A large number of Canadians are not paying attention to the “gap” between their healthy life expectancy and their overall life expectancy, according a special report produced by RBC Wealth Management.
The “gap” refers to the increasing number of Canadians who are now living nine to 11 years past the time they are considered “healthy.” As a result, these baby boomers must address certain vulnerabilities that they may face.
“These changing demographics present challenges that we haven’t seen before in Canada,” says Tony Maiorino, head of Toronto-based RBC Wealth Management Services.
He highlights the growing demographic of Canadians who will no longer be able to manage their own financial affairs due to health issues.
“This means an increased need for resources and concern for those who have not planned for the possibility that they may be unable to act or make decisions for themselves. There is a growing urgency around this issue and Canadians need to be aware of it so they can plan ahead,” he says.
“Without question, creating a Power of Attorney (POA) is a prudent course of action,” says Maiorino.
“While the document itself is an essential estate planning tool, of equal importance is who will take on the role. Appointing the most appropriate person or people to take on the role of attorney is a vital decision.”
A Power of Attorney (Mandate in Anticipation of Incapacity in Quebec) is a legal document whereby one person (the donor) gives one or more persons (each an attorney) the authority to act on his/her behalf, either immediately or at a future time, for example after the donor becomes incapacitated.
RBC Wealth Management identifies five key factors advisors can discuss with clients before they appoint attorneys:
> The attorney’s financial acumen.
While no one assumes that a trusted attorney would manage his/her money irresponsibly, if the person in mind is inexperienced in managing finances, he or she may not be as ideal a choice as someone who has financial experience or expertise.
> The attorney’s location and ability to travel.
An attorney needs to be able to communicate important and timely decisions. Even with the ease of electronic communications, he or she may be required to travel on short notice if an emergency arises
> The attorney’s age and stage in life.
Someone who is already of an advanced age today may not be healthy when the donor needs them to act for the donor. The attorney could also be managing a busy career and family for the foreseeable future and may not have the time to dedicate to diligently attend to affairs as may be required.
> The attorney’s organizational skills.
Not only will the attorney be responsible for the record keeping pertaining to a POA, they may also have to manage their own POA. If the attorney is responsible, there is a good chance he/she will be equally responsible with the donor’s affairs.
> The attorney’s potential for emotional bias.
If the attorney is a relative, the person may have an emotional bias that prevents him or her from carrying out the donor’s wishes or have challenges when managing the expectations of other family members. Also, if the attorney is a family member, he or she may be in a potential conflict of interest if the spending for the donor’s care will affect his or her potential inheritance.