A Power of Attorney is a document granted by a donor to allow another person to administer the donor’s financial and legal affairs.
An attorney appointed under a power of attorney is an agent of the donor, with the consequent implications of the law of agency. The agent’s power is limited by the authority given to the agent by the donor (or principal).
There are three common types of powers of attorney that can be used, each for different purposes:
- General Powers of Attorney
- Broad powers, ends if donor of power becomes mentally incapable
- Specific Powers of Attorney
- Specific to a particular property, transaction, 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 B.C., general powers of attorney don’t specify limitations on the powers of the attorney in the document, but the attorney is only permitted to handle the donor’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, unless expressly stated in the document, a general power of attorney will cease to have any effect if the donor becomes mentally incapable. This is why 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 in the document on the general powers given in a general power of attorney.
The power can be limited in subject matter (such as 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 a donor becomes incapable of managing their affairs.
ENDURING POWERS OF ATTORNEY
Pursuant to s. 8 of the Power of Attorney Act, an enduring power of attorney can be created which continues to be in force and effect despite any mental infirmity befalling the principal.
An enduring power of attorney also can be used where the individual’s mental incapacity is not of the degree requiring a committeeship appointment.
Some drawbacks of an enduring power of attorney are that the agent cannot be compelled to act, the principal is unable to supervise the attorney’s actions or revoke the power of attorney following the onset of mental infirmity and, subject to an express contrary direction contained in the power of attorney, the agent cannot use the principal’s assets for the benefit of the agent or the principal’s.