I have been doing some reading on Financial Advisors and dealing with Power of Attorney’s which led me to think that a quick review of Power of Attorney documents including what they are and what they are used for.
The Power of Attorney (POA) is a legal document that gives someone or more than one person the ability to act on behalf of a person on their financial or property issues. The person who is granting the POA is called the Donor and the person who will act as the Power of Attorney is called the Donee.
Different types of types of Powers of Attorney
There are different types of POA’s depending on what the Donor wants to accomplish. It is always very important to make sure, as the Donor; you know what you want, what you are granting and what you are signing. The two types we will briefly look at today are General Power of Attorney and Enduring Power of Attorney.
General Power of Attorney
The General Power of Attorney is granted to someone while you are still able, mentally, to look after your financial or property affairs. You as a Donor would appoint someone with General Power of Attorney if you were leaving the country and needed someone to pay bills from your chequing account for example. This POA is in force until the time you become mentally incapacitated. At that point General Power of Attorney ends. Also, General Power of Attorney can start the on the date the document is signed or it can be activated at a later specified date.
Enduring Power of Attorney
The Enduring Power of Attorney kicks in when you become mentally incapable of managing your financial affairs or property affairs. It can some into effect when you sign the documents and will continue through the time you become mentally incapable (enduring) or start at a future date when you become mentally incapable (spring board).
Health Care Directives
This is different from the Enduring Power of Attorney options managing your financial or property affairs. This is the legal document that allows someone or more than one person to manage your health issues and concerns. It can be called a Power of Attorney but most often we call a Health Directive but that depends on what Province you live in. Every Province has slightly different wording so again be clear on what you want and what you are signing.
The good and Bad
Some of the positive points of setting up POA’s are:
- It is clear who is managing your financial, property or health affairs
- You can appoint more than one person
- The Attorney (done) must manager your affairs on your behalf
- Much easier to set it up when you are of sound mind rather than later when you actually need it.
Some of the negative points of setting up POA’s are:
- Appointing the wrong person can lead to mismanagement
- Directives that are too specific or too general can also lead to mismanagement
- Appointing joint POA’s can lead to disagreements
Make sure you take the time to appoint the right person you can trust and review your documentation regularly. Also, the Power of Attorney that you appoint does not have to be an Attorney (lawyer). It can be very time consuming and expensive to try appoint a POA after someone has become mentally incapable so it is wise to take care of this when your mental capacity is sound.