It's critical to have a plan for the future and to plan for contingencies, particularly as they relate to our physical and mental health. For some people, joint accounts and powers of attorney are helpful tools that enable them to have peace of mind, knowing there is a plan for their economic future if they encounter future health challenges. But joint accounts and powers of attorney can be used when you are perfectly healthy, too. It is important that you understand these tools and how and when you may want them to be a part of your financial plan.
Once you understand how both joint account and powers of attorney work, you will have a much better perspective on whether or not you want to add them to your financial planning toolkit. The following information provides an overview of how these tools function and specifically how you can work together with CIBC to make joint accounts and powers of attorney part of your financial plan, if they meet your needs. This article is focused on powers of attorney for finances and property. There are also powers of attorney designed to enable your attorney to make decisions for you on your health and personal care. We won't be dealing with that type of directive here, but it is very important that you work together with your doctor, lawyer or other trusted advisor to determine if this is something you want to prepare for your life plan. We'll also explain how joint bank accounts function and how you can evaluate whether or not they are the right choice for your needs.
What is a Power of Attorney?
A power of attorney is a legal document in which you assign one or more individuals, known as an "attorney," the authority to act on your behalf regarding financial or legal matters for property. Don't let the term "attorney" confuse you. While you may choose a lawyer for this role, it's more often someone close to you: a friend or family member, or a corporate attorney such as a trust company who will act with your best interests in mind. You can give them the authority to act on all your property and financial matters, or it can be limited to specific functions, such as managing your investments. In short, the power of attorney is the document and the attorney is the person you appoint to act in your place.
Are all powers of attorney the same?
No, not all powers of attorney are the same and your document can be customized to reflect your needs and updated to reflect changes in your personal situation. For example, unless specifically stated, your attorney is no longer authorized to act on your behalf should you become mentally unable to manage your property. But if you elect to create an "enduring" or "continuing" power of attorney, your attorney can continue to act on your behalf even if you become mentally incapable. An enduring power of attorney can take effect as soon as you sign it, and continue should you experience mental incapacity. Alternatively, you could create a "springing" power of attorney that takes effect only upon a specific contingency, for example, should your family doctor determine that you are no longer mentally able to manage your own finances.
In Quebec, a power of attorney is also known as a mandate and an attorney is also known as a mandatary. With a mandate you can include provisions empowering your mandatary to represent you in the event of your incapacity to administer your property. However, in that case the mandatary must request the mandate be confirmed in a court of law, a process known as homologation.
Many people who suffer from disability and chronic illness choose to have an enduring power of attorney, as it gives them security in knowing that someone will be able to manage matters should their condition unexpectedly worsen.
Do I need one?
Everyone's needs are unique and you should discuss whether you need a power of attorney with your legal advisor, based on your circumstances. Perhaps you're out of country for an extended period of time and want someone back home to manage your banking on your behalf. If you do choose to appoint an attorney, it's very important that you choose the right person to handle this critical responsibility.
Who can be an attorney?
Anyone you trust to make decisions on your behalf can be your attorney, as long as they are mentally competent and have reached the age of majority in your province or territory*. CIBC employees are not permitted to act as attorney for CIBC clients, except where there is a close family relationship, which has been reviewed and approved at CIBC's sole discretion.
*Additional qualification requirements may apply in your province or territory.
Who should I choose?
Since this decision can have a significant impact on your well-being, carefully weigh your options when selecting your attorney. And remember, you can choose more than one attorney. The choice is ultimately yours to make, but we suggest someone who:
- You trust completely
- Shares your values and morals
- Is knowledgeable about financial matters
- Is located near you geographically, for convenience
- Understands and is accepting of the role
Some people appoint a trust company, such as CIBC Trust, as their attorney for property, perhaps jointly with a family member or close friend. The trust company brings expertise to the relationship, while the family member or friend has a personal understanding of your motivations and wishes. Whoever you choose, make sure they're willing and completely understand the duties they're responsible for.
How do I get started?
You should consult a legal advisor as to the requirements in your province or territory and your personal circumstances. CIBC can provide you with a power of attorney form but you are not required to use it. You can also use a form prepared by a third party, such as your lawyer, or a form you've downloaded from the Internet, purchased, or received from your provincial government.
