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Thursday, May 13, 2010

Can I direct that my power of attorney use my favourite financial advisor?


Most people realize that when they appoint an attorney under an Enduring Power of Attorney, the person they name will be responsible for handling their money and investments. Sometimes, the attorney is in charge for a very long time.

This concerns a lot of people. They fear that the person they appoint will invest foolishly or recklessly and end up losing a big chunk of the nest egg the person spent his or her life accumulating.

I can see where this fear comes from. Think about the fact if you should lose mental capacity and your attorney has to take over, that person might be running your financial affairs for years. You're dependent on that attorney to look after things and should there be a big financial loss, you're the one whose lifestyle or long-term care will be reduced accordingly.

When clients express this fear to me, I try to get to the bottom of it. I ask what they would like their attorney to do once they take over. I ask what would give my client peace of mind that their attorney wouldn't do anything foolish with the money. Often, their answer is that they'd like their attorney to keep the investments with the financial advisor they now have.

Good financial advisors have an extremely loyal following, I've noticed. They know their clients really well, usually for many years. The advisors understand their clients' philosophy about saving, spending and investing and understand each client's tolerance for risk. The advisor helps with home ownership, business profits, investments, business succession planning, retirement planning, insurance planning and estate planning. The client trusts that the advisor will be able to steer the attorney towards the same solutions the client himself or herself had desired.

It's possible to include a clause in your Enduring Power of Attorney that expresses your wish that your attorney continue to use the financial advisor you now use yourself. You can't make this an absolute order, because you can't fetter your attorney's discretion that way. Also, your advisor could have retired or passed away by the time your document is used.

This is not a clause that would appear automatically in an Enduring Power of Attorney. It's something that would be included only where it was applicable to a client who expressed an interest in having it in the document.

I've noticed that this clause is extremely popular with clients. It tends to make a terrifying possiblility a little less terrifying by giving the clients a way to help control outcomes. Financial advisors tell me that they like the clause too, because often they know their client's families and they'd like to continue working with the families.

If you have a financial advisor you like and trust, talk to your estate planning lawyer about having this kind of clause included in your Enduring Power of Attorney.

8 comments:

  1. My mother has me as an executor in her will. She is showing signs of senility. Should I consider getting a power of attorney for my mom now before things get worse? My dad is even older, but not showing signs of senility. He has a different executor for his will.

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  2. my father passed away leave a will kit filled out from self counsel.He signed the two witness spots.Is the will valid as not witnessed.In the will I was named executor and he declared bankrupcy in2009,owns nothing,has a lein on a car not worth for the bank to take back

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    Replies
    1. Hi. In my opinion, the will kit will is not valid if it's not witnessed. Had the will been 100% in your father's handwriting, it would not have needed witnesses.

      If there were assets that you had to deal with, you could apply to the court for an order of administration with will annexed. This means that you acknowledge the will, even though it failed due to a procedural error. The court would then issue an order that the will would be followed.

      However it sounds as if there are not enough assets to justify the need or the cost for court involvement. You do not need probate or administration to deal with a vehicle.

      Lynne

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  3. We are numerous siblings with a surviving parent in long term care. The parent no longer wants to deal with financial issues. One sibling is the parents financial adviser and now wants also to be named Financial POA. Is this prudent? Can you point me to literature to read?

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  4. Lynne, I wrote you a while ago about a home my mother left to my sister and me in Nova Scotia. She and her husband will NOT agree to insure the property and I need an attorney because they are so utterly uncooperative about everything. Can you recommend one in Nova Scotia? Thank you.

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    Replies
    1. There are a couple of outstanding law firms in Nova Scotia. I have worked with lawyers from the firm of McInnes Cooper with great success.

      Lynne

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  5. Hi Lynn - can the executors who are also the beneficiaries agree to change the terms of their mother's will? Mother passed away in December. The terms of her will are that her house is to be held and leased for 5 years. The sons do not want the hassle of leasing out the house. There seems to be no reason why the house has to be held for this period of time. Since the sons are both the executors and beneficiaries and they agree they wish to sell the house, do they have to get directions from the court or can they proceed to sell the house. Julie

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  6. Hi Lynne,

    My brother and I are co-executors of my father's estate. He willed us each a house then divided the estate 50/50. The problem is the house my brother received had been a rental while his principle residence is full of personal items. He had hoarding tendencies. The transfer of title has taken place. my brother intends to sell his property. What are my responsibilities to provide him access to my property given it still contains possessions?

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