The benefits of drawing up a will are widely recognised in Canada. By doing so, you make provision for winding up your affairs after death. Less well known are the opportunities to protect yourself and your family in advance of being unable to make financial and legal decisions during your lifetime. An Enduring Power of Attorney (EPA) is one way to ensure you are able to choose who would be able to manage your affairs should you be dealing with mental incapacity due to longevity, illness or accident.
There are some common misconceptions among people in Canada about the need for an EPA that can lead to inefficiencies when they are least needed.
Everything is joint with my spouse:
While you are able to make many financial accounts jointly held, there are certain assets such as RSP’s and Tax Free Savings Accounts that are not able to be jointly held. Without an EPA, your spouse may not be able to access these assets should you need them. Along these lines, your principle residence is likely jointly held. To be able to access the value of your home through sale or to borrow against the equity in your home, both signatures are likely required.
We already have an ordinary Power of Attorney in place:
As of September 2011, an ordinary Power of Attorney is no longer valid if the person who granted the Power of Attorney becomes incapacitated. If there is no EPA in place, the court does have the power to appoint people to manage your affairs, but this can be very time consuming, costly and contentious at a time when legal and financial issues should be secondary to health concerns for all involved. If you have a Power of Attorney that is more than five years old, it would be recommended to review the changes by the BC Provincial Government.
There is a very useful link on the Province of British Colombia website (www2.gov.bc.ca) under “Incapacity Planning” which outlines considerations you will want to make when looking at your entire Estate Planning scenario. While this is a topic that is very difficult to discuss, it may be the most important piece of your Estate Plan that will protect you and those around you if they are forced to deal with incapacity.