Property POA - Financial Directive?

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Hopetoretire
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Property POA - Financial Directive?

Post by Hopetoretire »

I'm at the age where I have to revise my POAs and will. I believe that with the Personal Care POA, one can attach an Advanced Care Directive to ensure that one's wishes are carried out and your greedy relative can't decide euthanasia for you (as an example). Is this the subject of a Living Will?

Is there a similar Financial Directive that one can attach to a Continuing POA for Property? E.g. do not sell my house and go to the casino, but put proceeds into Annuity for me, do not rob me of all my funds needed for nursing home but get the bank to only pay out a certain amount every month? Is this the subject of a Living Trust? Would a bank do this (and in future execute my will)?

I've been scanning various lawyer websites but the information is scant (guess I'll have to pay $450/hr for this), so would like to get my act together before involving an estate planning law firm.

Thank you for any advice (and yes, I don't really have anyone to trust).
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Re: Property POA - Financial Directive?

Post by kcowan »

Hopetoretire wrote: 19 Nov 2017 21:25...do not sell my house and go to the casino, but put proceeds into Annuity for me, do not rob me of all my funds needed for nursing home but get the bank to only pay out a certain amount every month?
I think your situation indicates that you should purchase an annuity while you are capable. Consider a reverse mortgage on the house if that is needed.
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Re: Property POA - Financial Directive?

Post by brucecohen »

You can put conditions into a power of attorney, but understand that conditions create complexity and complexity creates risk that the PoA holder will not be able to meet unexpected needs that might develop. Is there no one you fully trust?
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Re: Property POA - Financial Directive?

Post by Hopetoretire »

Yes, no one really to fully trust :(

I bought 2 annuities last year, no reverse mortgage needed. Most of assets in fixed income. Thinking of putting 75% of assets into Living Trust, and leaving the rest for POA discretion in case of emergency. I read that registered investments can't go into a Living Trust? How does one manage this through a POA - would they be able to withdraw from RSP, convert into RRIF, etc? Also believe that one has to pay 3-6% for Property POA (does this mean that one can secure the services of a "professional" from a company to do this?) A POA can decide to spend less on my care especially if they're a beneficiary of my will and it's a condition that I share my will with them, AFAIK.

Apologies for so many questions, my health is okay right now, so no urgency, but want to be prepared. Thanks!
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Re: Property POA - Financial Directive?

Post by AltaRed »

There are a number of threads on this very stuff if you chose to do a forum Search (Advanced Search icon).

I agree with Bruce that one can put some restrictions on a Property POA but they should be left quite broad to take into account wide ranging environmental/business conditions that might occur. I don't understand where you come from with regard to a Living Trust. To me, there are two key documents required (other than a Will).

One is a Property POA that is either Enduring/Continuing (active all the time), or Springing (that comes into force once you have been declared incompetent). The Attorney named by the Grantor manages one's lega/financial affairs until death at which time it ceases to function and then the Will (and Executor/Administrator) takes over.

The other is a Personal Directive/Health Directive (or other similar name) that gives someone the authority to make life decisions as you have laid them out in the Personal Directive, e.g. not to keep one alive by artificial means. It is of most value for the health system which will thus know what your intentions are and they can act accordingly, e.g. not to go heroic means despite pain and suffering to keep you alive. And more recently, when assisted euthanasia might be appropriate though the law (outside Quebec) is very limited in application so far...but is evolving over time. The PD is also good for the representative to make decisions on where you will live, e.g. LTC, etc. and is your advocate within the health system to carry out your wishes.

The only advantage I see to a Living Trust (whether it be revocable or irrevocable) over a Will is that you would be the beneficiary of the proceeds while alive and the estate would not have to go through probate after death, but you still have to name your beneficiaries for your estate, and name an Executor. That Executor does not have to be the same person as your Attorney in a POA. As far as what is allowed in a Living Trust, I think you need to chat to a lawyer but as mentioned by Bruce, I would not be too restrictive in its application. I would only provide broad guidelines on how one's assets might be managed.

Provincial legislation provides guidance on what fees can be charged by Attorneys, Executors, etc. If you have no one to fully trust on any of these matters, it is likely best that you name a Trust Company to manage all this on your behalf. They will obviously charge fees according to legislation but they also are subject to oversight by the regulator, more so than an individual would be. A well known Trust Company is not going to stray outside the box when there is regulatory oversight. It is not too early to start researching what Trust Company to pick to manage your affairs.

Perhaps Twa2w will care to comment. He has first hand career experience in these matters.
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Re: Property POA - Financial Directive?

Post by twa2w »

I don't have a whole lot to add but just clarification in case the OP is new to some of the terminology.

