In this post, I want to go back to basics. My clients are wise and well-informed people, but they are not estate planning specialists. In spite of my years of education and life experience, I am bound to misunderstand the simplest thing my car is doing which would be obvious to a more mechanically-inclined individual.
So it is with the wisest of non-experts when it comes to the basics of Wills and Estates. I am frequently surprised when a client or friend says something like, "my mother doesn't need a will; she has given us power of attorney to look after everything, so we're good."
Powers of Attorney
Simply put, Powers of Attorney authorize and appoint another person of your choice to act on your behalf only while you are living. The law causes them to terminate automatically upon the maker's death, so that anyone still trying to use your Power of Attorney after you die is acting without legal authority and liable for doing so.
There are two kinds of Power of Attorney.
Power of Attorney for Property: This document grants authority to deal with your material belongings, obligations and financial interests including bank accounts, houses, mortgages, debts, investments and other possessions. You can appoint one or more representatives ("attorneys") and, if you wish, alternate attorney(s).
Power of Attorney for Personal Care: This document grants authority to a person of your choice to make decisions concerning a list of matters such as the daily personal care you will receive when you can no longer care for yourself, medications and other health care you should receive, life support, and so on. Note that it is not the same thing as a so-called "living will," which attempts to set out the actual care you want to receive. This important distinction makes a big difference to the type of decisions that can be made regarding your health and it is imperative to have a serious discussion with a legal professional who thoroughly understands the different implications of these documents before signing such a document. The last thing you want is to have accidentally limited the decisions your attorney can make in such a way that she cannot make an urgent or desirable care decision in an unforseen set of circumstances.
Wills
Your Will comes into force upon your death and not before. If you don't have one, your family would have to apply to court for authority to deal with your estate, a potentially expensive proposition which can also pit family against each other. No amount of existing Power of Attorney documents will save you in this situation.
In your Will, you appoint executors. Your executors get their power directly from the Will itself--not from the court to which they may or may not have to apply to get the will certified. (This is a different and normally far less expensive court application than the situation where no Will exists.) Some organizations which the executors have to deal with may co-operate with the executors based on the Will itself, while others will insist upon court validation of the Will, otherwise known as either "probate" or obtaining a "Certificate of Appointment of Estate Trustee With a Will."
The Will is more specific about what the executors are to do with your property than the Power of Attorney. An important goal of your Will is to avoid confusion or people fighting about who your things should go to after your death and potentially wasting large amounts of your hard-earned savings on litigation. Although you have a lot of freedom as to how you want to dispose of your belongings, there are many things you'll need to be careful of. I will write a separate post shortly, specifically to discuss some of these important considerations.
Signing
Both Wills and Powers of Attorney are subject to very strict signing rules in order to be upheld. Affidavits of Execution are typically done at the time of signing to provide evidence of proper signing. This applies to both Wills and Powers of Attorney. Institutions such as banks to whom your appointed attorney will need to show the Power of Attorney to prove his or her authority will want to see the Affidavit in order to satisfy themselves of its validity.
Ability to Make a Will or Power of Attorney
In addition, the maker of a Will or grantor of a Power of Attorney must be of sound mind, understanding things like what assets he or she owns and what obligations he or she may have to dependants and so on. Note that after a person loses the ability to keep track of such things, or begins to suffer from dementia, it will be too late to create a valid Will or Power of Attorney. Therefore, it is important to get these matters looked after well in advance of any threat to one's legal capability to do so.
In Conclusion
This is a wildly simplified overview of an area of law that has developed over a number of centuries! There is nothing simple about getting a Will done right and the law is continually evolving. My hope is that this post makes the framework of basic estate planning a bit more clear to readers.
Information in this article is intended for general guidance and interest, and is not to be treated as legal advice. Readers should always consult a qualified lawyer with their own particular fact situations in respect of legal advice they may require. In addition, provincial laws vary and readers are encouraged to get province-specific advice.