What is a Power of Attorney?

A power of attorney is a legal document that gives a person the power to take care of another person’s financial and legal matters.   The person granting this power is called the “donor” while the person to whom the power is given is called the “attorney,”  

A power of attorney gives the person appointed as attorney the authority to take care of financial and legal affairs. This could include routine matter such as paying bills and more complicated financial decisions such as choice of investment portfolio, tax planning or selling real estate on your behalf.   A Power of Attorney does not give Attorney the right to to make decisions about the donor’s personal or health care.

What are Powers of Attorney Used For?

In the days before modern communications such as phone and internet, individuals who went away for extended periods of time would grant a power of attorney to a trusted individual to make financial and legal decisions in their absence. 

Today, a Power of Attorney is most commonly used as a form of advance planning, to ensure that a family member or other person of the donor’s choice is legally able to take care of their financial affairs if the donor become “mentally incapable” of managing their own finances in the future.   Such a Power of Attorney is often called an “enduring” Power of Attorney as it remains in effect – or “endures” – even if you become mentally incapable.

When considering whether or not to grant a Power of Attorney, it is important to know that mental incapacity will prevent a donor from granting a Power of Attorney.  The Power of Attorney Act states that if a donor cannot understand all of the following:

(a)the property the donor has and its approximate value;

(b)the obligations the donor owes to his or her dependants;

(c)that the donor’s attorney will be able to do on the donor’s behalf anything in respect of the donor’s financial affairs that the donor could do if capable, except make a will, subject to the conditions and restrictions set out in the enduring power of attorney;

(d)that, unless the attorney manages the adult’s business and property prudently, their value may decline;

(e)that the attorney might misuse the attorney’s authority;

(f)that the donor may, if capable, revoke the enduring power of attorney;

then the donor is incapable of granting a Power of Attorney. 

If a donor does not have a legal Power of Attorney appointing someone to act for him/her in place when he/she becomes mentally incapable, then the donor’s loved ones will need to go to court to get “committeeship” (the legal authority to handle the donor’s affairs) which is invariably an expensive and time consuming process.

If you or a loved one is in need of advice regarding Powers of Attorney or Committeeship, consult Vancouver & Burnaby Incapacity Planning lawyer Andrew Rebane at Resolutions Law Corporation, Burnaby, British Columbia andrew@resolutionslawcorp.com or 778-372-7107