Living will, POA for personal care, personal directive are all terms for essentially the same thing. Legislation and terminology vary by province. Generally speaking this document names a person or persons to make healthcare decisions on your behalf if you are incapable of doing so. It also allows you to leave instructions concerning your wishes about that care and end of life decisions.

The person you name may be, but does not have to be, the same person you name as a power of attorney for financial matters. Beware that if it is not the same person, there may be conflicts. The person making your health decisions may want to put you in a gold plated nursing home while the financial POA may say his job is to preserve money for the heirs and wants to put you in a 20 person ward.
So be prepared to address this sort of thing in the documents.

AR has outlined good info on POA's. You can leave pretty specific instructions but this can cause issues as banks who are presented with this do not want to be involved in overseeing decisions on what the POA can do. Generally speaking, you would leave a separate document of instructions to your power of attorney, rather than in the POA document itself. Of course there is little oversight on these things so no guarantee they will be followed. I have seen, on large complex affairs, where the attorney on the POA, has to report to a third party every so often, I believe the Ontario government also has some rules that interested parties can demand an accounting under a POA. I am not in Ont and am unsure if this is still the case and how it works.

You can name a trust company as your POA but they will not normally act for a healthcare directive. They also usually require a certain minimum to act. You can easily set up an apptmnt at no cost with a trust officer to discuss terms and fees. They will likely give you an idea via phone or email.

BTW, you do not have to provide your POA with a copy of your will. You could easily tell them what lawyer holds the will and the lawyer cannot release it without your permission or until you are gone. At which point your executor in the will, will take over. And a trust company, as pointed out, can act as executor as well.

You could set up a trust and move all you non- registered assets to the trust. On your registered assets you can name beneficiaries.
Trusts can get complicated and expensive. There would be extra tax filing and as you age you may not want tne hassles. If you want more info let us know.
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Re: Property POA - Financial Directive?

Post by AltaRed »

Since the OP said he has no one he can really trust (I assume he means friends and family and/or business associates), I think he needs to come to terms with a professional trustee, and that this will cost money. He also has to wrestle with the protocols trustees are supposed to be use (likely to be used) to manage his financial affairs via POA, and if the same (or different) firm, executor of the estate.....versus being so restrictive that no trustee can reasonably act on his behalf under circumstances the OP may not even contemplate/imagine today. A lot of shit can happen in 5-20 years and the OP ultimately needs to trust 'professionals'.

I agree much of his financial POA issue could be solved today with a good portion of the assets being annuitized in life annuity, hopefully partially indexed? with the remaining assets, including the house, monetized as/when needed for extra spending needs. When the OP no longer is capable of managing his financial and legal affairs, he should not be restricting sale of the house as it will no longer suit his living needs and is really nothing but a money pit/stranded asset. FWIW, I would not agree to being the OP's Attorney in a financial POA with the constraints the OP has been articulating so far.

Separate from this of course is the Personal Directive (insert province label here) and if the OP has no friends or family to hold on to this document (developed by a real lawyer), then I don't have any recommendations. That is a whole other subject he should be talking to someone about sooner rather than later. Perhaps one of the doctors here will comment?

I have 2 documents (in BC). One is a Representation Agreement and the other is an Advance Directive. The first covers my general health care wishes and where I live, etc. for the time I am essentially not terminal (could be a decade or more), while the latter is specific wishes on end-of-life matters. The first wouldn'tt normally engage directly with the health care system except to prove who has authority, while the latter is very much integrated with the medical system. The OP needs to deal with both issues.
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Re: Property POA - Financial Directive?

Post by twa2w »

Agree, but we really do not know enough about the OP other than he does not trust anyone in his personal circle to be his POA, he owns a home, has a couple of annuities and an undislosed amount of other assets. He has a list of specifications due to lack of trust.

Does he have children he is estranged from or ?, commonlaw? Other family? Does he want to leave any estate.?

We have no idea the size of his estate.

I agree he should look at a professional POA /exec at the very least to see if costs and services meet his expectations.

There are trusts that may work for him as well.

Of course much of this will depend on his net worth and specific expectations.

I realize it is tough to disclose too many personal details on the net.

I suggest he call his bank, or a bank and arrange to meet with a representative from their trust dep to talk about professional executorship and professional POA. Many branch Bankers and even telephone Bankers are not conversant with their trust counterparts so he may have to be patient when he is tracking a contact down. There would be no charge for this and he will at least know the costs. - I suspect they are less than he thinks.
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Re: Property POA - Financial Directive?

Post by AltaRed »

Indeed, we do not know his family situation OR his assets, nor should he feel compelled to disclose them. On matters like this, he needs to start talking to some professionals. A financial POA may be of less consequence than his health directive if he absolutely has no one to turn too.
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Re: Property POA - Financial Directive?

