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Planning for Incapacity - Powers of Attorney
Conclusion
When is a Power of Attorney effective?
When does a Power of Attorney end?
What is an Enduring Power of Attorney?
What are the disadvantages of a Power of Attorney?
What is the effect of the new Representation Agreement Act on the Power of Attorney?
Who should I appoint as my Attorney?
What is a Power of Attorney?
What authority can I give to my Attorney?
What are the alternatives to a Power of Attorney?
Conclusion
The Power of Attorney is a powerful tool to use when planing for temporary absence or incapacity. It is relatively inexpensive and effective. If you are planing for incapacity, get your enduring Power of Attorney signed before September 5, 2001 or you will be faced with needing a more expensive Representation Agreement. On the other hand, if you find the Power of Attorney limiting because it cannot deal with health and personal care decisions, then the Representation Agreement might be just the thing for you.
The foregoing is general information only and not intended to constitute legal advice. For that you should contact a lawyer of your choice to specifically address your needs and your situation. To that end, we certainly invite you to call us.
When is a Power of Attorney effective?
For a Power of Attorney to be effective, you must be able to understand the nature and effect of making it and appreciate your financial circumstances.
A Power of Attorney is normally effective on the date it is signed. You can specify that it becomes effective at a future date. If you want the Power of Attorney to be effective only upon the occurrence of a specific event, such as incapacity, you can also provide for that with what is sometimes called a "springing" Power of Attorney. The difficulty with a springing Power of Attorney is that there could be uncertainty as to when it becomes effective. It would be prudent to specifically outline the evidence which is required and which can be relied upon by persons dealing with your Attorney to ensure it is being validly exercised.
When does a Power of Attorney end?
A Power of Attorney will effectively end or expire on the earliest of the following dates:
a. The date you revoke it (assuming you are capable of doing so);
b. The date you make a Representation Agreement which specifically revokes it;
c. Your death;
d. The expiry date of the Power of Attorney, if such is specified in the document;
e. Your becoming mentally incapable of managing your affairs (unless it is an enduring power of attorney); or
f. The death or incapacity of the Attorney (unless an alternate or authorized substitute is in place);
g. Your bankruptcy;
h. The appointment of your committee under the Patients Property Act;
i. For Land Title purposes, unless the Power of Attorney indicates otherwise, it is only effective for 3 years from the date it is signed; or
j. The Court revokes it by Order.
If you wish to revoke your Power of Attorney, you need to understand the nature of the Power of Attorney, and the effect of revocation. You must also send a letter of revocation to your attorney, and it would also be prudent to send copies everywhere you have property or money and make sure they get it. If the Power of Attorney was registered at the Land Title Office, you must also register a Notice of Revocation there.
What is an Enduring Power of Attorney?
Under common law, a Power of Attorney terminates on incapacity, because the Principal is no longer capable of supervising the Attorney to make sure the authority granted in the document is not abused. Most people obtain Powers of Attorney to allow the Attorney to deal with financial matters when the person is incapacitated, so in those circumstances it is necessary under the Power of Attorney Act for the Power of Attorney to specifically provide that it survives any mental infirmity which the Principal may suffer. This is otherwise known as an "enduring" Power of Attorney and is the most popular means by which you can plan to have your financial affairs dealt with, if you should become incapacitated.
What are the disadvantages of a Power of Attorney?
The primary disadvantage of a Power of Attorney is the risk of abuse. One reason why the Provincial Government has enacted the Representation Agreement Act was to provide the checks and balances on a representatives to attempt to avoid elder abuse which can more readily occur under the authority of a general Power of Attorney. Attorneys have converted or used the Principal's property for their own personal purposes, contrary to the original intention of the Power of Attorney.
What is the effect of the new Representation Agreement Act on the Power of Attorney?
The Representation Agreement Act authorizes Representation Agreements which are supercharged Powers of Attorney. In addition to dealing with property and financial matters, a Representation Agreement can also deal with health and personal care issues. A Representation Agreement can also appoint monitors to supervise the work of the representative. The Representation Agreement Act also provides specific accounting, property management and accountability measures which do not exist under the Power of Attorney regime.
After September 5, 2001, enduring Powers of Attorney, will no longer be authorized. Normal Powers of Attorney are unaffected, no matter when they are signed. All enduring Powers of Attorney signed prior to September 5, 2001 will be grand-fathered and remain valid until otherwise terminated according to law.
