A Power of Attorney (POA) is a simple and affordable way to plan for your financial future. The power you give can be limited to a single decision or to unlimited powers.
Why is it so important to prepare POA before something happens to you?
As per the Power of Attorney Act, you need to have a mental capacity to do this document, which means if you are in a hospital and can’t communicate, you can’t give power of attorney.
Why is it so important to prepare POA with a legal professional?
We have had many cases when people came to us with a signed power of attorney, and banks did not accept it. There is a legal and practical side to preparing and signing POA. Even though it is allowed by law to sign POA in the presence of 2 witnesses, banks likely won’t accept it if it was signed without a legal professional.
What types of Powers of Attorney exist?
With general POA, your attorney can manage your affairs while you are still capable. You can restrict an Attorney's duties, or limit the time period. Be aware of the fact that these powers of attorney expire.
With an enduring power of attorney, you can plan for any future incapacity. This type is the most popular, as it doesn’t expire. You can always revoke the powers given.
As per law, your attorney must act in your best interests. However, you should understand that there is always a possibility of misusing the trust. So choose wisely.
Most people would ask their family member or close friend to act as their Attorney. Sometimes, it can be a Notary Public, or a lawyer. You need to trust your attorney. Confirm that your attorney is able to act for you. Note that your attorney must be at least 19 years old, and live close to you. You still can choose an Attorney who lives out of province, but think about the practical aspects.
Consider naming more than one attorney in case your main attorney can’t act for you.
It is important to differentiate a power of attorney from will. POA works during your life while your will is used after your death.
What happens if you have not appointed someone as your Attorney and you become mentally incapacitated?
Without appointing someone with an enduring POA, no one has the legal right to act on your behalf (not even your spouse!). Unless your finances are all held jointly with someone else, your finances cannot be used to pay your rent, utilities and other expenses. If you have assets like a home or a vehicle, they cannot be sold even if you no longer live in the home or drive the vehicle. Of particular importance, a home or land held jointly by two or more individuals requires the signatures of all individuals to sell, mortgage or otherwise deal with.
Once an individual has become incapacitated he/she can no longer appoint an Attorney. In this instance the Public Guardian and Trustee will administer his/her affairs. If a family member or friend would like to take control of a loved one's affairs he/she must hire a lawyer and apply to the courts for legal appointment called Committee. This is a costly and lengthy process as opposed to giving a POA. Furthermore, the person named as Committee will have to report to the Public Guardian and Trustee as to what decisions they have made and how money has been spent. Most people find the obligations of a Committee onerous and intrusive.
If you have any questions or would like to discuss further, please contact Uptown Notaries for assistance.
Guest Blog by Natalya Hanna, Notary Public
This Article can not be considered legal advice.
Our Blog articles are shared through our wide network of professionals serving your needs.