The importance of planning for incapacity during your lifetime

Power of Attorney (“POA”) is a legal document in which a trusted person, called an “attorney” is appointed to make legal and financial decisions on behalf of an adult while they are alive. Although we often see clients using POAs to assist in ordinary property transactions, it is a powerful tool when it comes to incapacity and caring for family members and loved one as the average life expectancy of Canadians rises.  The most common type of POA is the “enduring power of attorney” which appoints  the attorney to act on behalf of the adult despite any incapacity they may suffer. It is important to leave the powers unrestricted to allow the attorney the flexibility required to tackle any situation that may arise. It can also be limited so that the attorney is only permitted to make decisions about defined aspects of finances (e.g. real estate), or it can be general which gives the attorney authority over all legal and financial affairs. It is important to note that a POA is no longer valid upon the adult’s death.

The adult preparing the POA can appoint multiple attorneys to act independently or jointly. We tend to recommend against appointing joint attorneys as all the attorneys need to be present when dealing with each transaction and that process can be cumbersome. There are ways to draft scenarios and outcomes such as triggering events that may protect against abuse; however these terms cause other issues in terms of increasing hurdles the attorney faces when dealing with urgent situations. Ultimately, the attorney is legally bound by the legislation and must act in the best interest of the adult; held accountable not only by the effected parties but also by the Public Guardian and Trustee.

Representation Agreement (“RA”) is a legal document in which a trusted person, called a “Representative” is appointed to make personal and health care decisions on behalf of an adult while they are alive. In other provinces, terms such as “living will” and “power of attorney for health care” are the equivalent of the RA in British Columbia.  It covers situations where you may not have the capacity to make health care decisions, such as arranging rehabilitation after stroke or consent for surgery as a result of a traffic accident. The Representative has duties which include consulting with the adult to a reasonable extent to determine their wishes before making any decisions. The Representative has the authority to have the final say on your wishes despite disagreement by other members of your family. Generally speaking, the health care professionals prefer to consult with one person rather than multiple so we do not recommend jointly appointing representatives. There is a common misconception that a person named in the Will or in a Power of Attorney can make personal and health care decisions, but this is not the case in BC. Having all three documents in place is essential for a complete estate and personal plan.

Advance Directives (“AD”)

An advance directive in BC is generally used in situations where an adult is faced with an illness that requires treatments that are specific. The AD gives direction to the health care professional about end of life care and the preferred treatments. This document does not replace a Representation Agreement and is often mistaken for the same. Most hospitals or health care professionals can provide AD document to their patients when admitted. Where the Representation Agreement allows for an appointment of a person, the AD simply sets out a plan of action. The Representative must comply with the directions of the AD; however if there is a decision to be made outside of the scope, the Representative steps in to make that decision.

Consideration

If an individual does not have a POA in place and loses mental capacity, most institutions including banks, land title registry and ICBC will not allow another person (even a spouse) to deal with that individual’s assets or make decisions. In the absence of a POA,  a “committee application” which is a lengthy and expensive court process, is required. To protect the individual’s interests the provincial office of the Public Guardian and Trustee will monitor the actions of the Committee under direction from the court. Government intervention usually brings with it a number of additional delays and expenses that can be avoided with these personal planning documents. Similarly, if an individual is unable to respond in the hospital, the health care professionals look to the RA to see who is appointed as the legal representative. Although health care professionals tend to be more lenient with direction from a spouse or child, the RA becomes essential when the adult does not have a close family member available..