The Importance of Having a Power of Attorney (POA)

June 14, 2023

Each day we make hundreds of decisions for ourselves and for the people around us. It is easy to take for granted the intellectual capacity required when making these decisions, especially for in-depth and complex judgements. But what would happen if suddenly we had an accident or experienced a sudden, severe medical condition which left us incapacitated and unable to make every day decisions? Although we don’t like thinking that this could happen to us, unfortunately it can and it is best to prepare for these types of circumstances when we are in a good mental state. By completing a power of attorney (POA) you appoint a trusted and competent individual the right to make financial and health care decisions for you.

What is a Power of Attorney (POA)?

A POA is a legal document where you appoint an individual to manage your finances and property or make health care decisions on your behalf. They do not become an owner of any of your assets and only have the authority to manage your finances as you would normally do for yourself. Without a POA, no one can automatically step in to make decisions and may have to go to court to be appointed a guardian.

What are the different types of POA?

For property

A general POA gives authority to manage your finances and property with specific limitations such as: jurisdiction over specified accounts, a distinct task (selling a property) or a specific time frame. This type of POA is only in effect while you are mentally capable and ends when you become mentally incapacitated.

An enduring or continuing POA allows the appointed individual to continue to make decisions on your behalf even when you become mentally incapacitated and can no longer make any decisions for yourself.

For personal health care

A personal health care POA can make decisions regarding your health such as medical care and housing when you become mentally incapable of making these decisions for yourself. If you do not have this type of POA, your family can make some decisions for you -- but not everything. In this case it is very important to ensure the person you name as your POA is well aware of your wishes. Be sure that you have shared your wishes verbally and written in the document. This is especially important for the situations regarding end of life care and ‘do not resuscitate’ orders.

Some considerations and decision to make before selecting a POA

When contemplating who to name as your POA there are a number of factors to consider. It is also important to note that you do not have to name the same individual for both types of POA. A loved one may not have the strength of heart to be POA for personal health care but may have the expertise and willingness to be named as the POA for property.

Here are a few items to consider when selecting the POA.

• are they of age and health to complete the task in its entirety. You could live for many years and the role with the responsibilities could go on for years or even decades

• for property -- are they knowledgeable in finance, taxation, and investments

• are they reliable, available and trustworthy

• are they aware/have personal knowledge of your wishes for both how you handle your finances and your wishes for personal health directive

Who can be named as a POA?

A POA must be of legal age and can be:

• A spouse
• A child
• A close friend

There can be some risk to appointing a POA as there are no specific instructions on what can and cannot be done, however your POA must manage your money and property for your benefit and could be required by law to account for and justify why certain decision were made and the handing of the funds.

To minimize concerns, you can name two or more people as your POA, to manage your affairs together or separately. This allows for check points along the way but may also lead to disagreements if the people do not agree on certain situations. You can also put certain wishes in writing being careful not to be too specific as to limit the individuals you name as POA to effectively manage your affairs while keeping your best interest at the center of all decision-making. All in all, appointing a POA for your finances and health care can add peace of mind knowing you and your finances will be managed soundly if you can no longer make decisions for yourself.

FirstOntario Credit Union in partnership with Credential Securities and Credential Asset Management Inc. has an experienced team of advisors specializing in various areas of wealth management including retirement planning, investment management, estate and succession planning, individual financial risk management and more. These professionals are here to help you plan for the future and reach your financial goals. Visit FirstOntario.com/Investments or call 1-800-616-8878 ext. 1700 to connect with a FirstOntario advisor and start growing your wealth today – your way.

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