Youngsters are usually carefree without much concern for their future welfare. However, as people become older, they take a different perspective. Especially during middle age, most individuals plan to make arrangements for later life. As people move into their senior years, health becomes an issue, and people become less capable of making decisions about their life. This is where the power of attorney (poa) becomes an important issue. This article will discuss how a power of attorney works in Canada.
Power Of Attorney: What Is It?
A power of attorney (POA) is a signed legal document that allows one or more people to administer and govern your property or money. Known as the “attorney,” they can carry out duties around property and money on your behalf.
To become an attorney, a person does not need to be a lawyer, and the qualifying age depends on the province or territory.
For the power of attorney document to be valid in Canada, the recipient must be mentally capable when the documents are issued. That means the person must be able to understand the legal and financial decisions they are making along with the consequences of these choices.
Power Of Attorney: The Two Types
In Canada, there are a total of three territories and ten provinces. The requirements and the naming convention for a power of attorney (poa) vary depending on the territory or province. However, two main types of power of attorney are used when dealing with property and finance. They are the following:
General Power Of Attorney
This legal document gives the attorney power over some or all of a person’s property and finances. Through this document, the attorney can manage a person’s property and finances while they are mentally capable of conducting their affairs. It could be used if someone is too busy to look after their matters or simply seeking additional help.
The general power of attorney ends if the person becomes incapable of managing their affairs. This type of power of attorney can be “limited” or “specific.” It means it can be valid for a specific time period or a task (for example, to sell a property). The general power of attorney starts when the documents are signed or on a specified date.
Continuing Or Enduring Power Of Attorney
This document allows someone to continue acting as the attorney if they become mentally incapable of looking after their property or finances. It can give someone authority over all or some parts of their property or finances.
It comes into effect as soon as the document is signed. In some instances, it is possible for a power of attorney to go into effect only after a person becomes mentally incapable.
How To Choose A Power Of Attorney?
The chosen person must be trustworthy. It could be anyone, such as a person’s spouse, a family member, or a friend. It is also a good idea to consider whether they have the necessary skills and the capability to manage your property and finances. Financial experience and literacy are crucial to be a good power of attorney.
Also, consider a person’s availability and willingness. Are they eager to act as your power of attorney? Do they clearly know what’s expected of them? Do they have the time to manage your affairs?
In some provinces, a power of attorney can be paid for taking on the role. It is best to find out the rules in your province and discuss the matter with the person you want to appoint.
What Authority Does An Attorney Hold?
Unless limitations are stated on the power of attorney document, an attorney can do anything necessary to a person’s property or finances. Without limitations, an attorney can carry out things such as banking, buying consumer goods, or even buying and selling property on the person’s behalf. However, they cannot become the owner of a person’s property or finances.
Additionally, they cannot create or change a person’s will, make changes to life insurance coverage, or hand over the power of attorney to someone else.
Advantages and Disadvantages
In an ideal world, a person would handle all their affairs. Given that this is not always possible, people acting as a power of attorney (poa) serve an important purpose. However, there are advantages and disadvantages of using a power of attorney.
- A power of attorney makes it clear who is responsible for managing a person’s property and money if they are mentally incapable of looking after their affairs.
- There are laws to ensure the person manages the matters to the recipient’s benefit and to account for their management.
- A power of attorney is highly flexible; more than one person can act as a power of attorney, and the term can be for a fixed period.
- More than one power of attorney ensures no fraudulent activities occur.
- The biggest problem with a power of attorney is the possible financial abuse and mismanagement.
- A bad power of attorney may not have the right skills to manage a person’s affairs, or they may not have the best interests.
- If the power of attorney document is not specific enough, it may lead to the management taking place in a way the recipient may not like or appreciate.
- A power of attorney may become unsuitable if the documents are not regularly reviewed.
- If there is more than one power of attorney, there may be “competition,” which could lead to tensions and difficulties.
Power Of Attorney Over Personal Care And Healthcare
Though power of attorney deals with a person’s property and finances, other documents allow the attorney to decide on a person’s health or personal care. These differ from a power of attorney, which deals with a person’s property or finance. Depending on the province or territory, they may be called mandates, powers of attorney, representation agreements, health directives, or personal directives.
Making The Best Choice
Power of attorney is important if a person does not have the mental capability or the availability to manage their property and financial affairs. Because this is a crucial area of a person’s life, careful consideration must be given to ensure that the right person is chosen. Failure to do so can be detrimental to the welfare of the recipient.