If my last “Do It Together” video has inspired you to move estate planning to the top of your priority list — especially if you have children — I’m happy to have gotten you past that first, and maybe most challenging hurdle: recognizing that you need to get it done.
In today’s post, let’s keep up that momentum, by going over the three key documents that make up a solid estate plan at any stage in your life. These are: your will, your power of attorney and your mandate.
While each is important in its own respect, they bring you and your family the most piece of mind when you write all three together. Today, I’ll explain why that’s the case.
Worst-case scenarios. Even though we find it hard to believe they can happen to us, we know they sometimes do. We can get injured or called away from our daily routine in any number of ways, and in the extreme, meet with an untimely death.
While you may not be able to prevent the unexpected from throwing you for a loop, you can — and should — spell out what you want to have happen if it does. Three, relatively straightforward legal documents is all it takes. These documents include your will, your power of attorney and your mandate, or living will. Let’s take a look at each one, and how they operate together.
Your will answers the three questions I brought up in my last video: Who will inherit your estate? Who will administer your estate? And – so important – who will take care of your children, both day to day and financially, if you pass away before they reach adulthood?
In short, your will covers your critical wishes in the event that you die. That’s an important start. But what about life’s many other “what if?” events? There are other circumstances that might not kill you, but can leave you temporarily or permanently unable to be there for yourself or your loved ones.
Then what? Your will is of no use in these circumstances. And yet, you probably don’t want others making critical decisions for you when you could have made them for yourself in advance. For this, you need those other two documents. In contrast to your will (which only takes effect in the event of your death) your power of attorney and your mandate apply while you are alive.
A power of attorney is your legal lifeline if you want or need someone else to manage your property on your behalf. A power of attorney can be narrowly defined — such as giving someone the ability to access your bank accounts and pay your bills for you for a specified period. Or it can be a broader brush, such as granting someone full authority to access and administer all of your worldly goods indefinitely, until the power is revoked or otherwise ends.
To name a few examples, you may want a power of attorney if you need to buy a house, but you’re travelling or out of the country, or you’re stuck in a hospital, or you’re home nursing a debilitating injury. In all of these cases, the person to whom you delegate Power of Attorney can sign documents on your behalf. This is often your spouse, or someone else you implicitly trust.
So if a power of attorney covers these sorts of events, what is a mandate for? Well, with a mandate, also known as a living will, you can designate one or more people (your mandataries) to take care of both your property and your personal health decisions if you become temporarily or permanently incapacitated. In other words, if you are no longer able to make decisions for yourself. Once you reach that point, your Power of Attorney is no longer valid and your mandate takes over.
Believe me, I hope you never, ever need a mandate. But imagine if you were left requiring this level of care and you had not taken the time to lay out your wishes in advance. That not only reduces the likelihood that your wishes will be met, but it can leave very painful questions unanswered for your loved ones to guess at. Both are preventable through a little advance planning.
Okay, I know I’m being a little heavy here, but having just welcomed a my daughter into the world last fall, the subject has been on my mind. My wife and I have our documents in place, and we keep them updated accordingly.
In the spirit of “Do It Together” financial planning, I want to help you do the same! Next up, I’ll explore some of the differences between creating wills in Quebec and Ontario, as well as how each province handles your estate if you die intestate, without a will.
