A Valuable Contingency Plan: The Importance of a Power of Attorney and Personal Directive

In our previous post we discussed differences between Powers of Attorney and Personal Directives.  We indicated that these documents are just as important as a will.  Because a will is a legal document that comes into force when you die, you yourself will not experience the benefit of the planning you put into your will.  To the contrary, a Power of Attorney (POA) and Personal Directive (PD) can have a direct impact on your life. 

If circumstances arise which leave you in a position where you are no longer able to make decisions for yourself or handle your financial affairs, having a POA and PD in place will allow a designated Attorney and Agent to act without delay.  Without these documents in place, your immediate family members will have to go through a complicated and costly legal process to obtain the Court’s approval to act on your behalf.  For the sake of better understanding the importance of a POA and a PD, let’s consider the following scenario.

Bob, who is 43, is married to Brenda.  Bob has never had any major health concerns; he exercises regularly and walks to and from work every day.  On his way to work one morning, Bob is hit by a vehicle when he is crossing a street.  As a result of the trauma he has suffered, Bob is now in a coma. 

With a Power of Attorney and Personal Directive

If Bob has a Power of Attorney and a Personal Directive appointing Brenda as his attorney and his agent, these documents are enacted when Bob’s doctor makes the determination that he is incapacitated. From that point, Brenda has immediate authority to make necessary decisions in respect of Bob’s care and to take over the management of Bob’s finances. 

Brenda can decide what treatment Bob should receive.  She can also choose to place him in a specialized care facility, if necessary.  Where the Personal Directive indicates that Bob does not want his life to be extended by artificial means, and if the situation progresses to the point where there is no hope that Bob will ever recover, Brenda has the authority to “pull the plug.” 

By virtue of the Power of Attorney, Brenda also has access to Bob’s bank accounts.  She can deal with his credit cards and if she needs to sell the house that they jointly own to be closer to Bob, she can do so.

By having prepared these documents beforehand, Bob had the opportunity to choose to appoint Brenda as his Agent and Attorney.  He also had the ability to specify what compensation, if any, Brenda should receive for acting on his behalf.

Without a Power of Attorney and Personal Directive

If Bob does not have a Power of Attorney and a Personal Directive in place at the time of the accident, Brenda does not have legal authority to do any of these things.  Despite the fact that she is his wife, she does not have legal authority to make decisions in respect of his health care and she cannot assume control of his finances.  She cannot even sell their house – even though she is one of the owners. 

In order to obtain authority to handle these matters, Brenda would need to make an application to the Court to be appointed as Bob’s Guardian and Trustee.  Such an application takes time and is costly. 

Unfortunately, if Bob would have preferred to have someone other than Brenda handle these responsibilities, he is not in a position to say so.  He also cannot provide any input in respect of compensation for Brenda.  The court will dictate what compensation Brenda will receive for acting as Trustee and she will not be entitled to receive any compensation in her role as Guardian.

Planning Ahead

The Power of Attorney and the Personal Directive are commonly an afterthought to the will – documents the lawyer “throws in” as part of the will package.  But they are valuable tools and should be carefully considered.  We would encourage you to carefully consider who you want to have involved and discuss these responsibilities with your family members.  Given that your attorney will have full control over your finances and your agent will have authority to make all decisions relating to care and interaction with others, it is important that you choose people you trust fully.