Post by OptsyEagle »

AltaRed wrote: 20 Nov 2017 10:41 Property POA that is either Enduring/Continuing (active all the time), or Springing (that comes into force once you have been declared incompetent).
As for the Springing one, who decides when one is incompetent? How does it effectively get activated? I would think most people would want this one, but it is the other that I tend to have seen more frequently.
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Re: Property POA - Financial Directive?

Post by AltaRed »

OptsyEagle wrote: 22 Nov 2017 14:28
AltaRed wrote: 20 Nov 2017 10:41 Property POA that is either Enduring/Continuing (active all the time), or Springing (that comes into force once you have been declared incompetent).
As for the Springing one, who decides when one is incompetent? How does it effectively get activated? I would think most people would want this one, but it is the other that I tend to have seen more frequently.
I mentioned Springing only because it appears the OP has a significant desire to remain in control while his mind is in control. But there are issues with a Springing POA and that is the willingness for capacity to be assessed by the medical profession et al. From https://nelligan.ca/blog/wills-and-esta ... -attorney/ as one example.....
A springing power of attorney gives comfort to the donor. He knows that until a determination of incapacity is made, he will be able to deal with his investments and property without any interference by his named attorney. However, in some cases this can lead to uncertainty.

It is not an uncommon situation to have a donor with diminished capacity still maintaining that he is perfectly able to manage his own financial affairs, when clearly he should not be doing so.

Unless the donor is willing to have his capacity assessed, the donor’s attorney and family are in a dilemma. They can either: 1) let the donor continue with his misguided belief that he is capable; or 2) after failed attempts to convince the donor that he is incapable, apply to the Court for an order to have the donor assessed and then a guardianship order over the donor’s property. Needless to say, the Court applications are expensive and very disruptive to the family.

While a springing power of attorney makes sense to a lot of people, there is also a risk that it will delay an attorney being able to act on the donor’s behalf.
Clearly this could be a very grey area since if the Attorney is a trust company, they have no way of really knowing when the grantor is going off the deep end, unless someone else who knows the grantor proactively initiates the action. Even then, why would the professional necessarily be motivated to initiate the proceedings unless there is some remuneration involved?

I don't have a Springing POA for this very reason. I am likely to be stubborn as I go mental. I place my trust in my co-Attorneys with an Enduring/Continuing POA. Could they start acting on my behalf without my knoweldge? Potentially yes, but as long as I am sane, I will notice any such ulterior actions and have an opportunity to intervene. And presumably I picked them based on my judgement of their character.

What one can do to miimize ulterior motives, is have all their financial and legal information well documented, but filed away at home in an Estate folder rather than all the financial and legal details of heir life being given to the Attorney upfront.

Ultimately, the OP has to trust someone to more or less act in his best interests when the time comes to do so.
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Re: Property POA - Financial Directive?

Post by OnlyMyOpinion »

Tough to cover all eventualities.
Our lawyer did not feel we should have an enduring POA in effect at present (early 60's).
Hopefully I will be in a position to judge when I should kick the can down the road, while my wife (or failing her, my son) and I can discuss things 'collegially'. This is effectively how my father (late 80's) and I operated for about a year. Now, while he is still cognizant, he no longer has any interest in his assets/finances.

My Enduring Power of Attorney (EPA) 'springs' into effect if I,
a. execute an attached Declaration,
b. become physically unable to communicate, or
c. become mentally incapable based on completion of an attached Medical Opinion/Questionnaire assessing my Legal Capacity to sign the EPA (yes-no). It is to be executed by a medical doctor with knowedge of my medical condition who ascertains whether I,
i. understand the nature & effect of the EPA (yes-no),
ii. understand that my attorney will have complete control of my property (yes-no),
iii. understand that the EPA will continue if I am/become mentally incapable (yes-no).
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Re: Property POA - Financial Directive?

Post by Hopetoretire »

Thank you all for the discussion. I am learning a lot and also noted some things that never crossed my mind. I am considering a professional Enduring Property POA and not springing in case I'm in an accident and unable to pay my bills, etc. for a period of time. Hope to build in a clause that can take away powers once I have recovered (can I include the caveats listed by OnlyMyOpinion in the document)?

Cross referencing in the Personal POA (physically or mentally disabled but not terminal) and the Property POA (although different attorneys) may help ensure that I'll have enough funds to put me in a decent LTC home and not out on the street while "beneficiaries" are waiting for me to die. I'm okay with dying broke (use up all monies to stay healthy and cared for) and this is where the difficulty lies if I nominate a friend or family member as attorney (they're not poor, but I've seen several signs of greed). So I think I'll have this drawn up:
1. Personal POA for disability and Advance Directive if terminal
2. Property POA by professional that "springs" into effect temporary or permanently depending on health condition.

