Estate planning can be an intimidating and overwhelming topic for many and involves careful contemplation and consideration by the individual preparing their estate plan. It is also important to remember that Alberta boasts its own unique set of laws and regulations that govern estate planning documents. While most people are familiar with wills as a key estate planning tool, a comprehensive estate plan will also contain a Power of Attorney and Personal Directive, which are essential documents for safeguarding your interests and ensuring your wishes are honored during life’s most challenging moments.
Whether you are new to estate planning or looking to expand upon your existing documents, this blog will provide an in-depth overview of powers of attorney and personal directives, along with the unique legal considerations accompanying each of these planning tools.
Estate Planning: A General Overview
An estate plan is a document, or set of documents, that outlines your final wishes regarding the handling of your legal, financial, and personal affairs when you pass away. Certain documents in an estate plan, such as a power of attorney and personal directive, may also be utilized in the event of your physical or mental incapacity.
The instructions contained within various estate planning documents can cover:
- what will happen to your assets;
- how your investments will be handled;
- how you want your children to be cared for; and
- how decisions regarding your health and personal care will be handled if you are unable to make such decisions yourself.
The type of documents and matters that each document will cover can depend on your unique circumstances, including how many assets you have, your family structure, and whether you own a business.
Estate plans should be reviewed regularly, but most importantly, they should be revised and updated as needed following major life changes, such as a marriage, divorce, birth or adoption of a child, or death of a spouse.
Determining Legal Capacity
Generally speaking, legal capacity refers to a person’s ability to understand the nature of their actions, decisions, and potential consequences. A person may lose their legal capacity (in other words, they may become unable to make such decisions for themselves) due to a medical or psychological condition, such as dementia, traumatic brain injury, or psychosis.
Capacity can become difficult to discern and when questions arise as to someone’s capacity, legal proceedings can quickly escalate. For example, a person may lose the ability to make certain decisions, but may remain capable of making, and understanding the impact of, other decisions. Further, a person may lose their capacity due to a contemporary health condition and then regain it. In some cases, a person may be accused of being incapable by a third party with bad intentions attempting to take advantage of a particular situation. Therefore, to ensure that your true intentions are reflected and minimize the chances of capacity challenges, it is important to proactively prepare a comprehensive estate plan while you have the capacity to do so.
If a person’s capacity is called into question, a capacity assessment may be ordered, in which case a professional will determine whether a person fully understands the consequences of their actions, and if they should be allowed to continue making legally binding decisions on their own.
What is a Power of Attorney?
In Alberta, there are three types of Powers of Attorney an individual you may choose to utilize:
A General Power of Attorney allows the chosen Attorney to act on your behalf and provides the Attorney with broad authority to make decisions related to your financial matters. However, a general Power of Attorney will not survive if you become incapacitated.
An Enduring Power of Attorney allows your Attorney to make financial and legal decisions on your behalf even if you lose the ability to make sure decisions on your own. An Enduring Power of Attorney will outline the scope of the appointed Attorney’s authority and will generally last until you pass away, revoke the Power of Attorney, recover from incapacity, or the Attorney is unable or unwilling to make such decisions.
A Special Power of Attorney (also referred to as a Specific Power of Attorney) is limited in scope and provides your named Attorney with limited decision-making authority over a specific matter or one-off decision. For example, a Special Power of Attorney may be used if you are out of the country and unable to finalize a matter or sign paperwork yourself. A Special Power of Attorney can also be time-limited.
Appointing a Power of Attorney
Due to the significant responsibilities and decision-making authorities provided to your Attorney, it is important to name a family member or someone else that you trust to act in your best interests when it comes to decisions regarding your property and financial affairs.
What is a Personal Directive?
While a Power of Attorney addresses decision-making authority over your property and financial matters, a Personal Directive is a legal document in which you can give someone else the authority to make decisions on your behalf relating to your health and personal care if you are unable to. These decisions may relate to medical treatments, your place of residence, and whether you will remain on life support. It is important to note that a Personal Directive will only come into effect in the event you lose capacity to make health-related decisions for yourself.
Preparing a Personal Directive or Power of Attorney
In Alberta, there are specific laws and regulations governing how, and in what form, a Personal Directive or Power of Attorney must be created. There are also specific provisions related to the age and capacity of the person creating the document, who must be present at the time the document is signed, who is allowed to be a witness, and other considerations. Failure to adhere to such rules and regulations can result in serious complications, litigation, or your document may be rendered invalid. Therefore, it is important to work with an experienced estate planning lawyer who can explain the considerations and impact of each document you wish to prepare.
Contact the Lawyers at DBH Law for Guidance on Powers of Attorney and Personal Directives
At DBH Law in Calgary, our talented team of estate planning and administration lawyers regularly advise clients of their options when it comes to estate planning and preparation. We work closely with our clients to help them determine the most cost-effective and efficient estate planning strategy to meet their unique needs. From document drafting to estate administration, our lawyers are ready to help. Contact us online or by phone at 403.252.9937 to schedule an initial consultation with one of our estate planning lawyers.