I ended my last column with the warning that not all powers of attorney are the same. They can be as simple as a one-page form or quite extensive. This week I鈥檓 giving you examples of why you might want particular types of clauses in your power of attorney.
Compensation Clause
The Power of Attorney Act, section 24(1), says that 鈥溾�n attorney must not be compensated for acting as an adult鈥檚 attorney unless the enduring power of attorney expressly authorizes the compensation and sets the amount or rate鈥�.
It can feel esteeming for a parent to choose one of their children to be named in their power of attorney. Or for a close friend to be chosen.
And of course, you would be honoured to help your parent or a close friend at their time of need.
But you鈥檙e likely to face much more than a 鈥渙ne and done鈥� type of role if the need arises.
I鈥檝e heard several stories about how extensive the work can be. None of the folks sharing those stories received any compensation because the power of attorney didn鈥檛 provide for it.
This work is an imposition on your attorney鈥檚 life, upsetting whatever work/life balance they鈥檝e achieved. If they had wanted a 2nd job, they would have gotten one.
And they鈥檙e providing the services for you at a time when your cognitive capacity has declined to the point that your relationship with them might be very different from what it had been.
In my view, it makes sense to provide for a reasonable level of compensation for those services.
That begs the question: What鈥檚 a reasonable level of compensation?
In my opinion, the compensation should be considerably higher than what your appointed attorney earns in their job. Again, if they had wanted a 2nd job, they would have gotten one.
Depending on the attorney鈥檚 earnings, $50.00 per hour might seem reasonable. Or really low.
It鈥檚 important to also consider that $50.00 per hour might seem like a lot at the time you make the power of attorney, but not so much by the time your appointed attorney might need to step in, both because your attorney鈥檚 income is likely to increase over time and because of inflation.
Whatever rate you choose can be indexed to inflation.
I鈥檝e typically recommended a rate of $75.00 per hour.
Pet Clause
Another type of clause you might want is a pet clause.
For some folks, money is no object when it comes to caring for their pet.
Many love their pets like they would a child. Perhaps even more so!
Basic pet care expenses can be high in themselves. Vet bills for dental care, injuries and illnesses can become many thousands of dollars.
So long as you have the cognitive capacity to do so, you can choose to spend your wealth on your pet to your heart鈥檚 desire, with no concern at all about depleting your children鈥檚 inheritance or even compromising your own financial stability.
Things change if you lose that cognitive capacity.
Your attorney might have very different values when it comes to spending money on a pet. And the beneficiaries under your will might be hawkishly watching to ensure that their inheritance isn鈥檛 depleted by frivolous expenditures.
A clause that specifically authorizes and directs your attorney about the care of your pet and the level of priority to put on those expenditures will allow for your pet to continue enjoying the level of care you would have chosen to provide.
Gift Clauses
There are default restrictions about how an appointed attorney can deal with your money property.
A power of attorney cannot be used to give gifts beyond the lesser of $5,000.00 and 10% of your income in a given year.
And cannot be used by your attorney to give any of your money or property to themselves.
Good restrictions!
Or maybe not.
Consider having appointed your child as your attorney.
You might well have chosen, if cognitively capable, to help them out financially with their purchase of a home, the cost of particularly expensive medical care, or even to take your grandchildren to Disneyland.
If at the end stages of your life and incapable of doing so yourself because you鈥檙e in a coma or otherwise cognitively incapable, I expect that you鈥檇 want your appointed attorney to transfer your assets to your children before you die to eliminate the time and expense of probate.
Appropriate clauses can remove the default restrictions and allow for your attorney to handle your financial affairs in the ways that you would have wanted them to be handled.
Not a one size fits all
These are just some examples of variations of power of attorney document.
A power of attorney isn鈥檛 a one size fits all document. Your particular circumstances and wishes need to be considered for an optimal document to be drafted.
Paul Hergott
You are encouraged to contact Paul directly at paul@hlaw.ca with legal questions and issues you would like him to write about.
