If a client becomes incapacitated and is no longer able to make important decisions, his or her financial affairs could be at risk. Your objective in cases of incapacity should be to ensure that whoever is acting on your client’s behalf doesn’t overstep their bounds, says Cynthia Caskey, vice president and portfolio manager with TD Wealth Private Investment Advice in Toronto.

Caskey advises that you help your clients prepare for the risk of mental or physical incapacity in advance. You should be proactive to ensure that your client’s best interests are served.

Here are steps you can take to help protect your clients:

1. Encourage your clients to create a living will or power of attorney
“A lot of Canadians believe that if you become mentally of physically incapacitated, whether it’s due to illness or accident, your spouse, partner or family member can simply act on your behalf,” Caskey says. “But this is not true.”

A family member would need either a court order or a power of attorney (POA). Without either document, Caskey adds, the family members of an incapacitated client cannot manage the client’s affairs.

Clients of all ages should be prepared for incapacity. We often associate incapacitation with aging, but serious accidents or illness can occur unexpectedly at any age.

2. Learn the roles of various family members
The modern family has evolved to include many unique, intricate structures. Ask your clients to explain the role of each family member, and outline what’s to be expected from each member if your client were to become incapacitated.

Make sure you know how to contact your client’s family members if complications arise regarding your client’s capacity.

“The more you understand who they are, and have a chance to reach out and introduce yourself, Caskey says, “the better off [the process] is going to be.”

You need to ensure that the person holding POA is legally able to give instructions on securities. And you don’t want to discover, after a client becomes incapacitated, that POA is held by a child living and working in the U.S., Caskey adds.

3. Understand the rules
Make sure you have an understanding of the legal obligations regarding POA and incapacity, and what is in the best interest of the individual who is incapacitated, Caskey says. You should always be able to evaluate whether any actions that you’re being asked to take are in the best interest of that person.

For example, if one child holds POA and asks to create a joint account with the incapacitated parent, the inheritances of other children in the family could be affected. Keep a watchful eye on this kind of decision, Caskey says, because you could be sued later by other beneficiaries or family members if you took actions that altered their inheritance.

4. Help your client find a lawyer
Your client will need a lawyer to prepare documents such as wills and POAs, and you can help in that search. Not all lawyers are created equal, Caskey says, so you should ensure your client is getting the best advice possible — without creating a conflict of interest for yourself.

You and your client’s lawyer should be complementing each other so that your client has a cohesive plan in place.