senior thinking

Throughout the course of life, every one of us goes through a number of stages, opening and closing many different chapters along the way. Collectively as a nation, Canada itself has recently entered one of these significant new chapters, specifically in relation to population demographics. For the first time in Canadian history, there are now more individuals over age 65 than there are youth under age 14, according to data from the 2016 Census.1 And while this shift has just started, this trend is expected to grow substantially in the coming years, as more Baby Boomers become seniors, life expectancies remain longer and fertility rates among Canadians generally continue to be low.

Further to the population aspect, however, there’s a deeper cause for attention, and that’s the health issues that will go hand-in-hand with this population shift. In “The State of Seniors Health Care in Canada,” the Canadian Medical Association noted that over the next 15 years (based on 2016 statistics), there is expected to be a 66 percent increase in the number of Canadians living with dementia and that after age 65, the risk of dementia doubles every five years. Additionally, from a physical health standpoint, there’s an expected 40 percent increase in cancer cases by 2030.2

On a broad scale, these realities and projections will certainly have a wide range of impacts on Canadian society as a whole. But narrowing back to the individual level, these statistics should also serve as a strong message to all individuals that there are crucial aspects to plan for when it comes to your personal, family and financial future, and one of the best methods of protection in this regard is a Power of Attorney.

Power of Attorney explained

A Power of Attorney is a written document that legally authorizes another party to act on an individual’s behalf. There are two basic types: a Power of Attorney for Property and a Power of Attorney for Personal Care. A standard Power of Attorney for Property empowers another party to legally make decisions about an individual’s finances and property (which may include tasks such as handling banking matters, paying bills, managing investments, or buying or selling real estate on your behalf), and this authority survives in the event that the individual becomes incapable of making these decisions (generally known as a Continuing or Enduring Power of Attorney for Property in most provinces in Canada). A Power of Attorney for Personal Care authorizes a party to make decisions about an individual’s personal care (which may include your healthcare, medical treatment, housing, hygiene or safety preferences and wishes).

Depending on the province or territory where you live, there may be one document that outlines your authority for an individual (generally referred to as “attorney”) to make both personal care decisions as well as financial and property decisions. There are also provincial and territorial differences for how the document is created and signed, therefore making it crucial to have a qualified legal advisor create the document for you to ensure the wording and signing are properly carried out.

In Quebec, for example, the process for naming a Power of Attorney (known as a Mandatary) differs somewhat from other provinces. Two separate Power of Attorney documents may be required — one which is effective while the donor of the Power of Attorney is capable (known as a Mandate) and one which only comes into effect on the donor’s incapacity (known as a Protection Mandate). A Protection Mandate must be verified through a court process called “homologation.”

Note: For the purpose of this article, the main discussion will be on Power of Attorney for Property, which survives incapacity, known as a Continuing or Enduring Power of Attorney, but it is likewise important to give the same amount of consideration to Power of Attorney for Personal Care, and to consult with a qualified legal advisor to ensure your wishes and intentions are accurately documented. Also, although the method of implementing a Power of Attorney and the terms used may be different in Quebec, the principles discussed throughout this article are relevant to Quebec residents.

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Making the right choice

Much like choosing an executor for a Will, appointing a suitable attorney for a Power of Attorney is something many individuals overlook the critical importance of. First and foremost, the choice should be someone you thoroughly trust and who knows you very well, which is why many individuals opt for a family member or close friend. Given the many demands of acting as attorney, however, it’s likewise important to understand the responsibilities they assume — as well as the risk to your finances and care if you choose someone who can’t properly fulfill those duties.

Further to trust and familiarity, other factors to consider include their financial skills, ability to handle family conflict, where they live and their own personal or family demands, and their willingness to act, for example. With these aspects in mind, choosing an attorney therefore should be given the same level of thought and careful selection as you would any other professional you engage such as your lawyer or accountant.

For more information on choosing an executor, please view “A matter of informed choice,” featured in Perspectives, Fall 2017.

