Roles and responsibilities consideration
A power of attorney, personal directive, mandate or similar estate planning document calls for someone to make financial and health care decisions on your behalf. The role usually comes into play when you are unable to make decisions for yourself due to a health problem or loss of energy.
The person acting as your POA can usually make any decision outside of the will, such as preparing a new will.
In Canada, an executor is the person responsible for managing your final wishes in your will and distributing your estate to your beneficiaries. Your estate takes over when you die, at which point the power of attorney no longer applies.
What is an executor?
An executor is the person named in your will who will be responsible, after your death, for ensuring that your assets are distributed according to your wishes and that your estate is paid out properly. This includes many tasks, from filing your final tax return and canceling your credit cards to giving away your jewelry or collectibles, selling your home and investments.
Read more in the MoneySense Glossary: What is an executor?
What is a reliable person you are communicating with?
Investment advisors have been asking their clients to provide a trusted contact person (TCP) for the past few years. Starting this year, Certified Financial Planners (CFPs) are also required to ask their clients to provide a TCP. A friend would be a good choice for this role, Michèle.
A fiduciary contact is different from a person named under a power of attorney. They are an authorized person that an advisor or planner can contact and share personal information under limited circumstances, such as suspicions that someone is being financially exploited through fraud, coercion or unauthorized transactions. TCP may also be affected by concerns about mental capacity as it relates to financial decision making.
How to choose a trustworthy person
If you don’t have a family member, or you don’t have a family member who is a good choice, you may decide to name a friend. Another challenge as you get older is that your friends tend to be like you. Being 70 years old and having a 70-year-old attorney or executor have obvious drawbacks. So, you’d be right to think twice about this, Michèle.
You can name a trust company, which is a legal entity that can manage assets on behalf of an individual. A trust company should act as a fiduciary (managing your money and/or assets), putting the interests of each person first.
Leave your question to Jason Heath
Why name a trust company?
A trust company does not age or pass away like a person, although it may be closed, or merged with another trust company. However, naming a trusted company can ensure a level of continuity naming a friend of the same age may not provide, Michèle.
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