A Power of Attorney (POA) is a document that grants a person (called the “attorney”) the legal power to take care of the granting adult’s financial and legal affairs. It does not give the attorney any power to make decisions about the adult’s health care or personal care, nor does it let the attorney change the adult’s will.
The attorney is required to act honestly, in good faith and in the adult’s best interests.
Three types of powers of attorney are commonly used, each for a different purpose:
- General Powers of Attorney
- Broad powers, ends if donor of power becomes mentally incapable
- Specific Powers of Attorney
- Limits the attorney’s power to a specific task, property, etc.
- Enduring Powers of Attorney
- Broad powers like the general POA, but does not end if donor becomes mentally incapable
GENERAL POWERS OF ATTORNEY
In BC, general powers of attorney don’t specify limits on the powers given to the attorney, but the attorney is only permitted to handle the adult’s financial and legal affairs.
The attorney cannot make decisions regarding medical treatment or other personal affairs that can be dealt with using representation agreements.
At common law a general power of attorney will cease to have any effect if the adult becomes mentally incapable (unless the document expressly provides that it will continue in effect). For that reason, an enduring power of attorney is more effective for estate planning purposes.
SPECIFIC POWERS OF ATTORNEY
Specific powers of attorney (which are sometimes called limited powers of attorney) specify limitations on the general powers given to the attorney. The power can be limited as to subject matter (concerning only a particular property) or limited in time (valid until a certain date).
Specific powers of attorney can also have an enduring clause, allowing them to remain effective after an adult becomes incapable of managing his or her affairs.
ENDURING POWERS OF ATTORNEY
Unless a date is specified, an enduring power of attorney generally comes into effect either when the adult becomes incapable or on the date it is signed, after which it continues to have effect when the adult is incapable.
An adult is presumed to be capable of making an enduring power of attorney until the contrary is demonstrated. A capable adult may do anything the adult has authorized the attorney to do, regardless of whether the enduring power of attorney is in effect.
There are some drawbacks to an enduring power of attorney:
- An adult may not be permitted to make changes or revoke the enduring power of attorney if the adult is incapable of understanding the nature and consequences of doing so.
As a general caution, if an attorney exercises authority improperly, but people affected weren’t aware that the attorney’s actions were improper, the action may still be valid and binding on the adult who granted the power of attorney.