The following chart provides a description of four key decision points to assess:

Financial acumen and organizational skills
  • Appointing someone who lives far away from you may create logistical, career and/or emotional stresses and challenges for that person.
  • If the appointed attorney lives in a different jurisdiction, there may be additional challenges because of legal and administrative complexities related to managing your affairs from afar. This may be further complicated if you own property in different geographic locations and divide your time between those homes, for example, as you may require Power of Attorney documents that are effective in each jurisdiction.
Geographical proximity/travel flexibility
  • Even a relatively simple estate with no ongoing trusts may take upwards of 18 months to administer.
  • While the role does not require a full-time commitment, the duties and responsibilities are time consuming. This is especially important to consider if you are naming a child or family member who has a busy schedule with their own children and/or work demands.
Stage in life and availability
  • The duties of an attorney may span a number of years and the level may increase over time depending on circumstances.
  • It's important to consider the value of spending that time with loved ones without the pressures of them being tasked with duties of being the attorney.
  • If an individual has young children, a busy career, travels frequently or has other lifestyle demands, these may make it difficult for him or her to properly fulfill the duties.
  • Naming an alternate is also important, in case the person appointed is not physically or emotionally well if/when the time comes to act.
Ability to maintain emotional neutrality
  • Depending on family relationships and circumstances, some family members may have an emotional bias that disrupts their ability to carry out your wishes.
  • Complex family dynamics can also impact decisions; for example, a family member may feel pressure from other family members to act in a way that’s not consistent with what you outlined you wanted.
  • Incapacity can cause significant emotional stress within a family; an attorney who’s a family member may become emotionally vulnerable in this type of situation and thus have difficulty acting with the impartiality required of attorneys.
  • A potential conflict of interest could arise if the financing of your care will affect his or her (or other family members’) potential inheritance.

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Assessing the various options

Depending on circumstances and preferences, some individuals may want to consider appointing more than one attorney. If this is the case, there are various choices; some examples include requiring that your attorneys act together (“jointly”) or giving flexibility of carrying out duties separately or together (“jointly and severally”). The kinds of tasks your attorney or attorneys can carry out depend on the power that is given to them in the Power of Attorney document. For example, some people do a general Power of Attorney for Property that covers all property and financial affairs while others are more specific for only some of their affairs. You can also grant independent decision-making power to separate individuals for different tasks (i.e. you can arrange for one person to conduct day-to-day banking and one person to make investment decisions).

Note: For all of these scenarios, it is crucial to seek advice from a qualified legal advisor so that you understand what each attorney can do on your behalf alone, what actions must be taken jointly and how to deal with conflicting instructions.

Given any number of factors, the potential for emotional burden or complex family dynamics, some individuals choose a trust company to act as their attorney, which provides a professional, unbiased approach, by a company licensed to provide this service. When appointing a trust company, the process is much the same, with a written, signed agreement as to the duties that will be carried out on your behalf. But unlike family members who may not be familiar with the duties or legal requirements, choosing a trust company offers reassurance that advice is timely and based on current regulations and that tasks will be carried out by experts in the field.

What happens without a valid Power of Attorney?

While some may assume their spouse or next of kin will automatically be appointed should they become incapacitated, the unfortunate reality is that without a valid Power of Attorney in place, each province and territory has specific rules for guardianship and decision-making. What this means is that without a court order, your spouse or next of kin will generally not be able to access your financial information and assets. In that situation, they must apply to the provincial/territorial government or court to have someone appointed. This process can be lengthy and expensive, and competing applications can also be filed, which will only add to the cost and time delay.

Not just a senior decision

Appointing a Power of Attorney is typically perceived as a decision to make as individuals reach their senior years, but a situation of incapacity can happen at any stage of life. And while many health statistics focus on seniors, they should also serve as reason to be proactive in thinking about creating a Power of Attorney and gaining the peace of mind that comes with doing so as early in life as possible. For example, for adults with young children, those in the Sandwich Generation (roughly those in their 30s to 50s) who are already facing additional stresses of handling the financial and emotional stress of caring for both their parents and their dependant children, or individuals with blended families or otherwise complex family dynamics, an unexpected event where that individual becomes incapacitated could lead to incredible burden and stress, and compromise your and your family’s personal and financial future.

All other factors aside, an individual’s own protection should be the number-one priority when creating a Power of Attorney and appointing an attorney. Unfortunately, without this written document or by appointing someone who isn’t suitable for the duties, the door remains wide open for individuals to be taken advantage of in a number of ways. The sad reality is that elder abuse is on the rise across Canada, and of all forms of abuse, financial is the most prevalent. For a more in-depth discussion on planning for seniors, including healthcare and elder abuse, please view the accompanying article in this issue of Perspectives,Is age but a number?

For more information on choosing or acting as an attorney and Power of Attorney services, please visit the RBC Royal Trust Incapacity solutions page.

Acting as attorney

For those who are acting as attorney for a family member or friend, some may find the duties overwhelming or very difficult to manage while caring for that individual. To help guide them in this situation, RBC Royal Trust offers useful resources, including an “Attorney for property duties checklist” and a “Reference guide for acting as attorney under a Power of Attorney” at the Power of Attorney resources page.