When it comes to picking who will act as your Powers of Attorney, most people choose the person closest to them without much of a second thought. But prepping your Attorneys for the job could be as important as who you choose. Nicole Ewing, Director of Tax and Estate Planning, TD Wealth, joins Kim Parlee to discuss how to prepare someone to act on your behalf.
- When it comes to picking your powers of attorney, some people just choose a loved one without giving it too much thoughts. But picking the wrong person could cause some complex problems later on. Here to give us her insight on what we should be thinking about, Nicole Ewing. She is Director of Tax and Estate Planning at TD Wealth. Nicole, always great to have you with us. I'm going to jump right in. You say that a common mistake for people is not considering different powers of attorney and how they may interact when it comes to, for example, your finances or your personal care.
- Yeah, exactly. And here, I'm talking about enduring powers of attorney for property and for personal care. The language might be different in different provinces, so we may have representation agreements. But forgive the differences in terminology, we're talking about naming people to make decisions for you. And so very often, we name the person who's most financially savvy to be making those property decisions for us and the person who's most caring and compassionate to be making our health care and personal care decisions for us without giving a lot of thought to how those two roles might be interacting.
And so you may have your caring and compassionate person who's making decisions for you that have a price tag and not consulting the person who is holding the purse strings. And so you could see, there would be an opportunity potentially for conflict and potentially where those individuals don't know what your wishes are. They might be in the dark, and so they don't have clear direction from you in terms of what's most important. And so I would suggest that, while having the documentation in place, naming your attorneys to act is really critical, it's the bare minimum. So we want to be having lots of discussion and planning both before and after those documents are in place.
- I've never quite heard it explained that way. And when you explain it that way, you're like of course. You can just see the conflict. It's so clear. So let me ask you. Give me some examples, because I know you've seen some, of how this goes wrong.
- Well, we can see where, if we don't have clear instructions or clear guidance about how to be making decisions, there's a lot of guilt and potential anxiety already that we might be experiencing. But we want the best for the person that we're making these decisions for, and they may not have the financial resources to actually allow us to provide that for them. And so then we're into a decision about, are we going to subsidize? Are we going to take funds out of our own pockets to give them the care that we want them to have? Potentially, putting our own families into financial or emotional hardship.
And so just really not thinking through the implications that it might have for the individual who's acting. I know people who are out of pocket hundreds of a month in order to provide the care that they want their loved one to have, because they're acting and they don't have that, say, permission to be less than perfect, to maybe not provide the ideal care. But so few of us are living the ideal life when we're making decisions for ourselves. And so we can't be expecting those who are making decisions for us to be acting to a higher standard than we're able to provide for ourselves.
- Yeah. Well put. So what do you need to do? What are some of the things that you should think about ahead of time to make it easier?
- Well, as always, document, document, document. [CHUCKLING] We want to have clear and open discussions, not only with the individual that we're naming. And let's be clear, we should ask them whether or not they are willing to act. They may have personal circumstances where it doesn't make sense for them to be the person acting, and you might not be aware of those. So they might be having some financial difficulties, being insolvent or bankrupt. They may have a US citizenship that could add complexities. They may have plans to leave the country and not be there for you. So be clear and ask them in advance.
Talking really clearly and bluntly about compensation, whether or not they can-- so there's statutory guidelines in terms of powers of attorney for property and being compensated for that, for acting in that capacity, but not necessarily so with acting as an attorney for personal care. And so are they willing to act knowing that they're not going to get paid for this? Talking about, what is a reasonable reimbursement?
So I think here about parking at a hospital. If we are attending all the time, parking can get very expensive. And then we're potentially in a conflict with other family members who are saying, well, why is your parking being reimbursed and mine's not? So just being very, very clear, getting your lawyer to draft clauses that contemplate and address these issues, talking not only to the individual that you're naming but also to your other family members, and letting them maybe in a little bit on why you're making the decisions you are, what powers you're giving the individual, and why they may be making some of the decisions that they're making.
- Nicole, I've only got about 15 seconds, but I think it's worth noting. Sometimes, I know you've worked with people where it's worthwhile to bring in a professional, the neutrality. And again, I've got 15 seconds.
- And 100%. Professional, both from your financial planner who can help you come up with a plan about funding the care that you're going to need. But also, don't let analysis paralysis get in the way. If you don't know who to name, there are professionals who act in this. So professional trust companies, for example, that can act as your attorney. Or agent. If you're acting for somebody and you don't know really how to do it, you can get their guidance as well and they can help you fulfill your duties.
- Nicole, always great insight. Thanks so much for joining us.
- Oh, my pleasure, Kim.
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