Do You Need a Power of Attorney?

In our line of work we are occasionally required to act on the instructions provided by a third party. In order to accept instructions from a third party we must have a duly executed Power of Attorney, or POA. A POA is a legal document that gives someone else, the Attorney, the right or legal authority to act or make decisions on behalf of another person, the Grantor.

POAs can be for property or for personal care. For the purposes of this essay we are specifically referring to the Power of Attorney for property. The POA can be continuing with no set time limit, or it can be non-continuing with a certain time limit.

Unless the POA has limiting powers, it is considered a General Power of Attorney. In this case the Attorney may make any decisions on behalf of the Grantor, except make a will. When the POA is Limited it is often dealing with specific assets, a specific transaction, or it may only be valid for a certain period of time. For example, it may be useful to have a limited POA if you will be out of the country for a period of time and you want someone else to act on your behalf to deal with a pressing matter, such as a real estate transaction.

The Power of Attorney falls under provincial jurisdiction and the rules may vary by province. In Ontario, a valid POA must be in writing and be signed before two witnesses. Certain people cannot be a witness. They are the Attorney or the Attorney’s spouse, the Grantor’s spouse, the Grantor’s child, and any person under 18 years of age.

A Power of Attorney is an important legal responsibility and should be carefully considered by both the Grantor as well as the Attorney. Both parties should examine the POA to ensure they fully understand the terms, conditions and responsibilities it entails. They need to make sure that the POA is valid and has been drafted according to the applicable provincial jurisdiction. If there is any doubt, professional legal advice should be obtained.

According to the Alzheimer’s Association the risk for dementia doubles every five years after the age of 65. POAs are particularly useful when dealing with seniors who may have developed diminished capacity. In this case the Grantor will have established a POA where their child or other person, for example, becomes responsible for making decisions regarding their property in the event of dementia or other form of cognitive set back.

When dealing with seniors the key is to determine when to activate the POA. You want to make sure that the person has developed diminished capacity to the point that they cannot, or do not, understand the implications of the decisions they make. Certain warning signs may assist when coming to this decision, such as inconsistency of verbal communications, memory loss, gaps in narrative communications, behavior that is out of the ordinary, or simply being non-communicative.

We recommend that everyone should consult their legal professional and have a Power of Attorney as part of their estate plan. Without a legally executed POA there is a lengthy process one must go through for Statutory Guardianship over another person’s property in the event of incapacity. Review your plans with your loved ones and ensure that your affairs are in order.

Rick Sutherland has been a resident of OOS since 1985 and has been a regular contributor to OSCAR since 1991. The foregoing is for general information purposes and is the opinion of the writer. This information is not intended to provide personal advice including, without limitation, investment, financial, legal, accounting or tax advice. Please call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., to discuss your particular circumstances or suggest a topic for future articles at 613-798-2421 or E-mail Mutual Funds provided through FundEX Investments Inc.

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