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Wednesday, June 29, 2011

Tailor your Power of Attorney to your particular situation

An essential part of estate planning is preparing for possible future incapacity. It's every bit as important as planning ahead for your eventual passing away. The main document used for incapacity planning is the Enduring Power of Attorney, which in various places is called a Continuing Power of Attorney, Durable Power of Attorney, or Power of Attorney for Property. There are other variations on the name as well.

Possibly the biggest decision to be made when preparing an Enduring Power of Attorney is the choice of person or trust company who will represent you once you have lost capacity. But that should not be the end of the thought you put into this very powerful and far-reaching document.

I see too many "cookie-cutter" powers of attorney in which little or no attempt has been made to personalize the document for its purpose.  While they do appoint someone to act, they give no guidance as to how things should be managed. This seems to me to be a loss of an important opportunity for the owner of a power of attorney to ensure that things run the way he or she wants them to run, and to build in some protection.

When having your Enduring Power of Attorney prepared, it's essential that you think about your specific family and your specific assets. Ask yourself what would change if you suddenly became incapacitated. Who would run your business? Who would look after your investments? What would happen about your 19-year-old child who lives at home rent-free while attending college? And what about the college tuition you've said you would pay? What about the quarterly donation you currently make to your favourite charity? Would your lake cottage be sold if you couldn't use it any more, even though you were hoping to leave that to someone in your will?

All of these things can and should be addressed in your Enduring Power of Attorney if  you want it to operate smoothly without court applications and family disputes.

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