A Will vs. A Power of Attorney: What’s the difference?
Disclaimer: This article on the difference between a will and a power of attorney is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
When people think of estate planning, they think about their wills. When speaking to new clients, we ask, “Do you have a power of attorney?”
The answer, more often than not, is no. In fact, only 40% of Canadians (and a mere 9% of those under 35) have drawn up powers of attorney.
After all, is a will not enough? The answer is no, in order to protect yourself, your family, and your property, you need:
- A will;
- A power of attorney for personal care; and
- A power of attorney for property.
We outlined what those documents are here, but in this article, we will talk about how powers of attorney differ from wills.
(Of course, if you would like to discuss any of your estate planning needs, please contact our office today).
What does each document cover?
Each document has a distinct purpose.
Your will outlines your wishes and how to distribute your estate after you have died. An executor is appointed to ensure those wishes are followed.
Both powers of attorney outline what happens if you are alive but incapable of making decisions for yourself. An attorney is appointed to make decisions on your behalf – you can have the same individual or choose different individuals for each power of attorney.
When do they go into effect?
A will goes into effect when you pass away.
Powers of attorney go into effect while you are still alive. When it specifically goes into effect depends on how your document is drafted. You can have it go into effect upon signing or upon becoming incapacitated.
There are pros and cons to each. If your documents allow your attorney to act immediately, they will be able to make decisions on your behalf much more quickly. This can be handy if, for example, they need to access your bank account to pay your bills if you are incapacitated. If your documents require your attorney to prove that you are incapable, this can cause delays and have an impact on many areas of your life.
However, allowing your attorney to make decisions on your behalf at any time comes with its own risks. Carefully consider your circumstances when preparing your power of attorney.
How are these estate planning documents prepared?
You may have heard the term “holograph wills”. (In fact, we talked about them here.)
While there are certain requirements that must be met, you can have a legally binding, valid holograph will that is only signed by the testator (meaning there are no witnesses). However, there is no such thing as a “holograph” power of attorney. The Substitute Decisions Act requires that your power of attorney be signed by two witnesses.
What happens if you do not have a power of attorney? What happens if you don’t have a will?
We will cover this in more detail in our next article, but in many ways, it hurts you more to be incapacitated with no power of attorney compared to dying without a will.
Distributing your estate if you die without a will (or die intestate) is governed by the Intestacy Act and outlines how your estate should be split amongst your closest relatives. Of course, this may not always be ideal, and it is always better to have a will in place.
However, there is no corresponding legislation if you become incapacitated and do not have a power of attorney. You have then triggered a series of long, costly legal battles for your loved ones to handle.
It is important that you fully protect your loved ones, no matter what happens.
Understanding Your Will and Powers of Attorney With Beeksma Law
At Beeksma Law, we know that anything can happen at any time. We know you want your loved ones and your interests to be protected and that is why we work with you to create an estate plan that fits your needs.
To learn more about getting started on these essential estate planning documents, contact our office today.