Power of attorney and your bank accountSunday, August 01, 2021
AS people get older it can become difficult for them to manage their financial affairs. Naturally, this can be a major concern for many seniors as their reduced ability to manage their finances and personal business can make them vulnerable to both inadvertent errors and unscrupulous activity.
While the rise of remote banking options has been able to assist with the management of finances and the completion of several transactions using online channels, there are circumstances where the best solution may involve seeking assistance from a trusted family member.
For some, assigning what is known as the “power of attorney” to a trusted friend or relative who is known as the “attorney” – though no legal qualification is required – can be a good option as they navigate their senior years.
“The power of attorney is a legal document that allows you to appoint and grant authority to another person to assist in managing your financial affairs,” explains Richard Fraser, vice- president and senior legal counsel at Scotiabank. Fraser also advised that this is a matter that must be carefully considered, particularly in terms of the scope of powers granted and in terms of choosing the right or trusted person for this role.
One important thing to note, Fraser said, is that “the person appointed does not become the owner of any of the other person's money or property; they only have the authority to manage it on their behalf”. They are also not able to make changes to a person's will or make any decisions after their death. Additionally, it is also crucial to note that even with a power of attorney in place, as long as the individual is mentally capable, they can continue to make their own decisions about their financial affairs.
When it comes to banking he also highlighted that typically, the power of attorney grants an authorised individual access to the financial accounts of the owner – who is known as the principal– to pay for health care, housing needs and other bills. The attorney is also able to make investment decisions on behalf of the principal and carry out other roles related to the principal's financial welfare.
In the contexts mentioned, the attorney is seen as a fiduciary and as such, the person must at all times act in the best interest of the principal when exercising the powers conferred under the power of attorney.
Fraser also pointed out that in order to appoint someone as an attorney under a power of attorney in relation to accounts held at the bank, the document will need to be validly executed and registered and the identity of the attorney will need to be validated before it is honoured.
“Although persons can draft their own simple power of attorney document and arrange for its stamping and registration, I consider it best practice for account holders wishing to utilise this option to obtain assistance from a legal professional. The legal professional would be able to assist with the preparation of the document, assist with the stamping and registration of the document, and give advice regarding the powers that should be conferred through the document based on the need of the account holder. Getting such legal advice is unlikely to be a burdensome cost and the process can prove to be extremely beneficial for the person who is considering the process,” he said.
While getting help is important, no senior should feel they are being pressured to take any of the above steps since the power of attorney should be given free from duress to truly be valid.
The power of attorney designation may be a great way to give seniors the assistance they need to carry out the necessities of life in their later years.
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