Many people consider themselves capable of managing their own affairs and, for most of their lives, they would be correct. But what happens when that ability is diminished or disappears completely? Often is the case where we assume our significant other can care for us if something happens. If the bank accounts are held jointly, the bills can keep getting paid. If the house or condo that you and your partner own does not need to be sold, things may continue along as they have in the past. But what happens if those situations do not apply to you? You could find yourself hanging in legal limbo while others are left to figure out who should be your voice and what it should say.
It is important to note distinctions in the personal planning tools at the outset. From a lawyer’s standpoint, I consider these tools the trifecta for a personal plan that is preventative rather than reactive. First, and possibly most commonly recognized, a Will lays out your wishes on how your estate will be distributed after your passing. I will discuss Wills and capacity in greater detail in a later post. Second, a Representation Agreement is used to appoint a person, the “Representative”, to make personal and medical decisions on your behalf should you ever lose the ability to consent to personal and medical care decisions. Representation Agreements will feature in a later post as there is a bit to unpack when examining this personal planning tool.
The third planning tool is one that can prevent a great deal of expense and stress and is the subject of this post. The Power of Attorney is one in the trifecta that is widely known but often misunderstood. This is because in British Columbia, we have separated the legal and financial decisions, the Power of Attorney, from the personal decisions, the Representation Agreement. It is not uncommon for those with Powers of Attorney to assume that the person they appoint, their “Attorney”, can also make their medical and personal care decisions. This is not actually the role of their Attorney. The simplest way of understanding the difference between a Power of Attorney and a Representation Agreement is this:
“Your Attorney is responsible for your “stuff”, so if you imagine yourself dressed with your wallet or purse on you, take all your clothes and things off and put them in a box. That box, your finances and legal rights and obligations is what your Attorney is responsible for. Your Representative is responsible for “you”, the naked person. Anything to do with your mind, body, and even soul is what your Representative is responsible for.”
Credit to Joseph L. Deuling, LLB
So why do we need an Attorney? This is the person who you are having step in your shoes to make legal and financial decisions that directly impact you at a time when you can no longer represent yourself. For example, if your bank accounts are only in your name, the bank will only allow someone validly appointed as your Attorney to take over and manage your finances. Your Attorney can buy or sell land for you, sign leases, make investments, or commence legal actions on your behalf. As your Attorney will have access to your financial affairs, it needs to be someone you trust and know will take the responsibility seriously.
The key is that you have signed your Power of Attorney before something happens that impacts your ability to sign, such as a progression in the symptoms of dementia. If you have not signed your Power of Attorney before losing your competency, a family member or friend will be in a position where they need to apply to the Courts to be appointed as your Committee, essentially declaring you incompetent. Such an application would be much more costly, time-consuming, and take away your choice of Attorney.
When it comes to the personal planning tools, the Power of Attorney can be one of the most important and cost effective tools to have in your personal planning toolkit. The team at Paul & Company are experienced in helping you preserve your voice. Call our office to discuss the next steps in creating your personal plan.