A power of attorney (POA) is a legal document that allows one person to act on behalf of another to manage their legal and financial affairs. The person who grants the power of attorney is called the donor, and the person who is authorized to act on their behalf is their attorney.
Often, people will draft a will and consider their estate planning complete. However, a standard will does not allow your loved ones to deal with your legal or financial affairs in any way while you are living – even if you do not have the capacity to deal with these matters yourself.
There are different types of power of attorney, but the most significant considerations are whether a power of attorney is general or limited, enduring or non-enduring, and immediate or springing.
A general power of attorney gives the agent broad powers to act on behalf of the donor, while a limited power of attorney limits the attorney’s authority to specific tasks or transactions – such as the sale of a property.
An enduring power of attorney remains in effect even if the principal becomes incapacitated, while a non-enduring power of attorney expires if the principal becomes incapacitated.
An immediate power of attorney takes effect from the moment the donor and the attorney each sign the document. A springing power of attorney takes effect when an event occurs, or a condition is satisfied – such as a physician drafting a letter which confirms that the donor of the power of attorney has lost capacity.
So why should you have a power of attorney? Here are some reasons:
- Planning for incapacity: No one likes to think about becoming incapacitated, but it can happen to anyone at any time. If you become unable to make decisions for yourself, a power of attorney can ensure that someone you trust will be able to manage your affairs on your behalf. Without a power of attorney, your loved ones may have to go to court to get an order for committeeship, which is a very expensive and time-consuming process. Undisputed, a committeeship application can cost around $10,000, and disputed, this figure could triple.
- Convenience: A power of attorney can be a convenient way to handle your affairs if you’re unable to do so yourself. For example, if you’re traveling overseas and need someone to sign a contract or pay a bill on your behalf, your attorney can do that for you with a power of attorney.
- Business purposes: If you own a business, a power of attorney can be useful in allowing someone to act on your behalf in business transactions. This can be especially helpful if you’re unable to be physically present for a business deal or if you’re out of the country.
In conclusion, a power of attorney can be an important part of your overall estate planning. By granting someone the authority to act on your behalf, you can ensure that your affairs are managed according to your wishes if you’re unable to do so yourself. Whether you’re planning for the future or simply want the peace of mind that comes with having a trusted person authorized to act on your behalf, a power of attorney is definitely worth considering.
This blog post provides legal information, but is not a substitute for legal advice. If you have a question about this topic or another legal matter, contact Naz Khodarahmi for a complimentary consultation. You can book a consult through www.macushlaw.ca through our booking system or contact Naz at [email protected] or 604-612-8024.