A Power of Attorney (POA) is a document that grants another person the legal power to take care of an adult’s financial and legal affairs. It does not give the authority to make decisions about the adult’s health care or personal care nor does it permit the making or changing of the adult’s will.
The person who gives this power is called the ‘adult’ or ‘donor’ and the person who is given this power is called the ‘attorney’ and is an ‘agent’ of the donor. The attorney is required to act honestly, in good faith and in the adult’s best interests.
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
- Limits the attorney’s power to specific task, property 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 adult’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 adult 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 an adult becomes incapable of managing their affairs.
ENDURING POWERS OF ATTORNEY
Unless a date is specified, an enduring power of attorney generally comes into effect either when the adult becomes incapable or on the date it is signed, continuing to have effect when the adult is incapable.
An adult is presumed to be capable of making an enduring power of attorney until the contrary is demonstrated. A capable adult may do anything the adult has authorized the attorney to do, regardless of whether the enduring power of attorney is in effect.
Some drawbacks of an enduring power of attorney are:
- An adult may not be permitted to make changes or revoke the enduring power of attorney if the adult is incapable of understanding the nature and consequences of doing so.
If an attorney exercises authority improperly, the action is deemed to be valid and binding on the adult in respect of persons affected who didn’t know the excise of authority was improper.