In a parent's best interests

This morning I dealt with a question about a customer who was acting under an Enduring Power of Attorney for his mother. Mother has an investment account at one of our branches. The son came into the branch with the Enduring Power of Attorney (and there are no questions about its validity) and wants to use it to put his name and the names of all his siblings on his mother's account.

He's getting pushback from the personnel at the bank, and is wondering why. His point of view is that his mother gave him full control of all her money and he can do whatever he wants with it.

The problem is that an attorney under an Enduring Power of Attorney is supposed to be acting in the best interests of the person who appointed him or her. How is putting a handful of names on his mother's investments acting in her best interests?

I think this customer is looking ahead to the day when his mother passes away, and believes that putting the funds in joint names would ensure that they pass equally to all of the children. However it is the nature of joint funds that works against him while his mother is alive. The fact that the funds are joint means that any one of the people whose names are on the account has access to the money. This is certainly not in the mother's best interests to have her nest egg vulnerable like that. And if you think a person's own children won't take her money, think again. Statistics are against you on that one.

There is also the whole issue about imposing estate planning on the mother. If she has made a Will, she may have left those investments to someone. It may or may not be her children equally. The son should not try to circumvent the mother's right to choose what she does with her estate after she passes away, as that is not in her best interests either.

I don't believe this customer is greedy or in any way dishonest. I think he is not aware of the limitations of an Attorney under a Power of Attorney. He isn't alone; it's not really a well-understood job. Anyone taking on this role should realize that every single transaction he or she makes with another person's money must be in that person's best interest. Perhaps he also doesn't realize that if one of his siblings takes the mother's money, the attorney might be personally liable for the loss.

If you are acting as an attorney, please ask for guidance.

What does my Enduring Power of Attorney allow my named representative to do?

I find that clients, whether attending a seminar or meeting with me one-on-one, have a lot of questions about Enduring Powers of Attorney. These documents are not as well known as wills are, so it isn't surprising that people haven't heard or read as much about them.

The person who you appoint as your spokesperson and decision-maker under your Enduring Power of Attorney (EPA) is called your "attorney". That alone causes confusion as those of us who have watched our share of American television are used to the fact that Americans call lawyers "attorneys". Here in Canada the word has a different usage.

Your EPA may be drafted with each and every power and authority for your attorney spelled out. Some don't specify much at all. But every EPA will contain a statement that your attorney can do anything that you can legally do by attorney with your own property and money. People often accept that statement but when we sit down and talk about how those powers could apply to them, they are taken aback by how much authority it really is.

Here are some of the things your attorney could do - legally - with your property once your EPA is in effect and he or she is acting as your attorney:

• sell, mortgage or rent out your home or cottage
• deposit or cash cheques made out to you
• sell your vehicle, motor home, art collection, boat or jewelry
• run your business, including hiring and firing employees
• move your investments into other investments of their choice

And of course there are many more as well.

There are restrictions imposed on attorneys by law, but my experience has been that many attorneys don't know what they are and are flying blind. If you have had your EPA prepared by an estate specialist, you may have received a letter or other written material telling you the do's and don'ts of being an attorney. Unfortunately not all lawyers offer that kind of assistance.

As you go through the estate planning process, put some careful thought into who you are choosing as your attorney as you are handing over complete control of everything you own.