It is important
to note that granting power of attorney does not
take away the power to act on your own behalf.
Rather, it serves to share this power with your
attorney who can act for you should you become
incapable of doing so yourself. It may be helpful
to think of power of attorney as "personal
decision insurance", in that it serves as a
measure of reasonable assurance that important decisions
required on your behalf will be made, as you would
wish them.
Most people acknowledge that a properly drafted Will
is an important component of a prudent financial plan.
A Will ensures that your wishes are acted upon in death.
However, what you may not realize is that it is also
important to consider making a provision, through power
of attorney, for financial and personal decisions to
be made on your behalf while you are still alive, yet
incapable of making them yourself.
There are several forms that power of attorney can
take. Some relate to decisions regarding your assets
and include a Limited Power of Attorney and a General
Power of Attorney. A different type is called Power
of Attorney for Personal Care that may grant your “attorney” decisional
power regarding your medical treatment, health care,
shelter, clothing, hygiene and safety should you become
mentally incapacitated. Depending on your personal
circumstances you may wish to consider the merits of
each type.
Limited Power of Attorney may apply to circumstances
where you require a legal representative to act on
your behalf when you are unavailable to grant authority
yourself, or if you require specific acts conducted
on an ongoing basis. The type of situation where this
can be utilized includes the purchase and sale of real
estate where you may be unavailable on important signing
dates, as well as the negotiation of securities transactions
within an investment account.
A General Power of Attorney can grant "all-encompassing" authority
for virtually any type of decision relating to your
property that you can make yourself, except to make
a Will. In order to remain binding should you become
mentally incapacitated, it may generally contain a "continuing" or "durable" clause.
If you are concerned about the decisions regarding
your personal care should you become mentally incapacitated,
you could consider assigning Power of Attorney for
Personal Care to a trusted party. In this way, you
can be reassured that adequate measures related to
your physical well-being will be undertaken in a manner
consistent with your personal wishes.
Regardless of the form of power of attorney you choose,
it is imperative that you carefully select the party
you designate to act in this regard. A designated power
of attorney can be either: a trustworthy individual
(i.e. friend or relative, preferably well versed in
financial matters in the case of power of attorney
for property), an accountant, a lawyer, or even a trust
company. Whichever party you choose, you should ensure
that you can depend on them to act with your best interests
in mind.
It should be noted that alternative measures to power
of attorney do exist for enacting decisions related
to your financial assets. However, undertaking these
measures may result in tax and legal consequences.
It is recommended that consultation with your lawyer
and tax advisor, if applicable, be conducted for any
decisions relating to either power of attorney or alternative
planning for incapacity.
*In the province of British Columbia, power of attorney
is known as “Representation Agreement”.
The information contained herein is considered
accurate at the time of printing. CIBC and CIBC World
Markets Inc. reserve the right to change any of it
without prior notice. It is for general information
purposes only. Clients are advised to seek advice regarding
their particular circumstances from their personal
tax advisor. In addition, legislation in this area
is continually changing. Before taking any action,
you should seek legal advice to ensure that your planning
is appropriate to your personal circumstances and that
it is effective in the jurisdiction in which you reside.
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