Retirement Ready: Aging and dementia

Planning for retirement includes planning for incapacity

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As we age, our ability to care for our finances and ourselves may diminish, and it is prudent to plan ahead for this possibility. Every one knows that we should make a will to assist our loved ones to manage our financial affairs, but it is equally important to plan for our possible incapacity prior to death by appointing a substitute decision-maker while we are incapacitated, but still alive. Planning for incapacity is often overlooked.

In British Columbia, we have several legal tools to assist us, if we were to become incapable: power of attorney, enduring power of attorney, representation agreement, advanced directive and adult guardianship, and committeeship.

A power of attorney is a legal document that appoints another person called an “attorney” to make financial and legal decisions on your behalf. A power of attorney can be very specific or very broad and it ends if you become mentally incapable. You could, for example, appoint someone to sign documents in order to sell your house at a specific time.

An enduring power of attorney is a legal document that appoints another person to make financial and legal decisions for you and it will continue even if you become mentally incapable of making decisions. The document must state that it survives mental infirmity in order for it to be “enduring.” It is a financial document and does not deal with health care. If you do not appoint an attorney to manage your financial affairs, no one can automatically act for you, not even your spouse. It is important that you choose someone you trust.

Representation agreements allow you to choose someone you trust to be your representative if you become incapable of making decisions on your own. A representative may be given decision-making authority for your personal care and health care and in some cases the routine management of your financial affairs. They can decide where and with whom you reside. They can make major or minor health-care decisions. In general, however, representation agreements are usually used for health care and powers of attorney are used for finances. The person you appoint can be a family member or a friend, and you can appoint more than one person.

An advanced directive is a capable adult’s written instruction about what health care you do or do not want in the future in the event that you become incapable and a healthcare decision needs to be made. It can be very specific and it is a legally binding document.

Note that the term “living will” is often used but it is a U.S. term. The term living well is not referred to in B.C.’s health care consent legislation.

If you become incapable and have not planned ahead, the Supreme Court of British Columbia may appoint someone to make decisions on your behalf. The court appointed guardian of the adult is called a “committee.”  In order to be appointed a “committee” of an incapable person, two doctors need to state that the adult is incapable of managing himself and/or his affairs, and the Public Guardian and Trustee needs to be notified. A court application is then made. This is an expensive and lengthy process.

In summary, you may not want to think about a time when you are unable to make certain decisions for yourself, but it is prudent to plan for it, just in case.

Mary-Jane Wilson is a partner of Wilson Rasmussen LLP, a Surrey, B.C. law firm. She is the author of the British Columbia Probate Kit. Visit wilsonrasmussen.com