When people seek help with their estate planning, they usually understand the need for an up-to-date will. Some, however, are less clear on the need to have a Power of Attorney. Having such documents is important and wise. Here’s why.
A Power of Attorney is a legal, written document that allows you to appoint someone to act on your behalf. Essentially, it gives them the same powers you have to deal with your assets and your personal care. A Power of Attorney is only valid after it is signed and only for as long as you live.
There are two kinds of Power of Attorney:
- Power of Attorney for Property covers your financial affairs and allows the person you name to act for you. A Continuing Power of Attorney for Property is a type of Power of Attorney for Property that allows the person you name to act even after you become mentally incapable.
- Power of Attorney for Personal Care covers your personal care decisions, such as housing, nutrition, clothing, and health care, should you be unable to act on your own.
If you don’t have a Power of Attorney, a family member can make health care treatment decisions for you and can apply to the Court become your guardian of the person and of property. Alternatively, someone else, like a close friend, could apply to act for you. With a Power of Attorney, you get to choose whom you would like to act on your behalf.
Powers of Attorney are powerful documents and should be given to individuals only after carefully considering that they are trustworthy and able to do what is required. It is wise to ensure the people who need to know about these documents are aware of them and where they are located. They should also be kept in a secure place.
Powers of Attorney are practical documents that can make your life, and the lives of your family members, much easier. When you create or update your will, remember your Powers of Attorney, too.
Tax benefits for you and your estate
Every legacy gift through one’s will to The Ottawa Mission Foundation provides your estate with a tax receipt for the full amount of the gift. In the year of your death, you are deemed to have disposed of all of your assets. Because of this, your reportable income can be high. The charitable tax credit flowing from your gift can offset any tax owing from capital gains or the winding up of retirement funds. Your executor should consult an accountant about how to make use of the tax credit in the most beneficial way.
Susanne Greisbach is a Senior Advisor in Trust and Advisory Services with the National Bank and a specialist in Wills, Trusts, and Estate Law. Susanne is a member of The Ottawa Mission Foundation’s Allied Professionals Network. This group of volunteers from various professions – law, accounting, financial planning – bring their professional knowledge and technical expertise to The Foundation’s legacy giving program. To learn more about Susanne and our other allied professionals, please visit our Legacy Giving page.