When creating an estate plan, it’s important to plan not just your wishes for after you die, but also make a plan in case you become unable to manage your personal and financial affairs during your lifetime.
A will covers your wishes upon death, a Power of Attorney (often referred to as a POA) is an important tool for incapacity planning. When you make a POA, you are appointing a person or persons to have legal authority to manage your finances, property, and business, and make decisions on your behalf if you become unable to do so.
When you make a will, you appoint a person or persons to be your executor and be responsible for managing your estate after your death, including distributing your assets according to your wishes.
One question that often arises is whether the same person can serve as both POA and executor. In British Columbia, the answer is yes, the same person or persons can hold both roles and in our experience, many people choose to set up their estate plan that way. However, it's important to consider the potential pros and cons of this decision.
Familiarity with your financial situation: If the same person serves as your POA and executor, they may already be familiar with your financial situation. If that’s the case, this can streamline certain aspects of the estate administration process.
Consistency in decision-making: Having the same person make financial decisions for you during your lifetime and manage your estate after your death can ensure consistency in decision-making.
Trust and confidence: Appointing the same person as your POA and executor can show your trust and confidence in their ability to manage your affairs both during your lifetime and after your death, sending a clear message to others about how you want your affairs to be managed.
Conflict of interest: The same person serving as 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 both be time-consuming, stressful, and emotionally draining. Serving in both roles could lead to burnout, especially if the estate is complex or contentious.
You still need 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 or not you choose to appoint the same person as your POA and executor depends on your circumstances and preferences. If you do decide to appoint the same person, it's important to communicate openly with them and other people involved in your estate plan (children, grandchildren, other beneficiaries) about your wishes and expectations. This helps to minimize the risk of conflict or misunderstanding in the future.
It’s also important 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 in those roles.
One additional note on incapacity planning. A POA does not cover medical and personal care decisions. Those decisions are covered by a different document in BC, called a Representation Agreement. The same person can be appointed as your executor, on your POA and your Representation Agreement. The same pros and cons apply.