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July 29, 2018 | The Guardian

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Should somebody be allowed to commit financial suicide? If it’s your mother? Or your aging husband?

This is a difficult topic for some people. Especially those who just don’t understand it, and think nobody ever, under any circumstance, should be allowed to act on their behalf. Jacob was one of those guys. He died three weeks ago, so I can talk about him now. He was a soldier in Korea, a bush pilot, surveyor, off-grid cabin builder and a man’s man who ended up in suburbia. He routinely ripped me a new one in this blog’s comment section with acerbic wit and gleeful malice. I hated that. But respected him. We actually met and had the kind of affectionately snarly relationship two chained junkyard dogs might enjoy.

Then Jacob’s comments got weird. I allowed a few. Deleted some. Months later I was deleting them all. Scattered jibberish.

Wendy called. “My father has been diagnosed with Alzheimer’s,” she said. Yes, I replied. I know. And thus began a two-year battle by his family to access funds J had squirreled away over the decades in order to pay the $6,000 a month he required in 24-hour care at a retirement home. In the end, they needed a court order. Costly. He suffered in the meantime. All because he’d refused to sign one piece of paper. A POA.

Late last week this blog published a letter from a troubled son watching his financially illiterate mom blow through a windfall, creating a tax liability and future woes. One of my suggestions was for sonny to secure a power of attorney so, if needed, he could move in and rescue her.

Interesting responses n the steerage section, including this:

Really? What happens if Mom tells sonny-boy to go dunk his head in the toilet? I’m 60 and I’d use the money pretty much the same as Mom. Does that mean my 35 year old daughter should get power of attorney over me and take over my finances?

And this one…

And after the lawyer goes through the mandatory explanation that this POA is essentially a document whereby she signs her life away by putting all of her financial decisions into the hands of another, do you think she’s just gonna say: “Great! Where do I sign?” Give it up. Let her spend her way into oblivion.

Let’s try to make a few things clear since ignorance is washing over the gunnels. First, everyone who owns anything should have a POA – covering not just your money and possessions but your care. Not just the wrinklies. Everyone. You have no idea what may befall you in the future – sickness, accidents or being forced to sit trough a whiny Adele concert – so why not be prepared?

Granting a POA – most typically to your spouse – does not mean it’s in force. The person declared your ‘attorney’ does not have the right to touch any of your stuff or send you off to the psychiatric ward. First, a POA must be invoked, either voluntarily (you are sick and want someone to look after things for you) or involuntary (you’re an irascible, demented old goat like Jacob). Second, your appointee has a legal, fiduciary responsibility to act in your best interests. Period. Any activity not 100% for your benefit is a crime.

What’s a POA?

It’s a legal document granting – under defined conditions – your appointee the power to look after you, your money, your stuff, or your care. You set the terms and conditions, but it’s common for a spouse to want the other spouse to do anything they could do. Write cheques. Cash in a RRSP. Sell the house. Invest. Arrange healthcare. So, yeah, you need a lawyer to help select the powers and the circumstances.

To be effective, a POA must be invoked. Just signing one doesn’t mean it takes effect. Typically for a power of attorney to come into force a person would have to be declared medically incompetent. But if you were badly injured, laid up, and needed your spouse to take over all financial and household affairs, you could grant that.

A POA can be one person, a few of them, or an institution like the trust arm of a bank. Obviously choosing your cannabis-crazy nephew is probably not the greatest decision. There is always a risk that someone may decide to flaunt their responsibilities and take advantage of you. But balance against this the risk of troubled times befalling you, without anyone properly equipped to care.

So, everyone should have a power of attorney. You also need a will. And never make your unqualified kid your executor.

Well, that’s out of the way. Let’s roll.

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July 29th, 2018

Posted In: The Greater Fool

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