As our population ages and the life expectancy in Canada increases, more and more seniors have their financial affairs managed by a power of attorney.
Here are some suggestions to protect yourself.
Choose wisely. You must completely trust your power of attorney. Legislation exists in some provinces to prevent certain people from acting in this capacity, including people who are going through personal bankruptcy or have criminal convictions.
There are also limitations against someone who provides personal care for profit acting as power of attorney for someone in their care. Consider the possibility of financial abuse or physical abuse in those you are considering for this duty.
Do as much as you can yourself until you are no longer capable. Pay expenses by automated debit or at the bank, and have income such as pension and investment income automatically deposited.
Make the power of attorney document while mentally competent, but don’t release the document to the person named until you are ready to have them start acting in that capacity. Your lawyer could retain all copies in safekeeping if you prefer.
Consider having two or three people acting as your power of attorney, so they can work together and check on each other.
Consider setting limits on gifts and loans to the person who has power of attorney or to family members. Also consider setting a fee for the person acting as power of attorney because it can be a big job. If they are getting paid for at least some of their time and effort, there may be less temptation to help themselves to your funds.
If you have been given this job to do, take it seriously. You have been put in a position of trust and you need to be accountable.
Keep your own and the grantor’s money and other property separate.
Never borrow or use the grantor’s money for your own or your family’s purposes.
Inform the grantor of decisions being made and money spent and received, to the extent the grantor is still capable of understanding.
Encourage and facilitate personal contact between the grantor and her family and friends.
Be aware of what is in the will of the grantor and try to preserve those gifts unless it is necessary to sell the asset to maintain the grantor during her lifetime.
Be prepared to present an accounting during your term as power of attorney and keep careful records of all receipts and money spent.