It can be difficult to think about ageing or illness and losing the same level of control you’ve always known.
The knowledge that you won’t always be able to handle decision making in the same way can be a hard truth to swallow, especially as it relates to the legal and financial paperwork that governs our lives.
Still, it’s essential to be prepared in the event your health declines. Appointing a power of attorney is one way to maintain control in the future, by designating someone while you are still able. It’s like giving your future self back the reins, only in the hands of a trusted individual.
Choosing a power of attorney is first and foremost a decision for your future.
A power of attorney is a legal document that you give to one person, or a select few trusted people, to manage your assets on your behalf. Those assets include things like money and property. The person you appoint is called an “attorney,” but this doesn’t mean they need to be a lawyer.
This power can be granted to a trusted friend or relative who will be capable of managing these important things for you.
In the United States, there are different types of power of attorney. Each type has different responsibilities and you can decide which type of power of attorney to give.
Those types are:
You can choose the type of power to give your power of attorney.
There are two types of powers of attorney commonly used for finances and property in Canada:
Your attorney does not become the owner of your assets, though they have full control of managing these things on your behalf. Most importantly, they cannot change your will or make one for you. They also cannot change a beneficiary on a life insurance plan, or give a new power of attorney to someone else on your behalf.
In most parts of Canada, you can create legal documents to grant another person the authority to make health and other non-financial decisions for you in the event you’re no longer capable of making them yourself. In the United States, you can appoint a general power of attorney or a medical power of attorney to handle these medical decisions for you.
How these are defined depends on where you live. These documents may be called powers of attorney, personal or health directives, representation agreements, or mandates.
Because these documents are not the same things as powers of attorney, you need to have a good understanding of what the document you’re signing entails. Ask specific questions about how this relates to financial matters, or, if this is specific to healthcare only.
Above all, a power of attorney needs to be someone you trust.
Your money and property are important. The things you’ve worked for need to be in good hands, even if you’re no longer capable of managing them on your own. You need to select someone who will manage them with your well-being in mind.
Here are some of the key characteristics to look out for:
In the event you become mentally or physically incapable of managing your own affairs, your power of attorney will become your decision maker. With this in mind, it’s important to select someone who will make decisions with your wants and needs in mind.
Choosing someone who knows you well will aid in ensuring they make decisions in the same way you would. An immediate family member or a long-time, close friend are ideal choices.
A power of attorney is someone you need when your own health is failing. It doesn’t do very much good to select someone who is already in ill health or struggles with long-term illness.
Often, this will mean selecting someone who is younger than you, like your children. When selecting a power of attorney, be candid with those you intend on selecting - and ask for the same level of transparency in return. These are important decisions and you shouldn’t hesitate to ask tough questions about their health and future.
In the event you fall ill or have reduced decision-making capacity, a flurry of stressful events arise at once. You may need to sell your house or liquidate assets to pay for treatment or long-term care. You might need to communicate with your bank or other parties, like realtors and insurance companies.
Of course, these are things you will be unable to do for yourself. So, you need to select someone who can approach this influx of stress and paperwork with a clear head and diligence.
Often, these kinds of decisions will be time-sensitive and require quick action. Someone who is both reliable and responsible can digest the information and make the most informed decision for you in the face of pressure.
In the previous point, we outlined the importance of having someone reliable as your power of attorney. Part of reliability is the act of being physically present to manage important tasks, like signing documents or meeting with third parties.
Because important decisions may need to be made swiftly, having someone who lives nearby is crucial. This way, there is no need to wait for travel time or juggling the cost of travel.
In the event your health declines, it’s important to have someone on your side with an awareness of your condition. They should also be savvy about navigating financial and legal situations. If you have a close relative who is in a profession that deals with financial, legal or medical matters - they may make an ideal candidate for your power of attorney.
This person will become your advocate. As the old adage goes, knowledge is power. The more this person is able to navigate these difficult situations for you and solve problems on your behalf, the better.
A rapid decline in health or a sudden illness aren’t always easy to predict.
In the event something does happen, a person - even possessing all of the characteristics above - will be better served in this role if you’re both prepared.
Stay organized and inform your power of attorney of the availability and location of documents like:
In the event your power of attorney is called upon to serve you, proper organization and preparedness can easily prevent financial or legal mishaps.
Being thoughtful, both in your selection and organization will help set you and your power of attorney up for success should the need ever arise.
Author(s): My Coda's Editorial Team