After September 5, 2001, an adult interested in appointing someone to make decisions for him or her will need to make and sign a Representation Agreement. You can expect a Representation Agreement to be significantly more time consuming, complex and expensive than a Power of Attorney, due to the greater scope of the Representation Agreement and the formalities for signing it.
Who should I appoint as my Attorney?
Your Attorney should be someone who you absolutely trust not to abuse the authority provided by the Power of Attorney, especially if it is an enduring Power of Attorney, which could be effective after you lose the ability to supervise what your Attorney may be doing with your property and finances.
Traditionally, people chosen to be Attorneys include spouses, siblings or children, and even lawyers. You can appoint more than one Attorney who can act either independently or together, depending on your desires. You can appoint alternate Attorneys (for example, "... I appoint John, but if he dies or becomes incapable or unwilling to act, then I appoint Jane...").
Under the Power of Attorney Act you can also provide your Attorney with the authority to appoint a substitute Attorney. This is a useful way to plan upon the Attorney's becoming incapable of doing the job; however, the "down" side is that your Attorney may not have any warning of a pending problem, or your Attorney may pick a substitute who you do not trust or who you would not appoint yourself.
What is a Power of Attorney?
A Power of Attorney is a document authorized under the Power of Attorney Act of British Columbia. It authorizes a person or company (the "Principal") to appoint another person (the "Attorney" - not to be confused with the American term for lawyer), to act on behalf of the Principal to deal with his or her property or financial affairs. A Power of Attorney must be in writing. In order for it to be effective at the Land Titles Office, it must be signed (also know as "executed") in front of a lawyer or notary public, who are qualified as "officers" for registration purposes under the Land Title Act. Signatures must be in dark (ie, black) ink.
What authority can I give to my Attorney?
A Power of Attorney can deal with any aspect of your financial and property matters. It can be general in scope, authorizing the Attorney to do anything which can be done lawfully by an attorney. It can take either a short form indicating the Attorney is authorized to do anything which the Principal can lawfully do by an attorney; or it can take an expanded form and specifically outline that authority, using a number of rather wordy paragraphs.
A Power of Attorney can also be for a restricted or specific purpose. For example, you could provide an Attorney simply to deal with the sale of a piece of property during your absence on vacation. If you would like a Power of Attorney to be granted for a specific single purpose, it would be prudent to restrict the terms of the Power of Attorney to that purpose. Banks, Credit Unions, and Investment firms usually have their own power of attorney forms, but such a power of attorney will not usually extend beyond the financial institution.
A Power of Attorney cannot be used to make a Will or to make health care decisions. You can make a living will or health care directive to deal with health and personal care issues, but it does not say who should make the decisions, and the directions in it are not binding on anyone
What are the alternatives to a Power of Attorney?
a. The Representation Agreement;
b. A committeeship under the Patient's Property Act. This involves a person who intends to act as your Committee (or Trustee), preparing and making an application before the Supreme Court of British Columbia with the support of two physicians, to be appointed Committee of your person (health, personal care, etc.) or your estate (property and finances) or both. The Public Trustee must be served with notice of the application, and can make submissions to the Court on the application suggesting restrictions on your Committee (such as the requirement to post bond, restriction on the sale of property without further Court Order, etc.). The cost of a basic committeeship application is approximately $3,000.00. If the committeeship is contested by members of your family, then the process can be considerably more expensive.
c. Having an associate or substitute decision maker appointed under the Adult Guardianship Act. This is a Court application process which is in the Provincial Court of British Columbia. This Act was recently enacted together with the Representation Agreement Act. Upon reviewing its provisions, it is as complex as the committeeship process in the Supreme Court of British Columbia.
How do the possible decision makers rank in terms of priority?
a. The first level decision maker is an Attorney under a Power of Attorney.
b. A representative under the Representation Agreement Act can supercede an Attorney under a Power of Attorney.
c. A substitute decision maker under the Adult Guardianship Act can supercede both an Attorney under a Power of Attorney and a representative under the Representation Agreement Act.
d. A Committee under the Patient's Property Act supercedes all of the above.
Consequently, if you need to arrange for someone's personal or financial affairs to be dealt with after incapacity and he or she has not previously signed a Power of Attorney or a Representation Agreement, then it is most prudent to apply to the Supreme Court for a Committee under the Patient's Property Act.
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