Many Canadians are concerned about the management of their money and property as they get older and what might happen if they become unable to deal with their own finances. As a consequence, it is a good idea to plan ahead for a time when you are likely to need help in managing your affairs One of the tools often used for managing financial matters is power of attorney.
A power of attorney is a legal document that gives one or more persons (referred to as appointees or attorneys) authority to manage your money and property on your behalf.
In British Columbia, there are two types of powers of attorney: a general power of attorney and an enduring or continuing power of attorney.
General power of attorney
A general power of attorney gives your attorney the authority to manage all, or some of your finances and property only while you are mentally capable of managing your own affairs. It ends if you become mentally incapable.
A general power of attorney can be specific, meaning it gives your appointee authority for a specific period of time, or it can be limited, meaning it gives authority for a limited task, for example, to sell real estate. The document can go into effect as soon as you sign it, or, on a date specified in the document.
Enduring or continuing power of attorney
Conversely, an enduring or continuing power of attorney enables your attorney to continue acting for you if you become mentally incapable of managing your finances and property. It can take effect as soon as you sign it, but in some cases, you may specify that the document comes into effect only in the event that you become mentally incapable.
You must be mentally capable at the time you sign any type of power of attorney for it to be considered valid. This means you should be able to understand and appreciate financial and legal decisions and the consequences that may result from making these decisions.
Importance of power of attorney
Having a power of attorney arrangement in place is important because it has numerous advantages. For one, it makes it clear who will be responsible for your money and property if you can’t manage them on your own, even temporarily.
It also gives you peace of mind, as your attorney has to manage your money and property for your benefit and can be required by law to account for and explain how your assets are being managed.
In contrast, if you lose your mental capacity and do not have a valid document in place, then someone will need to get authority from the court to manage your money and property, which can turn out to be time-consuming and costly.
Do you need help drafting a power of attorney?
Although you are not required by law to use a lawyer’s services when preparing a power of attorney, it is recommended that you do so, especially if your situation is complicated.