Power of Attorney/POA - The Basics
In this post, we’ll be discussing Power of Attorney or POA. This is a document that gives authority to someone to manage your money and property on your behalf in case you’re not able to. The person you give this power to is called an attorney, and that’s why the document is called a power of attorney (POA) document.
If you don’t have a power of attorney (POA) agreement, a family member or friend will have to go through an expensive and tedious process to act on your behalf.
You’d want to sign this document to protect yourself in case you become incapacitated- unable to understand information or consequences about a decision regarding your property. Bad car accidents or age-related diseases are examples of situations that could make you incapacitated.
There are two types of power of attorney (POA) - general and enduring.
General POA only lets your attorney take care of your affairs when you’re mentally capable. If you become incapacitated, the general POA agreement ends. Usually you’d get this type of agreement for a short term and you could limit the power of the attorney to a certain scope such as selling a house.
On the other hand, an enduring power of attorney lets your attorney keep acting on your behalf even if you become incapacitated. Sometimes, the agreement will kick in only once you have become incapacitated if you choose so.
It’s important to note that your attorney could do pretty much anything with your finances and property that you could unless you explicitly limit their power. They could do your banking, conduct real estate transactions, sign documents, or buy consumer products for you. Keep in mind that they won’t own your assets or property - they'd just be managing those things on your behalf. Some important limitations to your attorney’s powers are that they can’t create wills on your behalf.
How do you know if power of attorney/POA is right for you?
There are some notable practical and convenience advantages to signing this agreement. The POA agreement makes it clear exactly who will be responsible for your affairs - and they’ll be required by law to explain how what they’re doing is for your benefit. It’s a flexible agreement, as you can outline exactly how much power your attorney will have and in what time frame. Finally, it’s possible to have more than one attorney.
Another important document you should have is a will. Without a will, your loved ones will have to go through a court process to prove they’re entitled to your property. In scenarios where there’s a sudden car accident or illness and your kids are left unaccounted for in your will, this could be a really unpleasant process.
Bijan Law is a general practice law firm in downtown Vancouver. We can help you out whether you're entering a partnership for investment, starting or purchasing/selling a business, want to keep wealth within your family, immigrate to Canada, or resolve a dispute.