Many people may worry as they get older about what will happen if they are no longer able to
manage their finances and personal property. It can be a good idea to be proactive in planning
ahead for a time when you may need help managing your affairs. One option available to Canadians
to address this financial planning concern is appointing a Power of Attorney.

What Is a Power of Attorney?

Power of Attorney (POA) is a legal document that gives one or more persons the authority to
manage your finances on your behalf. Once a person is appointed POA, they have the same
decision-making abilities over your finances and property as you do. This includes bank accounts,
investments, bills, real estate, among others. It’s important to understand that this does not
mean they now own the property, only that they can make decisions regarding it. POA is limited,
however, and they do not have the authority to make or change your will, change beneficiaries, or
appoint a new POA. You can outline how the power of attorney can act.

For example, you can limit them to having decision making abilities over only one piece of property.
It is possible to appoint more than one person as power of attorney. The acting POA’s can be
required to make decisions together, or have the ability to act separately. This is something that
is outlined in the power of attorney document. Unless you become mentally incapable, you still
maintain the same control over your finances and property.

Types of Power of Attorney

There are two types of power of attorney when dealing with finances and property:

General Power of Attorney
General POA gives someone the authority to make decisions over some or all of your property
on your behalf. General POA only has this authority when you are mentally capable of managing
your own affairs. POA ends immediately if you become incapable. Power of Attorney can come
into effect when you assign them or on a specified date.

Enduring/Continuing Power of Attorney
Enduring POA allows for the appointed attorney to have decision making power over your
property when you are mentally incapable.

Choosing a Power of Attorney

The person you assign as power of attorney should be someone you trust completely. This person
could be a spouse, sibling, child, or other friend/relative. The minimum legal age for a POA varies
from province to province. It is recommended to assign a substitute POA in the event your first
choice is unable or unwilling to assume the role. It is important to note that in some provinces, POA’s
are entitled to be paid unless otherwise specified in the document. Power of Attorneys must be able
to manage your money in your best interest and keep detailed records on the decisions they make
on your behalf. Below are a few questions to ask yourself about the person you are considering
appointing:

• Does this individual have experience managing money and property? Do they do a good job
of managing their own affairs?
• Do you know this person well enough to feel that you can trust them?
• Do they have any personal issues that may interfere with their ability to act in your best
interest?
• Does the individual understand what will be expected of them as your attorney?
• Does this person have the time to manage your money or property as well as their own?
• Is this person nearby and readily available to assume this role? Having someone that lives
far away from you may cause issues.
• Has this person willingly accepted their appointment as attorney?

Benefits and Risks

Benefits:

• Makes it clear to family and friends who will be responsible for your money.
• POA’s must manage your money for your benefit and can be required to account how they
manage it.
• Your Power of Attorney document can be as general or specific as you want giving you great
flexibility over what assets your attorney would have control of.
• The ability to have multiple attorneys can limit the possibility of someone taking advantage of
you.

Risks:

• Can lead to mismanagement of your money if your POA turns out to be untrustworthy.
• Sometimes people limit the abilities of the POA to the point that it makes it difficult for the
POA to fully take care of your finances.
• Appointing two or more POA’s can come with certain challenges. If the POA’s are required to
act jointly then it is possible that they will not agree on certain decisions.
• If your Power of Attorney is not up to date, it is possible that the person you appointed may
be currently unsuitable for the role.

Appointing a Power of Attorney can be a good option for many people and gives them the peace of
mind that someone will be able to help them with their money if there is ever a need for it. When
appointing a Power of Attorney, it is important to work with a lawyer who can fully explain the legal
document to both you and your attorney. You should never feel pressured by a relative or friend to
sign a Power of Attorney.

It is also important to note that a Power of Attorney for Property is not the same document as a
Power of Attorney for Personal Care. A POA for property will have no authority to make decisions
regarding your personal care. These are two separate legal appointments, and they are not
interchangeable.

For further information, please contact a Cumberland* Portfolio Manager, who can assist by
connecting you with just the right expert advisor.