Incapacity Planning Explained

Although many people have heard of creating a Will to appoint an executor to deal with your assets when you die, not as many people have turned their minds to what can and should be done to appoint someone to deal with your asset and make decisions for you, personally, in case you find yourself in a position where you are alive but unable to do so yourself. This is where incapacity planning comes in.

The two primary documents that are used for incapacity planning are Powers of Attorney and Representation Agreements. There are multiple iterations of each document. Which version is best, ultimately depends on the individual’s circumstances.

A Power of Attorney typically deals with financial, business, and legal matters. A Representation Agreement will usually deal with day-to-day decision making, such as where you should live, and also covers healthcare decisions, including end-of-life decisions. They work in tandem together but have their respective roles. Both documents automatically terminate upon your death, when your Will comes into effect, if you have one.

If you end up in a situation where you require someone to act on your behalf to deal with your finances, but you do not have a Power of Attorney and no longer have the required capacity to make one, a family member or friend would be required to apply to the court for a committeeship order to give them the authority to do so. Obtaining a committeeship order can take months to do and is significantly more expensive than creating a Power of Attorney. 

In B.C., the Health Care (Consent) and Care Facility (Administration) Act sets out that a person’s next of kin has the authority to make that person’s major and minor health care decisions when the person is unable to do so themself. This can be helpful should you not have a Representation Agreement. However, it can also result in a different person making decisions for you than you would want. A Representation Agreement would go further and let the representative that you chose know what exactly you would want done in specific circumstances. It can take a lot of pressure off the shoulders of those who would otherwise be left to make the decision.

As health remains unpredictable, planning for incapacity can be a gift to yourself, your loved ones, as well as your bank account. Our estate planning lawyers at Harper Grey LLP can assist you in making these important decisions as well as all other estate related matters. Reach out to us today.