One of the most important documents you should have as part of your estate plan is an up to date power of attorney, otherwise known as a protection mandate in Quebec. This is a document that gives someone else the power to make financial decisions on your behalf if you are unable to. Needless to say, you need to give special consideration to whom you appoint as attorney or mandatary.
Here are some questions to ask when considering a potential attorney or mandatary:
- Are they trustworthy? The most important attribute to consider when making this decision is trustworthiness. You are giving someone else the power to make decisions on your behalf when you will be at your most vulnerable, so you want to make sure that they won’t abuse that power.
- Do they have sufficient competence to make financial decisions? If possible, try to choose someone who is comfortable making financial decisions and generally competent and organized. The person who acts as your attorney will need to account for every dollar that they spend on your behalf, and potentially prepare accounts for the beneficiaries of the estate explaining how much money they received during the time period they were acting on your behalf, and how much money was spent. They need to keep all of your accounts separate from theirs and make sure that things like tax returns are filed on time. If you own extensive assets such as a business, you may need to choose someone who is very knowledgeable.
- Are they a resident of Canada? Choose someone who lives relatively close by if possible, but at a minimum, be sure to choose a resident of Canada. Canadian residency is important in order for your financial advisors to be able to take instructions from your attorney or mandatary. Generally speaking, your financial advisors will not be permitted to take instructions from a non-resident of Canada due to securities laws. If the attorney is a resident of the US, or in fact even just a US citizen who happens to live in Canada, that could also result in extra complications in the form of additional tax filings and administrative headaches. If you are choosing between a child who lives in Canada and one who lives in the US, choose the one who lives in Canada (although you might want to speak to the child who is US resident in advance to explain why you are not choosing him or her).
- What is their personal financial situation? Consider the attorney’s own financial situation. If the attorney is struggling financially, that may indicate that they aren’t good money managers or that they may be under more pressure to misuse your assets for their own personal benefit.
- What if I don’t have someone to act as attorney? In some cases, discussions revolving choice of attorney or mandatary gives individuals a little bit of stress, since they may find that they don’t have any close family members who live close by, or who may feel comfortable taking on the job. In other cases, the only family members an individual may have are in fact older than them, and won’t be available to take on the job when called upon. If you find yourself in that situation, you should speak to your IG Consultant to see if they can refer you to a corporate attorney (i.e. a trust company). Although a corporate attorney may charge a fee to act as your attorney, it is important to keep in mind that a lay attorney could also ask for a fee (although they might need court approval before taking it). If your estate is going to pay a fee for someone to act on your behalf during an incapacity, it might as well be going to a professional who knows what they’re doing. A corporate attorney is usually much more familiar with what needs to happen, will take care to make sure your assets are properly managed, and will be there for you when you need them, so don’t discount the value of seeking out professional help.
Once you have decided on a substitute decision maker, speak to a well-experienced estates lawyer to ensure the required documentation is drafted property. Before going to see a lawyer, speak to your proposed attorney in advance to make sure that they are willing to take on the position and understand what their obligations may be, since some people do find it overwhelming. You should encourage your proposed attorney to be honest with you – if they don’t want to do the job, they should tell you while you still have the opportunity to pick someone else. If your first choice of attorney is not available and you are having difficulty deciding whom to appoint as attorney, reach out to your IG Consultant for assistance in making this decision.