Requirements to operate under a power of attorney
While requirements may vary depending on the circumstances, the following are the basic requirements for both the "grantor" (the accountholder who is assigning power of attorney) and the "attorney" (the individual acting on the accountholder's behalf) for an account at CIBC to operate under the authority of a power of attorney:
- If using a CIBC form of power of attorney, you and your attorney should visit a CIBC branch to complete the document. Though usually not required, we recommend visiting your home branch and having your attorney present to make the process as easy as possible
- For non-CIBC forms of power of attorney, the form presented at the branch generally can be either the original or an original notarized copy
- In some provinces, the power of attorney must also be signed by the attorney and witnessed, or it may require a specifically worded accompanying certificate
- The attorney and the grantor need to meet existing CIBC standards for identification: each must provide two pieces of acceptable identification, one of which must be government-issued and include a photo. For a comprehensive list of acceptable identification, please visit cibc.com/ca/acceptable-identification.html
- Each attorney must indicate their birth date and occupation
- In some cases, upon completing the power of attorney, CIBC will keep a "certified true copy" and provide the original to you for your safekeeping. In other cases, CIBC will maintain the original
- You and your attorney may be asked to complete an Attorney Acknowledgement and Indemnity Agreement in the presence of branch staff
- For your borrowing needs, products such as mortgages and personal loans may have additional requirements for operating under a power of attorney.
- If the power of attorney was executed outside of Canada, you may be required at your own cost to provide a statement from a lawyer, licensed to practise in the jurisdiction where the power of attorney was executed, that it was indeed validly executed and complies with that country's laws
As long as you're mentally capable, you have the right to change or cancel the power of attorney at any time. As your needs change, so can the document. Just make sure CIBC and any other financial institutions you have accounts with have the most recent version on file.
If you have an existing power of attorney and create a new power of attorney, make sure you are aware of the impact of the new document. Consider speaking with a legal professional to determine if there are any conflicts between the new form and the previous document, and whether the new power of attorney revokes the earlier power of attorney.
What if CIBC needs to conduct further review?
On occasion, CIBC may question the authority of the attorney to give instructions on your behalf or the acceptability of the power of attorney document. In these cases, CIBC will inform you or your attorney that a review is required and will indicate the expected duration of the review.
This process can vary in duration, depending on the complexity of the issue. For example, if the power of attorney form is a photocopy, your attorney will be asked to provide an original or an original notarized copy. Some issues may be more complex and require a more thorough review.
Please note that if the review is due to CIBC having concerns related to potential financial abuse or other illegal activity, CIBC may be prohibited by law from disclosing its concerns and will investigate accordingly.
Escalation process regarding CIBC's review
Should you or your attorney not agree with CIBC's findings, any concerns should be discussed with an advisor at your local branch. If the advisor is unable to resolve the matter, disputes will be escalated appropriately within CIBC. You can learn more about our dispute resolution procedure by asking for a printed copy of CIBC's Our Service Commitment to You document, which is also available at any CIBC branch or by calling CIBC Telephone Banking.
How do joint accounts fit in?
Some people see joint accounts as a simpler alternative to a power of attorney. With a joint account:
- Two or more individuals have access to the account
- Each person can deposit, withdraw or transfer funds, regardless of who put them into the account
- Deposits payable to only one of the joint accountholders can still be deposited into the account
- It's easy for a delegate to manage bill payments and other day-to-day banking needs
However, these benefits may themselves be risks: joint accounts can leave you vulnerable to financial abuse, since everyone has full and equal access to the funds regardless of where they originated. Some other risks to consider include:
- Funds in a joint account may be subject to claims by the creditors of one of the joint accountholders
- In the case of a marital breakdown of one of the joint accountholders, the account could be considered a matrimonial asset and divided accordingly
In contrast, the law requires that if you are not capable, the person you have named as your attorney must act in your best interest and use your money for your benefit. If funds are misused, you or someone acting on your behalf can call on legal authorities to assist.
When an account is in your sole name, your money ordinarily will not be subject to claims by creditors of your attorney. When an account is made joint, with right of survivorship, (an option not available in Quebec), generally the assets will bypass the estate and not be processed through your will. The power of attorney ends upon your death and your will is used to determine how you want your estate divided, whereas joint assets will be transferred directly to the joint owner regardless of your estate plan.
Understanding powers of attorney and joint accounts is an issue that is particularly important for senior citizens, as they can be more vulnerable to financial abuse. You must understand that the power of attorney may grant the attorney authority to do almost anything you could do with your own property. Working cooperatively, the federal and provincial governments have created an online brochure on this topic, What every older Canadian should know about: Powers of Attorney (for financial matters and property) and Joint Bank Accounts.
Get good advice
Many people draft powers of attorney at the same time they create or update their wills. This is a great idea, because you are making important decisions when you are healthy and able to take your time to make a plan that best suits your needs. As with all estate planning, the key is to get good advice from a knowledgeable legal specialist and put your plans in place before you need them. This can provide you with peace of mind regarding your wishes for yourself and your family. It is always wise to create a power of attorney when you are not in a crisis situation so that your wishes are clearly stated.
At CIBC, we encourage you to engage in a conversation to determine the approach that will best meet your needs. Choosing the right path, be it developing a plan for a power of attorney or investigating whether or not to set up a joint account, is crucial to building the right financial plan for your future. Putting in place a plan so that your wishes will be followed is an important step to having peace of mind, both now and in the future.