A discussion of the what is involved in setting up a power of attorney. Obviously everyone's needs and circumstances are different and so this brief overview is not meant as legal advice of any kind. For more information please feel free to Contact Us.

Introduction

What happens when you lose the ability to make decisions regarding your finances? This is a scary thought, but it is important that you address this issue before it is too late. Contact our firm to help give you peace of mind.

What is a power of attorney?

A power of attorney allows a person or persons to legally make decisions on your behalf and conduct your financial affairs if you are unable to do so yourself. Often, individuals will appoint a power of attorney to protect themselves as they age and potentially become physically or mentally unable to manage their finances. A power of attorney is also useful if you fall ill and are unconscious and unable to make decisions.

Important note: A power of attorney only has the ability to make financial decisions. They cannot make medical decisions on your behalf.

Who can I appoint?

Generally, people will appoint a family member or close friend to act as their power of attorney. The power of attorney must be at least 18 years old and mentally competent to handle your finances. Although the name may be confusing, the power of attorney does not need to be an actual attorney. You may appoint more than one power of attorney.

What are attributes of a good power of attorney?

The person you pick to be your attorney should be someone you trust completely to make financial decisions for you. Honesty and good money management skills are very important. Here is a list of characteristics of a good power of attorney:

  • Trustworthy


  • Someone you know well and with whom you are comfortable


  • Financially responsible so that they have the experience and ability to handle your money responsibly


  • Has the time to manage your affairs


  • Lives near you


  • Someone younger than you who will likely not predecease you


  • Financially independent, so they are less likely to mismanage or steal your assets


How do I appoint a power of attorney?

You must sign a written document appointing a power of attorney. The appointed power of attorney does not have to sign the document. Usually, a witness also signs the document. The witness should not be the donor's spouse or common-law partner.

Can I control of limit the power of attorney's decisions?

Yes, you can include instructions or limitations in the power of attorney document. The power of attorney is bound by the instructions contained in the document and they are always required to act in your benefit. This precludes the power of attorney from making any financial decisions that would negatively affect you.

When does the power of attorney cease?

  • When you or the power of attorney dies (unless you name a substitute power of attorney).


  • If you revoke it.


  • If you become incapacitated, unless it is an enduring power of attorney (see below).


  • If you or your power of attorney become bankrupt.


What are the different types of power of attorney?

There are several different kinds of power of attorney, and you can choose which type to grant depending on your particular circumstances;

  1. Specific power of attorney - You grant the power of attorney the authority to complete a specific task on your behalf (i.e. selling your home) and is limited to that specified task only.



  2. General power of attorney - You grant the power of attorney authority over all of your financial affairs. This ceases when you become mentally incompetent.



  3. Enduring power of attorney - You grant the power of attorney authority to continue acting as power of attorney after you become mentally incapable. You must explicitly state in the power of attorney document that the power of attorney's authority continues after you become mentally incapable. This document must be witnessed.



  4. Springing power of attorney - Your power of attorney comes into effect at a designated time in the future, rather than at the time you sign the document. Your power of attorney gains authority when the specified future event occurs. For example, your power of attorney may not gain authority until a doctor deems you mentally incompetent.