can’t do are: make a will for you, change an existing will, change a beneficiary on an insurance plan or registered account, or give a new POA to someone else on your behalf. For example, the POA can’t change the beneficiary of an RRSP. No matter what, a financial POA should be someone you explicitly trust or feel comfortable with handling all your finances.
There are differences between a POA and a will. A POA works on your behalf while you are alive but unable to make decisions or manage your finances. Anyone acting as a power of attorney ceases all responsibility at the time of your death. A will is a set of instructions to make sure your wishes on how your assets are dispersed and carried out after death. Appointing a POA is not a replacement for a will. A lawyer or executer of your will would handle any financial decisions after your death.
Should you have a will at the same time as a power of attorney? Absolutely – our Wealth and Investment Team strongly suggests creating a will as soon as you can. It’s equally important to understand that you have to update your will as your life changes.
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Aviso Wealth, Inc.
Disclosure:
The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters. Aviso Wealth Inc. ('Aviso') is a wholly owned subsidiary of Aviso Wealth LP, which in turn is owned 50% by Desjardins Financial Holding Inc. and 50% by a limited partnership owned by the five Provincial Credit Union Centrals and The CUMIS Group Limited. The following entities are subsidiaries of Aviso: Credential Qtrade Securities Inc. (including Credential Securities, Qtrade Direct Investing, Qtrade Guided Portfolios, Qtrade Advisor and Aviso Correspondent Partners), Credential Asset Management Inc., Credential Insurance Services Inc., Credential Financial Strategies Inc., and Northwest & Ethical Investments L.P.