GEOFF KIRBYSON
Make a choice
while you can
What do your back-up goaltender,
your second parachute, the emer-
gency exit and your power of attorney
have in common?
They’re all things you have no inten-
tion of using but are ecstatic to have
when your original plan goes awry.
They’re all essentially a form of
insurance in case your starting goalie
breaks a leg, your first chute jams, the
regular exit is blocked or you lose
your marbles.
Power of attorney sounds like legal
talk but it really has nothing to do
with lawyers flexing their muscles.
Rather, it’s a document that grants a
person of your choosing the auto-
matic right to step in and handle your
financial affairs in the event you
become incapacitated.
Usually a component of an overall
estate plan, the power of attorney
has grown in popularity over the
past 10 to 15 years, according to John
Poyser, a Winnipeg-based lawyer in
the wealth and estate law group at
Inkster Christie Hughes.
He describes it as the “ounce of
prevention” in case you develop Alz-
heimer’s or some other condition that
keeps you from being able to make the
financial decisions you’ve made your
entire life.
That’s because it’s cheap and easy
to put in place, and authorizes some-
body you trust to make those import-
ant decisions for you.
The “pound of cure,” on the other
hand, is a costly court procedure that
takes a considerable amount of time
and will grant the right to handle your
financial affairs to whomever steps
forward and volunteers to go through
the process.
“If you don’t have a power of attor-
ney and you become incapacitated,
you lose the ability to make decision
for your own finances. Without a
power of attorney, nobody has the
automatic right to step in and handle
the financial affairs for the incapaci-
tated person,” Poyser says.
“Regardless of the circumstances, if
you lose the ability to handle your own
finances, nobody can sign the docu-
ments to administer them [for you].”
You want simple? A power of attor-
ney can be put in place for about $75
and a couple of meetings with a lawyer.
How about complicated? Without
a power of attorney, some family
member or a public trustee will have
to apply to the court and seek judicial
permission to take over your financial
affairs. It can cost anywhere from
$1,000 to many thousands of dollars
and take up to six months.
(There is often an annual or
biannual reporting requirement for
the court-approved trustee, too, which
means going back to court to explain
what has occurred with every dollar
under their watch.)
Even worse, the court process
could result in the last person in the
world that you’d want running your
financial affairs, authorized to run
your financial affairs.
With a power of attorney, you
might select your trustworthy sister to
stand in for you. But in the absence of
one, your scatterbrained brother, who
you don’t trust with milk money,
might be the only one to step forward.
Perhaps even worse, if no family
members volunteer, a public trustee
or guardian might be thrust into the
role.
“Most people hate the idea that a
government official would handle
their financial affairs,” Poyser says.
The vast majority of power of attor-
ney documents are “banged together”
by lawyers with little or no gathering
of information, Poyser says. To be
done correctly, however, they should
be part of an estate planning process
where the client is interviewed about
his or her personal circumstances and
presented with options that might fit
the situation.
Bob Hagerman, a Calgary-based
partner at Gowlings LLP, says a power
of attorney is, quite simply, a crucial ele-
ment to an estate plan. Go without one,
he warns, and you’re courting disaster.
“You could run up $30,000 in legal
bills fighting over things,” he says.
Many people who have updated
their wills in the past decade likely
have a power of attorney, but it has
only been permitted for the past 15
years or so, he says.
Other significant downsides to not
having a power of attorney include the
family disharmony that can be caused
by the court process. In addition, the
client’s objectives may not be properly
fulfilled because somebody else is call-
ing the shots for them.
“If a 70-year-old man, who has
been married to his second wife for 40
years, becomes incapacitated, who
gets to apply? His wife, or his 50-year-
old kids from his first marriage?”
Hagerman says.
He says he could draft a power of
attorney appointing one child among
three siblings, or all three of them
using a majority rules system to satisfy
disagreements. Without the docu-
ment, however, who gets what power
is all up to the court.
“It creates all sorts of problems,”
he says.
Unbeknownst to many people,
there is no automatic ability to be able
to deal with your spouse’s assets
should he or she become incapacitated, says Dennis Smith, a partner at
the Winnipeg-based law firm of Hook
& Smith.
“There’s a bit of a misconception
out there about that,” he says. “A lot of
couples own [virtually] everything
jointly but there are a few things that
aren’t. That’s what you need a power
of attorney for and for other life
issues, such as your pension or accom-
A lot of couples own
(virtually) everything jointly
but there are a few things
that aren’t. That’s what you
need a power of attorney
for and for other life issues,
such as your pension or
accommodations if you’re
going into a nursing home.
“
Dennis Smith, Hook & Smith
modations if you’re going into a nurs-
ing home.”
A power of attorney doesn’t kick in
only in the case of mental incapacity.
Sometimes it can be useful if a spouse
is physically laid up for some rea-
son—because of a stroke, for
example—but is still firing on all
mental cylinders.
Rather than having to load some-
one into a car just to do a couple of
banking transactions, the responsibil-
ity can be offloaded to the spouse
through the power of attorney.
Smith says he usually discusses
power of attorney with clients when
they come in to see him to discuss
their wills. He’ll regularly mention the
concept to them so they become fam-
iliar with it over time and start to
“lean on them a little” when they hit
their 50s.
“Hopefully they’ll never need it but
it’s there for them if they do,” he says.
E YE TOE YEPIX / ISTOCKPHOTO. COM
A power of attorney can also
include specialty clauses. Guaranteed-
care clauses stipulate that the attor-
ney spend the client’s money to maxi-
mize the quality of care that they
receive if they are disabled. This could
include hiring a nursing service to
help keep them in their home longer.
Those who tend to favour such
clauses include elderly people without
any children or whose children live
abroad, people who have watched a
friend languish unattended in a per-
sonal care home, or rich people who
don’t want anybody pinching pennies
on their care if they need it.
“With government-funded health
care, if there’s one person on the floor
and six beds, you get the same level
of care whether you’re rich or poor.
But if you have a couple of million
dollars in the bank, it’s nice to have a
See Power Page S12
