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ESTATE PLANNING: Powers of Attorney, Guardians and Trustees

You should consider appointing people to act as your Powers of Attorney (yes, you’ll need more than one) and, if necessary, Guardians and Trustees.

In “ESTATE PLANNING: It’s not what you know, it’s who you know” we discussed the general attributes you should look for in the people helping to administer your estate, and how to choose an Executor.

Powers of Attorney – different types may require different people.

A Power of Attorney is a legal document allowing your attorney to do almost everything with your finances and property that you could, such as banking, signing cheques, buying or selling real estate in your name, and buying consumer goods. He or she does not own any of your money or property, but can only manage it on your behalf. Your attorney cannot make a will for you, change your existing will, change a beneficiary on a life insurance plan, or give a new power of attorney to someone else on your behalf.

A General Power of Attorney can only act when you are of sound mind. An Enduring or Continuing Power of Attorney lets your attorney continue to act for you if you become mentally incapable of managing your finances and property.

Other qualities to look for…

It may help if your attorney understands your business interests, and the finances and financial structures behind those businesses. Also, it’s important he or she understands the legal responsibilities of the role, because he or she must comply with the legal duties and responsibilities of attorneys in the province or territory where you live, and can be held liable for any damages that result from a breach of their duties.

Due to the benefits of having an attorney who is knowledgeable about finances, some people appoint two attorneys – a friend or relative plus a knowledgeable professional.

A Power of Attorney for Personal Care lets you choose a person you trust to be your substitute decision-maker if you become mentally incapable in the future. For some decisions about your medical treatment, the law says your doctor and other health care providers must get your substitute decision-maker’s consent before taking action.

Other qualities to look for…

When appointing your Power of Attorney for Personal Care, you cannot name someone who is:

  • paid to give you health care, residential, training or social support (unless this person is your spouse, partner, or relative)
  • under 16 years of age
  • mentally unstable

You can name more than one attorney, but unless you stipulate otherwise, they must agree on the decisions they make on your behalf.

The Ontario Ministry of the Attorney General has a Power of Attorney Kits on it’s website.

Guardian – not necessarily your parents.

A guardian is legally responsible for your children’s welfare and property until they reach the age of majority, which differs from province to province. Guardians need to be named in your will. (Even so, your choice will have to be approved by the courts 90 days after you die.) While some people think that your children would automatically go to your parents in the case where there is no will, this is not the case – it means that the court will have to make the ultimate decision. In the scenario where there are several people asking for the job, your kids might end up with those who would not have been your first choice.  Put all the guardians’ details in the will, including full legal names, street addresses, telephone numbers and email addresses.  Also consider giving a gift to the Guardians in your will, conditional on the children staying in their care.

Other qualities to look for…

Guardianship is a very personal decision so you should pick guardians who share your values. Many people choose their own parents as guardians, but you need to consider their ages.  Would your 70-year-old parents have the energy to cope with your teenaged twins?  Others will choose a sibling and his or her spouse, which could be perfectly fine – unless trouble ensues. Suppose they end up divorcing? To avoid that scenario, you may want to specify your sister as the guardian, but not your brother-in-law.

Don’t make the executor and guardian the same person.

The roles are different, and require different skill sets. The executor is in charge of fulfilling your wishes as stated in your will and distributing any assets. The guardian is responsible for the well-being of your children.

The Ontario Ministry of the Attorney General has more information on a Guardian’s duties on it’s website.

Trustees – consider a trust company.

A trustee is a person or financial institution that has a legal duty to administer a trust for the benefit of the beneficiaries named in the trust.

A trustee’s role is significant, especially when you consider trusts are commonly used when the trust is intended to provide for children or family members with special needs who could require assistance overseeing their property, health, education and financial affairs. Trusts can also be used as a way to ensure that a spendthrift beneficiary is not given a single lump sum of money that could be mismanaged.

Other qualities to look for…

Given the length of time that could be required, it’s especially important that your trustee understand the amount of time involved. Because of the potential difficulty in finding a qualified person who is willing to undertake administering a trust, some people hire a trust company to manage their estate. A professional company is completely detached from the situation and will not be swayed, for example, by family members tearfully asking for more money.

At Educators Financial Group, we’re committed to helping education members with all their financial needs, including developing an estate plan.

For more information, contact us today, or read our other articles and use our checklist:

ESTATE PLANNING: Don’t forget the most important document of all

ESTATE PLANNING: It’s not what you know, it’s whom you know

ESTATE PLANNING: Your Estate Planning Checklist

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