When creating an estate plan, it’s important to plan not only for your wishes after you pass away but also for situations where you might become unable to manage your personal and financial affairs during your lifetime. While your will covers your wishes upon death, a Power of Attorney (POA) is a crucial tool for incapacity planning.
By creating a POA, you appoint a person or persons to have legal authority to manage your finances, property, and business, and to make decisions on your behalf if you become incapacitated. By contrast, your will appoints a person or persons to be your executor, responsible for managing your estate after your death, including distributing your assets according to your wishes.
A common question is whether the same person can serve as both POA and executor. In British Columbia, the answer is yes; the same individual can hold both roles. Many people choose to set up their estate plan this way. However, it’s important to consider the potential pros and cons of this decision.
Pros
Familiarity with your financial situation: If the same person serves as both your POA and executor, they may already be familiar with your financial situation, potentially streamlining the estate administration process.
Consistency in decision-making: Having the same person make financial decisions during your lifetime and manage your estate after your death can ensure consistency in decision-making.
Trust and confidence: Appointing the same person as both your POA and executor can demonstrate your trust and confidence in their ability to manage your affairs, sending a clear message to others about your intentions.
Cons
High responsibility and power: Concentrating so much responsibility and power in one person can be overwhelming.
Conflict of interest: The same person serving as both POA and executor may face a conflict of interest if they stand to benefit financially from the estate administration process.
Potential for burnout: The roles of POA and executor can be time-consuming, stressful, and emotionally draining. Serving in both roles could lead to burnout, especially if the estate is complex or contentious.
Need for a backup plan: It’s always wise to have a backup plan in case the appointed person is unable or unwilling to serve as either POA or executor. We always advise our clients to appoint at least one alternate POA and one alternate executor.
Ultimately, whether you choose to appoint the same person as your POA and executor depends on your individual circumstances and preferences. If you decide to appoint the same person, it’s important to communicate openly with them and other involved parties (such as children, grandchildren, and other beneficiaries) about your wishes and expectations. This helps minimize the risk of conflict or misunderstanding in the future. It’s also crucial to periodically review and update your estate plan to ensure it still reflects your wishes and that your appointed POA and executor are still able and willing to serve.
One additional note on incapacity planning: a POA does not cover medical and personal care decisions. Those decisions are addressed by a different document in BC called a Representation Agreement. The same person can be appointed as your executor, POA, and in your Representation Agreement. The same pros and cons apply.
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