Nick was in a serious car accident that left him in a coma for some time.  His wife Julia, already emotionally devastated by his condition, discovered she was not able to renegotiate their joint mortgage when it came due for renewal.

Gerald’s mother, Nola, is an 87-year-old senior who still lived in their family home.  She was healthy and spry and took care of her own personal and financial matters.  Every month she trotted off to her bank to pay her utility and other bills and withdraw enough cash for her spending needs.

RelatedCan You Live On $1,065 A Month?

Unfortunately, Nola suffered a massive stroke that left her incapacitated and in the hospital.  Gerald was unable to access her money to pay her bills and was not in a good financial position to pay her expenses from his own funds.

Why Power of Attorney is Important

As a banker I had ran across many similar situations, but it really hit home when my mother became really ill as a result of being over medicated by her doctor.

After being transferred from one hospital and medical facility to the next with no noticeable relief in sight, she became seriously depressed.

At one care facility she was asked the standard question about using “extraordinary measures” in case she stopped breathing – a DNR order.  She replied, “I don’t care any more.  I’ve had enough!”  When I objected the nurse replied, “That’s not your call.  You have no authority to make that decision.”  I was horrified.

Having a will is one of the cornerstones of financial and estate planning, yet it is estimated that less than 30% of Canadians have a valid will.

Equally necessary, but less common, are enduring powers of attorney and living wills (or medical directives) which give you the opportunity to specify someone you trust to act on your behalf and make decisions about what should be done with you personally if you are not capable of making the decisions yourself.

It is estimated that less than 10% of Canadians have signed an enduring power-of-attorney document that would protect them in such circumstances.

Related: Caring For Your Elderly Parents

Spouses just assume they will be able to act for each other if such trouble strikes, but it is not true.

For example, you would be unable to renegotiate your mortgage or sell your house, manage your spouse’s RRSP or other investments or property that is held exclusively in their name.

I have a Power of Attorney at the bank

Many people have signed a document at their bank giving their spouse or other relative power of attorney to make financial transactions on their behalf.  These are entirely different from enduring power of attorney forms.

These are used to cover dealings with that particular bank – not affairs in general – and contain a clause that invalidates, and automatically cancels, the power of attorney if the person granting that authority dies or becomes incapacitated.

Take care with documents that you can download from the Internet.  Some banks may not accept any documents that they deem as improperly prepared or seem vague.

Concluding thoughts

It’s important to secure the necessary powers of attorney to manage the personal, financial and health care interests of your elderly parents, even if it is a difficult subject to bring up.

Related: Talking To Your Elderly Parents About Money

Note also that a power of attorney for health care is only valid within the province in which it is executed.

Many couples have assets in their own names.  Take a moment to think about your personal affairs and how they would be handled in case of a medical emergency.

A person can petition the court to be granted the right to act on their spouse or parent’s behalf in case they are incapacitated.  However, the court could find someone else who has also petitioned them more qualified to handle their affairs and it’s within their right to appoint that other person.

With people living longer these days, it’s more and more likely that some form of mental and/or physical incapacity can occur.

RelatedAre You Counting On An Inheritance?

I urge everybody to address the need for these legal documents as soon as possible.

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6 Comments

  1. Tom on July 31, 2013 at 6:22 am

    Good sound suggestions. I’ve recently learned that the original will is the only acceptable legal document, not the copy which most people have tucked away somewhere.

    • Boomer on July 31, 2013 at 3:12 pm

      @Tom: Yes, only the original is valid for probate. The copies are a “heads up” for the executor(s) and often one is kept with important documents at home.

      You may not know that a holographic will must be entirely handwritten and signed – not typed up on your computer – to be valid and it doesn’t require witnesses.

  2. Bet Crooks on July 31, 2013 at 12:17 pm

    @Tom: good point. And our lawyer keeps moving without telling us where!

    I think it’s probably time for my husband and I to review our wills and our PofAs in case they’re outdated.

    • Boomer on July 31, 2013 at 3:14 pm

      @Bet Crooks: Often people will keep the original in a safe deposit box.

      Updates should be made whenever there is a change in circumstances – either personal or financial.

  3. Ian on August 1, 2013 at 7:56 pm

    I cannot begin to tell you how important POA is. I had POA for my mother who developed dementia. I managed her affairs for over three years-everything from dealing with the banks to working with the DVA to ensure that her British military service benefits were honoured, dealing with her survivor DB pension, well everything. It would have been much, much more difficult had this not been the case. Second lesson, my parents both per arranged and prepaid their funerals with very specific instructions. It took us 15 minutes at the funeral home to complete the details.

    • Boomer on August 2, 2013 at 11:20 am

      @Ian: As I mentioned, as people live longer, incapacity will become a growing problem for the elderly and their families.

      I am sympathetic to your situation, but you are fortunate that your parents had the foresight to deal with future occurances. Too many people put it off.

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