The importance of planning for incapacity

In Wills & Estates

While most people know that they should have a will, many people don’t think of planning for their incapacity.

With people living longer, it is likely that an increasing number of us will lose our ability to manage our financial and personal affairs, including the ability to make important health care decisions.

Fortunately, various laws in British Columbia allow a person to plan for their incapacity in advance.

Pursuant to the Power of Attorney Act, a capable person may appoint one or more attorneys to manage his or her financial and legal affairs. By executing an enduring power of attorney, an attorney can be appointed in advance to continue acting even after the donor is no longer capable.

While often short in form, enduring powers of attorney are extremely powerful documents which, if used improperly, can lead to catastrophic results.

When preparing an enduring power of attorney, a number of issues should be considered. For example: the Power of Attorney Act includes various restrictions on both when and how much of a donor’s property can be donated by the attorney as charitable gifts.

If the restrictions and limitations in the Act are not desired, the power of attorney document (POA) must state otherwise. Further, if a donor wishes for his or her attorney to be able to transfer the donor’s property into the attorney’s name (i.e. for estate planning), such power must be specifically granted in the POA.

It’s also important to consult a lawyer to avoid certain unintended consequences of a POA. Pursuant to the Income Tax Act, a person with authority to vote shares may be deemed to own the shares for certain purposes under that Act including whether or not two corporations are associated with each other and whether a corporation qualifies as a Canadian Controlled Private Corporation.

As many POAs provide attorneys with general powers, caution must be taken when a donor owns shares in a private Canadian company and the drafter should consider whether or not the POA should specifically exclude granting the power to vote the donor’s shares.

There are several pieces of legislation relevant to health care decision-making. Pursuant to the Health Care (Consent) and Care Facility (Admission) Act (HCCCFAA), a capable person may prepare an advance directive setting forth types of health care they will consent to in the future.

In most cases, a health care provider will need to comply with such a directive, and any appointed representative(s) must consider (and may be bound by) those wishes. Advance directives do have limitations, however, and do not allow a person to consent in advance to certain types of health care (i.e. abortion or experimental health care).

Pursuant to the Representation Agreement Act, a capable person may appoint in advance a representative to make health care, personal care and certain financial decisions on their behalf in the event of incapacity.

If a representative is appointed, a health care provider is not permitted to provide certain types of care unless the representative consents. In the event that a representative has not been appointed, the HCCCFAA prescribes a hierarchy of the persons (i.e. spouse, children, etc.) able to be appointed as temporary substitute decision makers.

As with a POA, a donor should carefully consider what powers he or she wishes to give his or her representative, and may want to include specific advance directives.

For those who only want their POA or representation agreement to become effective when they are no longer capable, both such documents can be drafted to become effective when a certain “trigger” event occurs.

These agreements often require that a physician certify the donor’s incapacity before the agreements become effective.

This article is for general purposes only, please contact a professional to deal with any specific issues you may have.