Setting up Enduring Power of Attorney
Mention the word attorney and it immediately brings up images of briefcases, power ties and court cases. So, when power of attorney is mentioned, the conversation can get confusing. Because, while it’s smart to talk to a lawyer when setting up power of attorney, the document itself has nothing to do with lawyers.
In this case, an attorney is an individual who is appointed to make decisions in your name – and everyone should have that kind of attorney.
If you don’t already have power of attorney established, now is the time to consider who you should appoint. To help you better understand, we’ll cover the most important parts so you can make the best decision for you.
What is Power of Attorney
Power of attorney (PoA) is a document that gives someone in your life the ability to step in and take control over your finances if you become unable to do it yourself.
In this case, the person giving the power (i.e. you) is referred to as the donor while the person you give power to is referred to as an attorney (but this does not require that they are a lawyer).
While that sounds scary, it doesn’t have to be. Taking the time to write your PoA right gives you the ability to set boundaries for your attorney and ensure they are equipped to manage your estate well. And, rest assured, you retain the right to make your own financial decisions until you are mentally unfit or a triggering event, which you define, happens.
Why should I set up PoA with my will?
If you become unfit or unable to make decisions for yourself, someone has to step in to take care of your affairs. If you don’t have a document declaring who your attorney is then the court has to step in to make the decision for you.
This can be a costly endeavour and takes your finances completely out of your control.
Types of power of attorney
Enduring or continuing power of attorney gives your attorney power to continue to manage your finances despite your mental inability. It can be limited to certain actions, or encompass all your financial dealings. You can also specify when it comes into effect. For example, you may only want it to come into effect if you lose the mental ability to handle your own affairs.
General power of attorney gives your attorney authority over part, or all, of your finances and property. However, it ends if you become mentally incapable of managing your own affairs. You can limit this power of attorney to a certain task, like selling a home, or specify a certain time period during which your attorney will retain it.
*For the purposes above, the type you need is the enduring or continuing power of attorney.
Springing Powers of Attorney
There is no one set of conditions that sets a PoA into motion. Instead, when creating your power of attorney document you get to decide when it becomes valid, which is referred to as springing power of attorney.
Often the triggering event is a loss of the ability to make decisions for yourself based on mental inability, but it doesn’t have to be.
To make sure PoA is not sprung early, you can name one or more people, called declarants, to state in writing that the triggering event you stipulated has happened before the PoA is set in place.
Defining the scope of your attorney
Legally, your attorney can do almost anything with your finances, but only as defined by you.
That includes:
- Paying bills
- Buying goods
- Buying or selling real estate
- Signing cheques
- Buying consumer goods
Because of how broad a PoA can be, it is important to dictate in writing what can, or can’t, be done by your attorney beforehand. That way, no one has to guess at your desires.
While your attorney may have almost complete control over your finances during the defined time period, they cannot make or change your will for you, change a beneficiary on your life insurance, or give power of attorney to someone else.
*In Manitoba, PoA does not give your attorney the authority to make personal decisions. For that, you have to set up personal or health directives.
Homesteads Act
Under the Homestead Act, a spouse or common-law partner cannot sell the marital house without permission from the other partner. So, even if you’ve given your partner power of attorney, they cannot unilaterally sell your home. To do that, the donor can appoint an alternate attorney with specific authority to consent to a sale.
Requirements for PoA
Attorney
Not just anyone can be an attorney by law. Your attorney must be:
- an adult
- mentally competent
- not an undischarged bankrupt
Donor
Similarly, there are times when you (as the donor) cannot appoint PoA. In order to create an enduring power of attorney, the donor must be mentally competent and understand what they are writing and the effect it will have on them. It also must be signed voluntarily, without outside pressure from another person.
Document
Like a will, PoA doesn’t have a defined form. However, it does have to meet certain requirements, including:
- Written by hand or notarized by a lawyer
- Signed by the donor with a witness present. And signed by the witness in the presence of the donor
- Witnesses in Manitoba must be:
- registered or qualified to be registered to solemnize marriages
- a judge, justice of the peace or magistrate
- a qualified medical practitioner
- a notary public
- a lawyer entitled to practice
- a member of the R.C.M.P or a police officer in a municipal police force
- *Neither the attorney nor his or her spouse can act as the witness
- To be an enduring PoA, it must stipulate that it continues despite the mental incompetence of the donor
Keeping your attorney accountable
While you probably trust the person you appoint as your attorney, it can be helpful, and is legal, to appoint a person (or persons) to whom the PoA must be held accountable. This way, you can protect yourself and lower the temptation for your attorney to abuse their power.