Power of Attorney VS Personal Directives
Comprehensive estate planning involves more than simply writing a will to take care of matters after you pass away.
You also need to plan for your later years, when you may lose the power to make decisions for yourself and loved ones need to manage your healthcare, living arrangements, and finances.
Family members can’t make decisions on your behalf without the right documents.
Your estate plan must, therefore, include a power of attorney and a personal directive.
But what, specifically, do they accomplish, how do they differ, and what do you need to consider before drafting yours?
Personal directive vs power of attorney
Both personal directives and powers of attorney make plans for later in life if you are unable to express your wishes or lose the mental capacity to do so.
However, these essential estate planning documents achieve different goals.
The purpose of a personal directive is to express one’s preferences concerning healthcare, living arrangements, and the care and education of one’s dependents. You may also hear it referred to as a “living will”.
Within a personal directive, you name an “agent” who will be responsible for you and can make decisions on your behalf should you lose the power to make decisions.
A power of attorney achieves a similar purpose but for financial matters. You can name an agent to make financial decisions on your behalf should you lose capacity.
Together with a will, these documents protect your wishes after you die AND if you lose capacity later in life. They can save considerable confusion and disputes among loved ones because your wishes are clearly documented.
A personal directive helps you specify preferences concerning living arrangements and personal needs as well as end-of-life care and resuscitation.
Power of Attorney
A power of attorney allows you to authorize another person (or persons) to make financial decisions on your behalf if you are unable to do so. Without it, a loved one may need court approval to access your funds.
However, it is not quite as simple as that. Two different types of power of attorney exist in Alberta and they serve different purposes.
Immediate power of attorney
An immediate power of attorney can be set up for any time that you are unable to attend to your financial affairs, such as when you’re travelling or temporarily incapacitated.
It authorizes an agent to act on your behalf in a limited capacity but, importantly, you can also make financial decisions transactions, such as banking or real estate transactions.
The immediate power of attorney becomes void if you lose mental capacity—so it’s usually a good idea to set up an enduring power of attorney before that happens.
Enduring power of attorney
An enduring power of attorney is set up for the eventuality that you lose the capacity to handle financial matters.
Once you lose capacity, the attorney or agent named in the power of attorney is responsible for accessing bank accounts, signing cheques, making investments, selling property, applying for government benefits, and so on.
When you make an enduring power of attorney in Alberta, it is a legal document but would only take effect as specified in the document (i.e., should you become incapable of making decisions).
It may never be used—and can be revoked if you have the mental capacity to do so—but it remains an essential estate planning document.
Don’t leave it too late to create your power of attorney and personal directive. Book a one on one consultation with Vest Estate Lawyers to get started.