POWERS OF ATTORNEY
What is a power of attorney?
A power of attorney is a legal document that authorizes one person to act for another person. A grant of power of attorney allows the attorney to sign legal documents and to make contracts according to the powers granted within the power of attorney. Historically a power of attorney ceased upon mental incapacity (these can still be made), but under the present British Columbia legislation, the power of attorney can be enduring if you wish; in this case it continues to operate even if the person granting the power of attorney has become mentally incapable. Of course, the grantor of the power of attorney had to be mentally competent at the time the power of attorney was signed. Your power of attorney ceases to be effective upon death. Your Will then comes into force.
What can a power of attorney be used for?
Most legal authority can be granted to an attorney. The most usual use of a power of attorney is for signing real estate documents when the grantor of the power of attorney is out of the province, unable to sign the documents, or mentally incapable. For example, even though you own property as a joint tenant with your spouse, if your spouse became mentally incapable, you need a power of attorney to sell your home.
What is a general power of attorney?
The most common form of power of attorney is the general power of attorney, which allows the attorney to do almost all acts that the grantor of the power of attorney could do. The general power of attorney usually allows the attorney to act after mental infirmity and also could be used in the Land Title Office for greater than three years. In order for the power of attorney to continue past mental incapacity, the power of attorney must expressly say that it is an enduring power of attorney.
Read more about Types of Powers of Attorney.
What is a conditional power of attorney?
Conditional powers of attorney are usually granted to provide for dealing with certain specific transactions or types of transactions.
For example, a specific power of attorney could provide that an attorney could sign all documents relating to a real estate transaction or the mortgage of a house. When dealing with a mortgage of a house, one also has to check that the financial institution providing the mortgage will allow the mortgage to be signed by an attorney. Sometimes the policy of the financial institution will not allow this. Powers of attorney can also be limited to a certain period of time.
Lawyers do not usually like to use a specific power of attorney because the power of attorney document might not be useable if the government body or a third party that has to deal with it decides the terms of the power of attorney have not been met. An example of this is where a power of attorney allowing for the purchase of real estate did not include the ability of the attorney to mortgage the property.
Can a power of attorney come into effect only upon mental infirmity?
The appointment can be made conditional upon mental infirmity or other condition, but in these cases the condition has to be proved to the party being presented with the power of attorney. It might be difficult to prove to the financial institution or land title office that the grantor of the power of attorney is out of the country or mentally incapacitated. If this type of power of attorney is desired, there must be objective criteria to prove the condition has been met, i.e., a doctor’s affidavit concerning the donor’s mental incapacity.
What does the attorney have to do?
The attorney has to act in good faith. The attorney is a type of trustee and has to act in the best interests of the grantor of the power of attorney. The attorney cannot transfer property to himself or herself unless there is specific authorization within the power of attorney to do this. An attorney could be called to account for his or her acts. An attorney should keep proper records so he or she can prove what was done with the grantor's funds or other property.
Read more about Activating a Power of Attorney.
Can a power of attorney be revoked?
A power of attorney can be revoked by serving a notice of revocation to the attorney. Notices should also be given to any financial institution or land title office where the power of attorney could still be used.
Will a financial institution accept a power of attorney?
Even though you have a power of attorney, some financial institutions will request that you provide a power of attorney specific to their institution. They do this because they like to ascertain themselves that the person granting the power of attorney is mentally capable and is totally aware of powers being granted to the attorney. You should check with your applicable financial institutions concerning this.
Do I need a power of attorney if all my assets are held jointly?
Even though you have your funds in a joint account and your property in joint tenancy at the land title office, you should still have a power of attorney or representation agreement. Although most joint accounts at banks will allow either party to withdraw the whole of the funds and have right of survivorship on death, the Land Title Office requires all joint title owners to sign a transfer or a mortgage. The joint title owners have to be mentally competent at the time of signature, therefore an enduring power of attorney would be required.
A power of attorney is also a good idea to handle unexpected eventualities. An incapable person could still inherit property even if he or she doesn’t hold any land and bank accounts are jointly held with another person. Unless there is an attorney, an executor may require that a committee be appointed to deal with the mentally incapable person's affairs. Privacy laws will prevent access to government records without a power of attorney.
What happens if there is no enduring power of attorney?
In this case a committee is appointed by the courts. This requires a court application setting out the circumstances of the case. Also, affidavits have to be obtained from two doctors proving mental incapacity. Such a court application is time consuming and expensive.
Can I have more than one person as my attorney?
It is very common to appoint two or more people as attorneys. The attorneys then have to act separately or together. If there is a trust issue with regard to any one attorney, it is wise to have both attorneys acting together, that way they can keep an eye on each other and each has access to financial records to make sure that the other is acting properly. For most people this can be quite cumbersome, though, because both attorneys have to sign legal documents, cheques, etc. This could be a problem if the attorneys live in different geographic areas.
If the attorneys act separately, they should be able to cooperate and coordinate the use of the power of attorney. The attorneys can also act alternately.
How can I keep my power of attorney from being used right away?
If you are concerned with unauthorized use, or you wish the power of attorney to be used only if you are not capable of making decisions, the simplest means to retain control is to keep the original stored with you or in your safe deposit box.
The attorneys should know where the document is and have access to your house or safety deposit box, in the event that they must use it. If you place it in a safety deposit box, make sure that the financial institution will allow access to the attorney. The attorney probably needs to have a copy of the document or be a signatory on the box. Check with your financial institution on their practices.
Read more about How to Handle Your Enduring Power of Attorney Documents.
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