1. What is a Power of Attorney (POA)?
A power of attorney (POA) is a legal document that gives one person (the “attorney”) the authority to act on behalf of another person (the “principal”). A POA can be used for a variety of purposes, including managing the principal’s finances, making medical decisions for the principal, and signing legal documents on the principal’s behalf.
In Canada, there are two types of POAs: general POAs and enduring POAs. A general POA takes effect immediately and ends when the principal dies or becomes mentally incapable. An enduring POA takes effect immediately, but it remains in effect even if the principal becomes mentally incapable.
A POA can be used to manage the principal’s estate planning affairs. For example, the attorney can use a POA to:
- Sign the principal’s will on their behalf
- Apply for probate on the principal’s behalf
- Pay the principal’s debts and taxes
- Distribute the principal’s assets to their beneficiaries
It is important to note that a POA does not give the attorney the authority to change the principal’s will. The attorney can only carry out the principal’s wishes as expressed in their will.
2. Why is a POA important?
Power of attorney (POA) is an important legal document that can provide you with peace of mind and help to protect your interests in the event that you become incapacitated.
Here are some of the key reasons why a POA is important:
- To ensure that your wishes are carried out. If you become incapacitated, a POA will allow someone you trust to make decisions on your behalf according to your wishes. This can include decisions about your finances, healthcare, and personal welfare
- To avoid guardianship. If you do not have a POA in place, a court may appoint a guardian to make decisions on your behalf. This can be a costly and time-consuming process, and it may not result in the outcome that you would have wanted
- To provide flexibility and convenience. A POA can be tailored to your specific needs and preferences. You can choose to grant your attorney broad powers or more limited powers. You can also choose to grant your attorney powers that take effect immediately or powers that only take effect if you become incapacitated
Here are some specific examples of how a POA can be used:
- To pay your bills and manage your finances. If you are unable to manage your own finances, your POA can help to ensure that your bills are paid on time and that your money is managed responsibly
- To make medical decisions on your behalf. If you are unable to make your own medical decisions, your POA can consent to medical procedures, sign a do-not-resuscitate order, and make other important medical decisions for you
- To sell your home or other assets. If you need to sell your home or other assets, your POA can sign the necessary legal documents on your behalf
- To file your taxes. If you are unable to file your own taxes, your POA can file your taxes on your behalf
3. What happens if I do not have a POA?
If you do not have a power of attorney (POA) in place, and you become incapacitated, a court may appoint a guardian to make decisions on your behalf. This process can be costly and time-consuming, and the court may appoint someone who you do not trust or who is not familiar with your wishes.
Without a POA, your loved ones may not be able to access your bank accounts, pay your bills, or make medical decisions on your behalf. They may also have difficulty selling your home or other assets.
4. What is the difference between general and enduring POA?
The main difference between a general power of attorney (POA) and an enduring POA is that an enduring POA remains in effect even if the principal becomes mentally incapacitated. A general POA, on the other hand, ends when the principal becomes mentally incapacitated.
Here is a table that summarizes the key differences between general POAs and enduring POAs:
| Feature | General POA | Enduring POA |
|---|---|---|
| Effective date | Takes effect immediately | Takes effect immediately |
| Duration | Ends when the principal dies or becomes mentally incapacitated | Remains in effect even if the principal becomes mentally incapacitated |
| Purpose | Can be used for a variety of purposes, such as managing the principal’s finances, making medical decisions for the principal, and signing legal documents on the principal’s behalf | Can be used for the same purposes as a general POA, but it can also be used to make decisions on the principal’s behalf after the principal becomes mentally incapacitated |
| Requirements | Must be signed by the principal and witnessed by two people | Must be signed by the principal and witnessed by two people, and it may also need to be notarized |
It is important to note that the specific laws and requirements for POAs vary from province to province in Canada.
5. What is the difference between a Will and a POA?
A will and a power of attorney (POA) are two different legal documents that serve different purposes.
A will is a legal document that states how you want your assets to be distributed after your death. It can also include other important information, such as who you want to be the guardian of your minor children.
A POA is a legal document that gives someone you trust (your attorney-in-fact) the authority to make decisions on your behalf if you become unable to make decisions for yourself. The POA can be general, giving your attorney-in-fact broad powers, or it can be limited to specific tasks, such as managing your finances or making medical decisions.
Key differences between a will and a POA:
- Timing: A will takes effect after your death, while a POA takes effect while you are still alive
- Scope: A will only deals with your assets after your death, while a POA can be used to make decisions about a wide range of matters, including your finances, healthcare, and personal welfare
- Revocation: You can revoke or change your will at any time, as long as you are competent. You can also revoke or change your POA at any time, as long as you are competent
Examples of how a will and a POA can be used together:
- In your will, you can name the person you want to be the executor of your estate. The executor will be responsible for carrying out your wishes as expressed in your will
- In your POA, you can name the person you want to be your attorney-in-fact. Your attorney-in-fact can make decisions on your behalf if you become unable to make decisions for yourself. For example, your attorney-in-fact could manage your finances, pay your bills, and make medical decisions for you
It is important to have both a will and a POA in place. A will ensures that your assets are distributed according to your wishes after your death, while a POA ensures that someone you trust can make decisions on your behalf if you become unable to make decisions for yourself.
6. Does my POA override my Will?
No, your POA does not override your will. A POA is a legal document that gives someone the authority to make decisions on your behalf while you are still alive. A will is a legal document that states how you want your assets to be distributed after your death.
Once you pass away, your POA ends and your will takes effect. Your executor will be responsible for carrying out your wishes as expressed in your will.
There are a few limited exceptions to this rule. For example, if your POA contains specific provisions about how your assets should be distributed after your death, those provisions may take precedence over your will. However, this is generally not the case.