Why a Power of Attorney is Just as Important as a Will

by True Wealth Advisors

This is our latest blog post in our series dedicated to estate planning. Last week we took a one week hiatus from our estate series to look at the fall out of Brexit. This week we revisit estate planning with powers of attorney.

Have you ever wondered what would happen if you ever lost the ability to look after your own financial affairs and make important decisions on your own? Who would look after your assets? Without a power of attorney, the decision is left in the hands of the courts. Many people assume it will automatically default to their spouse but this isn’t always the case. It may end up being the person you wanted it to be like your spouse or it may not. Do you feel comfortable leaving such an important decision to someone else? If your answer is no, a power of attorney is a must.

What is a Power of Attorney?

A will is an important first step in estate planning, but it’s just that, a first step. Your estate is incomplete without a power of attorney. A power of attorney is an often overlooked piece of the estate planning puzzle. It’s every bit as important as a will.

You’ve worked hard throughout your life to amass major assets like a home, car and business. Imagine if you had no idea who would look after your worldly possessions if you were unable to. If that doesn’t scare you, it should.

In simple terms, a power of attorney is a legal document that gives someone the right to act on your behalf. It ensures the person you trust most looks after your finances when you’re not able to. That may be your spouse, but sometimes it’s not. You’ll want to choose someone who is financially savvy and has your best interests at heart. A power of attorney provides specific written instructions for that person to look after your estate.

What are the Consequences of Not Having a Power of Attorney?

Let’s say you get in a car accident and you end up in a coma and are unable to look after your financial affairs. What happens if you don’t have a power of attorney? The laws in the province in which you reside will determine who is responsible for making important financial decisions on your behalf. Although interested parties like your spouse, children and siblings can apply to the courts to look after your affairs, there’s no guarantee they’ll be granted the right. Not only does this cause anxiety and stress at a time when your loved ones are still grief stricken from your accident, not having a power of attorney can cost a bundle in legal fees and be time-consuming to resolve, leaving your estate in limbo. If you don’t have a power of attorney, schedule a meeting with your lawyer to draft one up. Do it today, not tomorrow or next week.

There are other points to note when it comes to powers of attorney such as types of POAs, how to ensure it is valid for the different possible situations you might need it etc. We will cover all these in next weeks article. In the meantime, need some help with estate planning? We have a team of experts who can help you navigate the sometimes complex waters of estate planning. Feel free to contact our office today.

Subscribeto the True Wealth Advisors Newsletter

Subscribeto the True Wealth Advisors Newsletter

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!