Is it true that a will beneficiary cannot be a POA or executor? I will look for will execution in a bigger law firm and not an individual lawyer who may retire or predecease me and maybe buy 2 more annuities (any other company other than Sunlife giving good returns)? Assuming that a life annuity can pay directly to LTC home (currently mine are term annuities) ...
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Re: Property POA - Financial Directive?

Post by AltaRed »

2. A property (financial) POA can be revoked at any time (or revised) provided one is deemed capable of making informed decisions. IANAL, but I would think lawyers may have a bit of difficulty with you coming back to this world and wanting to revoke/revise until they can be sure that is the case. I think they may require other witnesses to swear on an affadavit that you have regained your mental capacities, i.e. the lawyer does not really know you. Others who do, at least 2 years I think, would have to swear to that.

I don't know why you would want to revoke though. You could go cuckoo 2 days after you have revoked the Enduring POA. Just because you have an Enduring POA does not prevent you from regaining control of the steering wheel (making your own legal and financial decisions).

AFAIK, an Estate beneficiary can always be a POA Attorney and/or an Executor to a Will. That is often the case within families.
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Re: Property POA - Financial Directive?

Post by twa2w »

Just to add a note or two.

Re beneficiaries being POAs etc. A beneficiary or executor, vannot be a witness to a will they are named in. Similarly a POA cannot be witness to the POA document.
Easy to get this mixed up.

A lot of Springing POA'S have very specific guidelines as to how incompetency is determined. Often it is worded that two medical doctors or one doctor and one other medical professional confirm in writing the individual is incapable and often the document will state, my family Dr who or his replacement, and one other medical professional. A springing POA is only in effect during periods of incompetency. If you recover from a coma, the POA ceases. Senility or Alzheimers is a little tougher as the donor can always get reassessed by different people on a good day. Only myopinion covered these issues quite well.

Of course a continuing POA has similiar problems if an attorney starts acting because he believes Dear Dad is losing it. Dear dad gets ticked and revokes the POA and no longer trusts the son.

More usually what happens is the POA starts acting with the donors permission to assist with Bill payments and it is a gradual transition. Although sometimes dear dad forgets he asked the poa to do something and the s*** hits the fan.

If the donor is competent, an enduring POA should only act with their permission. Dad broke a hip, son does banking, helps list house etc. Keeps dad in loop on all transactions.

Of course poa's are ripe for misuse and abuse.

In the event of a professional POA, they will only act in periods of incompetency, ie the broken hip, the coma and will step back otherwise. Mental incompetency is a whole other situation.
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Re: Property POA - Financial Directive?

Post by OnlyMyOpinion »

An additional point:
Even though I act (jointly with my sister) for my mother under an enduring PofA for which I have notarized copies, at the suggestion of the CRA, I have also gotten a letter from her doctor (at her long term care home) attesting to her permanent lack of capacity.
Submitting both documents was suggested by the CRA when I spoke to them this week about acting as her representative for tax purposes (to access her tax info and file her T1).

The doctor's letter will also support my application to the CRA to act as representative for my father's estate. His will names her as executor or myself (and sister) if she is incapable. Her two documents along with his proof of death letter, notarized will, and a cover letter of explantion should suffice acording to the CRA.
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Re: Property POA - Financial Directive?

Post by Hopetoretire »

At last, have time to reconsider my options, and thank you all for the detailed advice and discussion last year. Thinking of:

1. Creating enduring POA plus Revocable Living Trust (with successor trustee being a Corporate Trustee in case I'm mentally incompetent) - plus Living Will/advanced directive
2. Putting 35% of portfolio into life annuities on retirement (from registered funds like DCPP, LIRA, RRSP) - protected, can pay into LTC home
3. Putting 35% of portfolio into a Revocable Living Trust from non-registered funds - own control while still able, can pay for healthcare when unable
4. Leaving 30% available for discretionary/emergency spending

Q1: if the successor trustee takes over control, can they change the investments in the trust?
Q2: if corporate trustee goes under, does state take over as successor trustee?

Once I have understood more, I'll find an estate lawyer and bank's estate services. Isn't it interesting that life's priorities come down to health and money? No more parents/siblings/spouse/kids - and no relatives/friends to trust (when they talk about your mother's jewelry while she's laying on her death bed in palliative care)!
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Re: Property POA - Financial Directive?

Post by AltaRed »

Q1: The trustee has to act in the donor's best interests, but within that framework can certainly change the investments. That is what you have the trustee for in the first place - to make changes in the investments in the trust if that is prudent to do so.

Q2: Not qualified to answer BUT lots of (corporate) trusts went under in the '80s in particular. What I believe happens is the assets of the insolvent trust company are sold to another company, if necessary, by the heavy hand of the regulator. The state does not really want to 'operate' (manage) the assets.
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