Roles and responsibilities to consider
A power of attorney, personal directive, mandate or similar estate planning document names someone to make financial and health care decisions on your behalf. The role generally comes into effect if you can no longer make decisions on your own due to a health issue or loss of capacity.
Someone who acts as your POA can generally make any decision other than a testamentary one, like preparing a new will.
In Canada, an executor is someone who is responsible for administering the final wishes in your will and distributing your estate to the beneficiaries. Your will takes over when you die, at which point, a power of attorney no longer applies.
What is an executor?
An executor is a person named in your will who will be responsible, after you die, for making sure that your assets are distributed according to your wishes and that your estate is settled properly. This includes a wide range of activities, from filing a final tax return and cancelling your credit cards to giving away your jewellery or collectibles, and selling your home and investments.
Read more from the MoneySense Glossary: What is an executor?
What is a trusted contact person?
Investment advisors have been asking their clients to provide a trusted contact person (TCP) for the past few years. As of this year, Certified Financial Planners (CFPs) are also obliged to ask their clients to provide a TCP. A friend would be a good choice for this role, Michèle.
A trusted contact person differs from someone named in a power of attorney. They are an authorized person whom an advisor or planner can contact and share personal information with under limited circumstances, such as suspicion that someone is being financially exploited through fraud, coercion or unauthorized transactions. A TCP may also be contacted due to concerns about mental capacity as it relates to financial decision making.
How to select a trusted contact person
If you do not have a family member, or you do not have a family member who is a good choice, you might decide to name a friend. One challenge as you age is that your friends tend to be a similar age as you. Being 70 years old and having a 70-year-old attorney or executor has obvious drawbacks. So, you would 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 must act as a fiduciary (manages your money and/or property for you), putting the best interests of the individual first.
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Why name a trust company?
A trust company does not age or pass away like an individual, though a it could shut down, or more than likely merge with another trust company. Still, naming a trust company can ensure a level of continuity that naming a same-age friend may not provide for you, Michèle.
