Power of Attorney – What Is It and Why Do I Need It?
January 20th, 2015
People are becoming increasingly aware of the practical and legal benefits of a document called a “Power of Attorney”. Briefly, a Power of Attorney is a document which is signed by the donor (the person granting the power) and allows the donee (person receiving the power) to “stand in the shoes” of the donor. Practically, what this means is that the donee can do anything for the donor which is permitted in the Power of Attorney. Common examples of powers which are given in a Power of Attorney document would be banking decisions, ability to sign contracts and agreements, ability to sign transfers of land and mortgages, and the ability to settle disputes. There are two basic kinds of Powers of Attorney: the Enduring Power of Attorney, and the Springing Power of Attorney.
Springing Power of Attorney
The Springing Power of Attorney is a document which only comes into force and effect upon the incapacity of the donor. For example, if Mr. Jones gives a Springing Power of Attorney to his son Joe, the power will only come into force if and when Mr. Jones becomes mentally incompetent. As with all Powers of Attorney, one of the main benefits of the Springing Power of Attorney is that it circumvents the family having to make costly applications to the Court of Queen’s Bench to appoint someone to be in charge of the incompetent person (Committeeship).
At the same time, the Springing Power of Attorney has the practical advantage of allowing the donor to feel secure that he or she has appointed an Attorney he or she knows they can trust when and if the donor becomes incompetent, instead of relying on the decision of a Queen’s Bench Judge to appoint a potentially different individual. Most importantly, the Springing Power of Attorney allows the donor to live with the peace of mind that no one can conduct any business on his or her behalf unless and until he or she becomes mentally incompetent.
Enduring Power of Attorney
The Enduring Power of Attorney is a document which comes into full force and effect upon being signed by the donor. This is in contrast to the Springing Power of Attorney which only comes into force and effect upon the subsequent incapacity of the donor to manage his or her own affairs. Therefore, using the example of Mr. Jones again, if Mr. Jones signs an Enduring Power of Attorney to his son Joe, the power is in force immediately and Joe may immediately undertake all the powers given to him by the document. As with all Powers of Attorney, the Enduring Power of Attorney may be either narrow or wide in the powers it grants the attorney. Moreover, the Enduring Power of Attorney can specify whether or not the donor wants the document to continue to be in force after the person has become mentally incompetent.
The benefits which the Enduring Power of Attorney offers include the fact that the appointed person may immediately look after his or her affairs. Again, a financial benefit that the document offers is that it enables the family to circumvent costly committeeship proceedings upon a future incapacity of the donor (assuming that it is intended to survive incapacity). On the other hand, such a document also has inherent risks. For example, the person appointed could make an unauthorized use of it for his or her benefit rather than for the benefit of the donor. It should only be granted to someone you have complete confidence in. In fact you should consider appointing more than one attorney to reduce the risk of abuse.
Which Power of Attorney is chosen clearly depends upon the circumstances of each individual donor. Very often, one will find that more elderly donors choose the Enduring Power of Attorney, while younger donors will often choose the Springing Power of Attorney. It is important to note that, so long as the donor is mentally competent, either Power of Attorney may be revoked and pronounced null and void. This is an important protection.
Notice: The articles on our website are provided for general information purposes only and should not be relied upon as legal advice or opinion. They reflect the current state of the law as at the date of posting on the website, and are subject to change without notice. If you require legal advice or opinion, we would be pleased to provide you with our assistance on any of the issues raised in these articles.
