By Lorne Welwood
This article is about personal planning. There are strategies and legal documents which protect you during your lifetime and your estate and family at death.
A Power of Attorney is a document with certain formalities which grants someone the authority to handle financial or legal matters for you, but it does not remove your own authority. It can be revoked in writing, ends at your death and, unless you state otherwise, ends when you cease to be mentally capable. But most people want the Power of Attorney exactly in case they are incapable. So most people choose the Enduring Power of Attorney which continues in force even when they become incapable.
While Powers of Attorney cover financial and legal matters, Representation Agreements are documents appointing someone to help you with making decisions about health care and living arrangements. If you become incapable, your representative will make these decisions on your behalf. If you do not have a Representation Agreement someone will make these decisions for you —but maybe not who you wanted. As with Powers of Attorney, these documents can be revoked in writing and end at your death.
An adult “of sound and disposing mind” may make a Will appointing one or more executors to carry out the terms of the Will, describing their authority and setting out how the net estate assets are to be distributed to beneficiaries (heirs). There are legal formalities for a valid Will and requirements to make adequate provision in it for one’s spouse and/or children. Will-makers with minor children will also want to appoint guardians for them in their Wills.
Lawyers preparing these documents have a legal and professional obligation to be satisfied that the client is “of sound and disposing mind.” This means, among other things, you will be asked to produce valid photo ID and provide information about your spouse and children, if any, as well as your assets and liabilities. They must also ask you specific questions about your assurance that you completely trust those you choose to be your Attorney, Representative or Executor. This is not because they are nosy, but because it is part of assessing “sound and disposing mind.” Also, some things such as assets jointly held or with named beneficiaries such as life insurance, RRSPs, RRIFs, TFSAs and so on, pass outside the Will, but have tax and other consequences for your estate and should be considered in your planning.