When does not spending $150.00 cost you more than $6,000.00?

Six years ago, Al went to see his lawyer. A widower in his late 70s, Al had been advised to update his Will after his wife Gloria had passed away. He thought this made sense and off he went. The lawyer did his job properly and professionally and the new Will has duly prepared and signed.

Al and Gloria had 3 children – 2 daughters and a son. The eldest daughter (a single parent) Tracey had a daughter named Cheryl. Tracey sadly had passed away shortly after her mother from cancer and Cheryl was left on her own, is now living on the fringes of society and is rarely in touch with other members of the family. Al’s other daughter is Tess and she ended up leading a very challenging life filled with drugs, alcohol, one abusive husband and a series of less-than-ideal boyfriends and live-in partners. She also has had to deal with significant emotional and intellectual challenges and her only source of legitimate income is a tax-free disability pension from the government. She currently lives (rent free) in Al’s residence because Al is no longer legally competent and is in an extended care facility. She says she stays there so she can be close to Al but the reality is she is sponging off Al since he can’t do anything about it and Tess, challenges aside, knows a good deal when she finds one. Her boyfriend-du-jour spends his time dealing soft-drugs and working part-time as a mechanic.

The son, Bruce, got involved off-the-grid very early in life and now in his mid-50s, is a hard-drug addict, has AIDS and lives and feeds his own habits by stealing (including from Al) and selling drugs. He disappeared in mid-2013 and hasn’t been seen or heard from since that time but he did take Al’s debit card and emptied Al’s account to the tune of over $8,000 over 4 weeks. He was living with Al before he went into care for the onset of dementia and Al trusted him with his card – and unsurprisingly, this trust was betrayed.

And NO, I am not making up his situation – just the names – the circumstances are exactly as described – unfortunately.

When Al had his Will re-done, the lawyer and Al’s financial advisor told him he needed to establish an Enduring Power of Attorney for personal care, property management and healthcare. Al agreed, but he never took this step because he didn’t feel he could name either of his surviving children – Tess and Bruce – or his grand-daughter Cheryl, and with good reason. But now…

Since Al is no longer legally competent the problem rises. Who makes his decisions and manages his property? What about his investments, his pension income, his personal assets, the level of care that can be afforded? Bruce can’t be found, Tess is not capable and the Office of the Public Guardian and Trustee would fight any attempt by her to be named a guardian. Cheryl is not appropriate either, even if we could locate her. So now what? Fortunately Al’s financial advisor is also a friend and stepped up to apply to be appointed as his Committee in court, with Al’s and Tess’ agreement and the support of the OPGT.

Once the Committee process started, a cousin of Al’s (named Jeff) was located and has joined the application as a co-Committee to act jointly with the advisor. Al is very lucky to have two people willing to take on this task of managing his personal, financial and health care affairs – but the cost of applying for Committeeship has now exceeded $6,000.00 and is not finalised yet – and this cost will come from Al’s assets as part of standard Court rulings in cases such as this.

Al knew his advisor and friend and cousin Jeff would have agreed to be joint-attorneys and guardians if he had only asked and redone the rest of the documents. But Al didn’t want to impose and didn’t want to burden them with the unique circumstances of his family. Admirable thoughts of course, but now the reality of avoiding that decision has hit home, all for the sake of about $150.00 six-years ago.

Are your plans for personal, financial and healthcare up-to-date AND properly documented?

Powers of Attorney: 6 Costly Mistakes to Avoid

You have heard of the advantages of having a power of attorney. Today I’ll explain easy steps you can take to avoid costly mistakes.  These mistakes can make your Power of Attorney (POA) useless and put your money at risk.

A POA is a legal document that must be in writing and witnessed. You, the grantor, give certain powers to another person (an attorney). The document allows your attorney to act for you as your agent. You can give a general POA to handle everything or limit it to only to sell your car.

A POA can be as short as one line, “I appoint my daughter as my attorney.” You may have used a kit or online form to prepare a POA for yourself. Or you may have had one prepared by a lawyer. Regardless of how it was prepared, you should check your POA form now. It may be too late later to correct what are common mistakes.

Mistake no.1: your potential incapacity is not covered

What is the real benefit of a POA? It allows the attorney to act on your behalf if you can no longer act because you are incapable. Your POA must then specify that it is valid even after any legal incapacity on your part.

The words “enduring”, “continuing”, and “ongoing” are not enough. There must be a reference to the POA being valid even if you subsequently become legally incapacitated.

Every province and state has its own rules for POAs. So you cannot expect a document you sign where you live to be valid in another jurisdiction. Remember, this post is for information purposes only. It is not a substitute for proper legal advice.

Mistake no.2: your capacity is not confirmed

All POAs must be signed while a person is competent. This is why planning in advance is so important. Persons in nursing care, those suffering any illness or the elderly may need to have their capacity to give a POA confirmed to prevent legal challenges.

Confirmation is usually done by a lawyer. The lawyer confirms that there is no undue influence, coercion or suspicious circumstance present. He then confirms that you as grantor or donor of the POA have the capacity to sign.

A meeting between you the grantor and lawyer must take place to assess capacity. What if one of your parents develops mild dementia? You would like to act as their attorney. You must remember that the parent must be capable of requesting the POA and not you as attorney.

Mistake no.3: you forgot to designate an alternative attorney

You should make sure that there is always an alternative attorney designated. This is in case one of your attorneys moves away or the person chosen refuses to accept the responsibility of acting as attorney.

You should confirm with your attorneys in advance of the appointment. This is important to ensure that they will accept the position.

POAs made by persons in middle age will need to be checked regularly to ensure that the attorney has not moved away, died or lost capacity themselves.

Mistake no.4: you don’t fully trust your attorney

The attorneys can do whatever you can do, including spending or mismanaging your cash and selling your property. Abuses are always possible, even among family members. If you don’t fully trust  a person, find a replacement or restrict the attorney’s powers.

Mistake no.5: your POA is not properly witnessed

If not properly witnessed, your POA could be invalid. Two qualifying witnesses are required. The witnesses cannot be a spouse or partner of you or your attorney. You and the attorney and your children cannot act as witnesses. Witnesses may need to give evidence that you had capacity at the time that the POA was signed.

The staff of nursing homes or hospitals usually will not agree to act as witnesses. Any documents executed in these circumstances may require that you bring two witnesses and confirm capacity by obtaining a written opinion from your attending physicians.

Mistake no.6: you forgot to amend the standard forms

Some POAs are four legal sized pages of printing. Not all the material on the POA may be appropriate to your needs. You need to read the form and initial changes.

If you do not want the attorney to deal with your home, to sell or mortgage it, then you will need to specify this in the document. If it is only for the purpose of dealing with foreign assets, specify this too.

Make sure that a lawyer in the foreign jurisdiction prepares or has approved the document’s use. If the POA is only for a particular bank account then the document should specify this. If you believe that your attorney should not be compensated for his services, then you may wish to specify this in the document.

Related post and the MrWills guide to POAs:

Why Resolve to Get a Power of Attorney This January?

Powers of Attorney: 10 Essentials You Need to Know

Edward Olkovich (BA, LLB, TEP, and C.S.) is an Ontario lawyer, nationally recognized author and estate expert. He is a Toronto based Certified Specialist in Estates and Trusts. Edward has practiced law since 1978 and is the author of seven estate books. © 2013