A power of attorney allows you (the donor) to choose someone (the attorney) to manage your financial and legal affairs on your behalf if you become mentally or physically incapable of doing so yourself; for example, if you become mentally incompetent, are injured in an accident, or plan to be out of town for a period of time.
The power of attorney can be specific or broad, ranging from purchasing or selling a piece of real estate to paying your bills and receiving payments to you. However, your attorney cannot make health care decisions for you under a power of attorney.
If you do not have a power of attorney in place and you become incapable of managing your affairs, your family or friends might be required to apply to court for a committeeship in order to act on your behalf.
Powers of attorney are not all the same. They may have different features, depending on what you need. Some examples are:
1. General power of attorney – The attorney may act on behalf of the donor in all financial matters. A general power of attorney becomes effective immediately on execution, but ends when the donor becomes mentally incapable.
2. Limited power of attorney – The donor specifies what the attorney has authority to do; for example, to complete a specific business transaction, or that the power of attorney is effective for a certain period of time.
3. Enduring power of attorney – The power of attorney continues even after the donor becomes mentally incapable.
4. Springing power of attorney – The power of attorney becomes effective only on the occurrence of a specified event; for example, when the donor becomes mentally incapable.
The donor must be at least 19 years of age and mentally capable when making a power of attorney. The donor may revoke the power of attorney at any time, provided the donor is mentally capable at the time of revocation.
The attorney must be at least 19 years of age, capable of handling the donor’s affairs and willing to act as the attorney. The donor may appoint more than one attorney and specify that they must act jointly, or allow them to act separately on certain matters. The attorney does not need to be a lawyer.
The power of attorney is automatically terminated when either the donor or the attorney dies.
The benefit of having a power of attorney in place, properly prepared to meet your needs, is that you are able to choose the person you trust the most to manage your affairs when you are away, or when you can no longer do so yourself.
Contact Jennifer Chew of DuMoulin Boskovich LLP for your legal needs.