What is a power of attorney?

Himani Ediriweera
 

A Power of Attorney is a legal document that authorizes someone else to act on your behalf when you are physically or mentally unable to. This document grants that person rights to handle some or all of your affairs, including your care, finances and property.
 

When should I get a POA?

Well in advance of needing a Power of Attorney, you should consider appointing a trusted person to ensure that personal decisions are justly managed when you are unable to. A Power of Attorney is a legal document that will protect you in life, whereas a will becomes active after death. In Canada, this appointed Power of Attorney is called an attorney, which does not necessarily mean this person is a lawyer.

When you name a Power of Attorney, you must be mentally capable, as defined by the laws in your province or territory, and fully understand the financial and legal repercussions of having someone responsible for your decisions.
 

What powers does a POA have?

Once the power is enacted, a Power of Attorney can do almost anything unless you have limited their authority over what they can manage. They legally have control over banking, selling real estate in your name and buying consumer goods. However, until the power is enacted, you can continue to act for yourself.

Your attorney is not authorized to draft or make changes to your will, change a life insurance beneficiary or name someone new. And as long as you are mentally able, you have full authority over your affairs.
 

Are there different kinds of POAs?

Canada has two commonly recognized Powers of Attorney:

  • General Power of Attorney: This legal document allows your attorney to temporarily manage some or all of your finances and property only while you are mentally capable of managing your own affairs. The attorney has specific or limited authority over a designated duty, like selling a home or paying bills.
  • An Enduring or Continuing Power of Attorney: Your attorney has authority to act for you, including managing property and finances, if you become mentally incapable.

As outlined by the Government of Canada, the following are benefits and risks of a Power of Attorney. 
 

Benefits

  • Practical: The authorized person delegated to represent you is clearly defined in the legal document.
  • Flexible: A Power of Attorney can be general or specific, and tasks can be assigned to one or more people. More than one can reduce the risk of having a Power of Attorney abuse their rights.
  • Convenient: If you are unable to name a Power of Attorney because you are mentally incapable, someone must be authorized by the courts to manage property and finances. This can be time-consuming and costly.
     

Risks

  • Makes you vulnerable: Avoid using someone who might mismanage or make poor decisions on your behalf.
  • Too directive or not specific enough: Directives must be specific so your Power of Attorney clearly understands your wishes but not too strict that he or she has no flexibility in managing your affairs.
  • Not up-to-date: Regularly review the Power of Attorney documents to ensure they are up to date with current needs and laws. It is also necessary to ensure the assigned individual will represent and protect your best interests.

Family members, or loved ones, are not always able to step in when you need support. 

To ensure all possible protections are in place, it’s recommended you consult with a lawyer when creating a Power of Attorney.
 

Sources and recommended reading

Federal/Provincial/Territorial Ministers Responsible for Seniors

Giving Power of Attorney