Wealth Strategies: Why You Need a Power of Attorney
Milestone Wealth Management Ltd. - Oct 17, 2023
Estate Planning is an important component to one’s overall financial and wealth plan. Building a nest egg is an important goal, but protecting that egg should be equally important. There are many components to an effective estate plan including a will, life insurance and potentially more advanced strategies such as trusts. However, those components all deal with what happens when one passes away.
It is also vital to prepare for what happens if one becomes incapacitated in some way. Due to medical advancements and improvements in living standards, people are living much longer than they did in previous generations. These advancements are a huge positive, however one side effect of this is the increase in elderly living while incapacitated.
Last year, we wrote a blog post discussing the details and importance of having a Personal Directive. The personal directive (or living will in other jurisdictions) appoints someone to make decisions of a personal nature for an individual who has become incapacitated.
In addition to this document, it is also very important to have a power of attorney. A Power of Attorney is a document that appoints someone to act on one’s behalf for decisions of a financial or legal nature, such as paying bills, accessing bank accounts, and managing investment accounts.
The representative that is appointed under the personal directive and the power of attorney does not need to be the same person. Depending on one’s individual circumstances, one might choose the same person for both roles or perhaps two different people with different skill sets would be appropriate for the different roles. For example, perhaps a spouse or adult child would be appropriate to make personal decisions, whereas a friend or professional might be appropriate for the legal and financial responsibilities.
Whereas the Alberta government does have a free template to create a personal directive, there isn’t currently a free template of the power of attorney offered. However, the Alberta government does have information on the Power of Attorney available here. We always recommend using a lawyer and the cost is usually quite reasonable. There are also cheaper, DIY options such as online legal templates.
A power of attorney is a vital part of a complete financial and wealth plan. You’ve worked hard to build up your wealth, and it is important to make sure it is protected with a complete estate plan.