This article is a general introduction to the “enduring” Power of Attorney, often simply called a “POA”. It is perhaps the most common and useful estate planning document, and one of the more dangerous, if not made and used correctly.
With a POA, you can choose a person (“attorney”) to act on your behalf. This can be very useful during a future loss of mental or physical capacity due to illness or accident, or for a person working or travelling abroad.
Even a simple POA will usually avoid both the need for a court-appointed adult guardian, which is uncertain, time-consuming and costs thousands of dollars to arrange, and the problems that can result from creating joint accounts just to manage funds.
Only an adult with legal capacity can make a POA. The British Columbia Power of Attorney Act requires that you must be able to understand all of the following:
- what assets you have, and their approximate values;
- your obligations to your dependants;
- the scope of what the attorney will be able to do on your behalf;
- that, if the attorney does not act prudently, your estate may lose value;
- that the attorney might misuse the authority, causing you harm; and
- that as long as you have capacity, you may remove the attorney.
A POA can grant very broad powers, such as managing, selling, investing, or spending any income or asset. However, it can also have limits and protections:
- requiring a doctor opinion to confirm your incapacity first;
- limiting the attorney’s authority, in time or in scope;
- naming an alternate attorney, in case the first is unable to act; and
- naming more than one attorney, who must act together.
Under the British Columbia Power of Attorney Act, every attorney has a list of basic duties, such as keeping records of all decisions and actions and producing them (a process called “accounting”) on demand. The attorney can face removal as well as legal liability if those rules are not followed.
Although POAs do not automatically expire, many older POAs are missing terms and guidance that you may consider to be important or desirable, such as to allow the attorney to support family members, to continue a pattern of charitable giving, or to compensate the attorney for their time spent on your affairs.
There is no mandatory form of POA, so your POA can be customized according to your wishes and circumstances. This requires a thorough discussion to make sure that you understand the risks and options before deciding what to do.
If you have any questions about a Power of Attorney or another type of estate planning, please contact us for accurate, respectful, and practical advice.