A power of attorney (“POA”) gives someone else that you choose the power to deal with your financial affairs while you are alive.
The POA is a legal agreement between a person giving the power, called a “donor” and the person or person receiving the authority from the donor, called an “attorney” in which the attorney “steps into your shoes” of donor to act on their behalf. This could be of vital importance if the donor becomes incapacitated or is away from home for an extended period and is unable to attend to urgent financial matters.
Types of Power of Attorney
There are several types of powers of attorney documents for advance planning in British Columbia:
1. General Power of Attorney
A general power of attorney is effective upon being signed and ends when the Donor is no longer capable or dies. It is not commonly used because most individuals want a power of attorney as a substitute insurance to help them appoint a decision maker in financial decisions if they lack capacity. For that reason, an enduring power of attorney (“EPOA”) is more effective for estate planning purposes.
2. Limited Power of Attorney
As the name suggests, a limited power of attorney is drawn for a specific purpose(s) and/or limited periods of time such as while you are travelling.
3. Enduring Power of Attorney (“EPOA”)
An EPOA, the most common type of power of attorney, is usually activated upon signing and continues either while the Donor is not capable or upon the Donor’s death. It is typically signed by a Donor and kept at home in a very safe place and acted upon with banks, governments, and various other third parties when a situation arises where financial transactions need to be completed but the Donor is unable to do so because of poor physical or mental health that prevents them from managing their own affairs.
Should you not have an EPOA, a family member may have to make a court application to be appointed to look after your financial affairs. This is not only time-consuming which may result in financial loss, not to mention the costs of making a court application which could be in the thousands of dollars.
4. Springing Power of Attorney
A springing power of attorney is where the authority granted to the Attorney does not start until a certain event ‘springs’ to life. That event can be a date, a milestone, or an event, such as a physician certifying in writing that the Donor lacks capacity.
One final note
Power of attorney documents are always subject to acceptance by the third party upon which the power of attorney is provided as not all organizations accept powers of attorney documents for all matters, and some organizations have internal rules about their use and acceptance of the document for financial transactions. The foregoing categories can be merged or blended depending on a client’s specific needs.
Who to appoint as your attorney?
You can appoint anyone that you trust and that you feel will handle your affairs as you would handle them, if you were able. The only requirements are that the person must be an adult and must have the legal ability to enter into a contract. Your attorney can be a relative, a friend, an advisor, or you can name two or more persons to act together as your attorney.
Before appointing an attorney, be sure to consult the person to make sure that they would agree to act in this capacity. There is no legal requirement that anyone serve as your attorney if they do not wish to do so. There is also no legal requirement that your attorney be compensated for the services he or she renders; however, you might want to consider compensation, especially if your attorney’s duties are complicated and time-consuming.
What are the Requirements of an Enduring Power of Attorney (“EPOA”)?
An individual who makes an EPOA must be an adult (the age of majority in B.C. is 19 years of age). He or she must be of sound mind at the time of signing the EPOA and must not be unduly influenced or coerced into signing the EPOA. The EPOA must state whether the attorney may exercise authority while the person is capable, or only when the person is incapable of handling their affairs.
Why appoint an attorney over your assets and affairs?
If you travel frequently (or are away on military duty, extended vacation, etc) and have financial and/or business interests that need to be handled in your absence, or if you want to ensure that your affairs will be dealt with if you should become incapacitated, appointing an attorney will allow you to decide who will make legal, financial and medical decisions for you.
The person or persons you appoint become your “attorney in fact”, which means that they must make these decisions as if they were you.
DOES A POWER OF ATTORNEY LAST FOREVER?
A Power of Attorney cannot be used after death. It is no longer valid after you die. When someone dies, the Last Will and Testament is the document that takes over.
You can end your power of attorney as long as you are capable to do so. You must put your
decision in writing. The written decision is called a Notice of Revocation. You must give a
signed and dated copy of the written Notice of Revocation to your attorney, or attorneys, and to any person or businesses who may have a copy of the document on file.
WE ARE HERE TO HELP
Appointments of Power of Attorney must be in writing and the witness requirements for an EPOA can be quite complicated. As such, we strongly recommend that an EPOA is witnessed by either a lawyer who is a member with the Law Society of British Columbia, or a Notary Public who is a member in good standing with the Society of Notaries Public of British Columbia. By having your EPOA witnessed by a Lawyer or Notary Public, you can ensure that your EPOA can be registered with land titles to deal with real estate issues should it be necessary.
The original document should be kept in a safe place. In the case of a “springing power of attorney”, which becomes effective upon your incapacity in the future, the document must also be kept in a place that is known to, and is accessible to, the person(s) you appointed as your attorney. For example, your attorney in fact may have no way of retrieving the document if it is in your safety deposit box.
A POA is a vital estate planning tool that should be created to be used under the right circumstances. If you wish to create a POA, contact Open Door Law to assist you in creating the right type of POA for you.
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