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Estates & Wills & Trusts

Trustworthiness the pillar of a power of attorney

Online research can be helpful to those contemplating a power of attorney (POA), but because rules differ in each province, it’s always best to seek legal counsel, says Winnipeg wills and estates lawyer Cynthia Hiebert-Simkin.

A POA is much more than a contingency plan, it’s a legal document that requires careful thought, says Hiebert-Simkin, a partner with Tradition Law LLP, Estates and Trusts.

“This is about planning for a worst-case scenario; it’s that whole idea that ‘if I am unable to look after my affairs, who is going to look after my money for me?’ and it is a huge job,” she tells AdvocateDaily.com. “A will takes effect at the moment of death, but when we think about day-to-day living, a power of attorney might be even more important.”

It includes so many aspects of money management and can leave a person quite dependent upon the designated attorney, Hiebert-Simkin says.

“It is an extremely powerful document because essentially you’re turning your life over to an individual,” she says. “That’s why it’s important to appoint an attorney that is trustworthy, has a good head on their shoulders and is able to put the donor’s interests ahead of their own.”

The main job of an attorney breaks down into two parts. The day-to-day involves banking, investments, bill and tax payments. But they must also do all the financial record-keeping. Hiebert-Simkin likens that job to running a small business.

“You are managing the financial affairs of the donor and it should be handled with the same kind of vigilance. Many people say: ‘Sure I’ll be an attorney for you,’ but they don’t fully comprehend how big a job it is,” Hiebert-Simkin says.

Beyond the financial management aspects of POAs, there’s a fair amount of administrative work that must take place, she adds.

“For a spouse there often will be some sort of legislation that allows them to apply for money from their spouse’s assets in order to help maintain them,” Hiebert-Simkin says, adding that married partners aren’t usually such a big issue, but dependent children, such as one with special needs, could be.  

“In most cases, the children will be gone, they’re off the family payroll, they are a non-issue, but there might also be circumstances where there are people who are financially dependent on the donor. In that case, they should be talking to a lawyer about those people and whether it is possible to support them,” she says.

The power of attorney could include provisions that the attorney managing the affairs for the donor report to someone else who regularly reviews how finances are being managed.

There is also an option to compensate the attorney for the time and trouble involved in looking after those affairs, but that too must be included in the power of attorney document.

Hiebert-Simkin suggests anyone who is designated as attorney seek legal advice — the cost of which may be covered by the estate — to get clear instruction on how to properly do that job.

“You’re not allowed to pre-take your inheritance just because you think your parent doesn’t need the money anymore. And, in fact, it would be a breach of the attorney’s duties to give money to people the attorney is not designated to pay. It may even be a Criminal Code offence,” she says.

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