Banking advice for seniors*

Many Canadians are concerned about how to manage their money, property, and finances as they age or as life changes take place. They may worry about what will happen if they become unable to deal with their own finances. It’s a good idea to plan ahead for a time when you may need help managing your affairs.

Two tools often used to manage financial affairs are powers of attorney and joint bank accounts. It is important to understand how a power of attorney or a joint bank account works before you use them. There are risks and advantages to both. You should never feel pressured to sign a power of attorney or to open a joint bank account. Carefully consider all of your options before making any decisions. Learn more about the information here.

About Power of Attorney

What is Power of Attorney?

A power of attorney is a legal document that you sign to give one person, or more than one person, the authority to manage your money and property on your behalf. In most of Canada, the person you appoint is called an “attorney.” That person does not need to be a lawyer.

Among other requirements, you must be mentally capable at the time you sign any type of power of attorney for it to be valid. In general, to be mentally capable means that you are able to understand and appreciate financial and legal decisions and understand the consequences of making these decisions. However, the legal definition of mental capacity will vary based on the laws in each province or territory.

Who can I ask to be my attorney?

You should ask someone you trust. You may choose your spouse, a close friend, a family member or anyone else that you trust. Carefully consider whether they are the best choice to manage your money and property, and do so in your best interest.

The minimum legal age for an attorney varies according to the province or territory where you live. The person you ask to be your attorney can refuse to act for you, so it is important to ask the person first if they are willing to take on this responsibility and everything that it entails. You should also consider appointing a substitute attorney in case the first attorney can no longer act for you.

What can a Power of Attorney do?

Unless you limit your attorney’s authority, they can do almost everything with your finances and property that you could do. If you don’t have any limitations in your power of attorney document, your attorney can do your banking, sign cheques, buy or sell real estate in your name, and buy consumer goods. Your attorney does not become the owner of any of your money or property. He or she only has the authority to manage it on your behalf.

About Joint Bank Accounts

What is a joint bank account?

Joint accounts are bank accounts in which two or more people have ownership rights over the same account. These rights include the right for all account holders to deposit, withdraw, or deal with the funds in the account, no matter who puts the money into the account.

How does a joint account work?

As a joint account holder, you share equal access to the account and responsibility for all the transactions made through the account. In most cases, unless you state otherwise, the other account holder can make transactions without your consent.

In some cases, it may be possible to specify that the consent of all joint account holders is required to access the funds in the account.

In many cases, joint accounts include the right of survivorship. This means that if one of the account holders dies, the surviving account holder becomes the owner of the account, with the right to deposit, withdraw, and deal with the funds in the account.

About Trusted Contact Person

What is a Trusted Contact Person (TCP)?

As of December 31, 2021, your financial advisor is required to take reasonable steps to see if you would like to name a Trusted Contact Person (TCP) when opening an account and when updating your client information. A TCP is someone you authorize your financial advisor to contact in limited circumstances. It allows your financial advisor to know who you trust and who they have permission to contact when they are concerned about your wellbeing under specific situations.  This could include:

• If your financial advisor needs to get in touch with you but can’t.
• If your financial advisor has a concern you are vulnerable and being financially exploited.
• If you are having a health issue and your financial advisor needs to confirm your wellbeing. 
• If your advisor needs confirmation of your legal representative(s).

For example, your advisor may contact your TCP when they simply can’t reach you because you have taken an extended vacation and forgot to inform them. Or, in a more complex situation, they may contact your TCP to ensure the validity of a request that is out of character if they believe you are vulnerable and being financially exploited.  

What can my Trusted Contact Person do?

A TCP can help safeguard your financial assets, but they:

• cannot authorize transactions on your behalf
• cannot make decisions on your behalf
• will not be given access to your detailed account information

You appoint a TCP to act solely as an additional resource to help your financial advisor make decisions about protecting your account. You can specifically outline in your client agreement when your TCP should be involved. 

Who should be a Trusted Contact Person?

A TCP should be someone you trust and someone who is mature and can handle difficult conversations about your personal situation. Consider choosing someone who:

• will protect your interests
• will be comfortable talking to your financial advisor
• knows you well enough to notice changes in your personal situation
• is familiar with your support network
• agrees to take on the role
• is typically not involved in decisions about your finances, and preferably, is not your power of attorney

How is TCP different from a Power of Attorney (PoA)?

A TCP can’t make financial decisions on behalf of you, meaning they can’t initiate or authorize transactions on your behalf. Nor can they make account changes in any form or be given access to accounts and account information.

A PoA can do anything that you (the grantor) could do unless constrained in the power of attorney document and by provincial and territorial law. They may have the ability to authorize the purchase and sale of securities in an investment account.

Each provincial jurisdiction in Canada has legislation governing the powers of attorney, and the rules vary by province. Typically, the duty to act arises when the PoA has accepted the appointment or has acted in a manner consistent with the appointment. In some cases, the power of attorney document will specify a date or an event that triggers the appointment. An example of an event would be a capacity assessment by medical professionals confirming that you (the grantor) are incapable of managing your financial affairs.

Overall, the PoA must act in accordance with a fiduciary standard and abide by the terms and conditions of the power of attorney document. These duties include but are not limited to the following:

• acting in the best interests of you
• exercising reasonable care and skill in conducting your affairs
• keeping records of all transactions and accounting for your affairs
• ceasing to exercise their authority and duties if the power of attorney is revoked

A PoA typically cannot do the following:

• make a will on your behalf
• change an existing will
• change the designated beneficiaries of any registered accounts (RRSP, RRIF, TFSA) or life insurance policies
• grant a new power of attorney to someone else
• provide gifts, unless allowed per the power of attorney document and authorized in specific jurisdictions, and the gift doesn’t impoverish you
• co-mingle your assets with their own assets (except for property that is registered jointly)

As with a TCP, you can specify more than one PoA, and there can be PoAs for specific assets.