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Corporate, Estates & Wills & Trusts

Trust, communication key when creating estate planning agreements

Creating a representation agreement may seem simple and direct — but in reality, it involves a personalized process that requires clients to consider a number of difficult scenarios and communicate these effectively to family members, Vancouver corporate lawyer Jonathan Reilly tells AdvocateDaily.com.

In British Columbia, wills, enduring powers of attorney and representation agreements are the three basic tools in the estate planning process, explains Reilly, founder of English Bay Law Corporation.

“An enduring power of attorney generally governs your financial affairs — land, money, anything like that. And they can be as broad as ‘this person can do anything that I can do’ or as narrow as ‘this person can do this one thing on this date.' They can require multiple signatures or a single signature. They're very flexible in terms of how we can set them up. But they don't cover your health, that's what the representation agreement does,” Reilly says.

A representation agreement, he says, “leaves instructions for how you want to be taken care of, or not.”

While a representation agreement often addresses basic issues such as whether an individual wants to be resuscitated or have surgery performed on them, Reilly says the document can be made more complex to include individual scenarios and circumstances — such as attempting revival and surgery once, if advised, but not multiple times.

“It's a very useful and flexible document that allows your care decisions be made for you for a time period when you're no longer capable of making them for yourself,” says Reilly, whose firm practices real estate, corporate/commercial and wills and estates law.

Reilly adds that it is important that there be some relationship and trust between the grantor and the recipient, and that they are all on the same page with respect to the grantor's wishes. 

“That trust and communication are probably more important and useful than trying to draft every possibility into the agreement,” he says.

Although some people put off drafting these documents until an undetermined point in the future, Reilly says representation agreements and enduring powers of attorney only come into effect if an individual becomes mentally incapacitated.

“Many people think, ‘Oh, well, I'll worry about that later.’ The problem is once you lose your capacity, you cannot put these tools in place — any of them. And that means you're at the mercy of the state or whatever your old arrangements were.”

A better plan, he suggests, is to have these arrangements in place early and revisit them often.

“Marriage, divorce, kids, a major economic change in your life, all those things are good reasons to revisit your estate plan — the will, representation agreement, and powers of attorney,” says Reilly, who adds that a major negative health event, such as a heart attack or stroke is also a key time to review these estate planning documents.

In addition, he says, it is recommended that the client’s family, or the individuals who will be making future decisions, be a part of the conversation.

It is important that the family or whoever you're going to give these powers to is part of the discussion at some level, and that they have an understanding of what you want and you trust them to put your wishes into play,” says Reilly.

The process to put these plans into place, he says, usually starts with a questionnaire.

“You start with the general — you’ve been taken to the hospital, you’ve got brain function but you're not conscious. What approach do you want the doctors to take? And then work your way down to, well, there is no brain function, now what approach do you want the doctors to take?”

Reilly also warns clients not to lock up the documents.

“If they lock them in their safety deposit box, this may mean that the bank will not open the safety deposit box for the person who needs it because the document that authorizes them to open the box is in the box,” says Reilly.

Ultimately, says Reilly, clients are never too young to get these documents in order.

“Most people don’t start to think about them until they get married, have a child, and buy property. But there's no reason why they have to be triggered then.”

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