This article will try to answer some of the most common questions about powers of attorney.

A power of attorney is written authorization for an individual to enter into binding legal transactions on behalf of another person.  Such transactions may include the day-to-day handling of a bank account, borrowing money, buying or selling real estate, or entering into a contract of any kind.  Almost anything that a person can do legally, can be done on his or her behalf by someone else who holds a valid power of attorney.  The exception is that the holder of a power of attorney cannot make or change a person’s will.

Some clients express the fear that once they have given someone else a power of attorney, they can no longer manage their affairs themselves.  This is not correct.  As long as you are able, you can continue to handle things yourself.

The written document is called the power of attorney.  The person who signs it, thereby giving the power to someone else, is called the donor.  The person who is named in the document as the one who will exercise the power is called the attorney  or the donee.  Although it is common practice in the United States to use the word "attorney" to mean a lawyer, its traditional use is to describe a person to whom authority has been given to act as an agent.  This may be a lawyer, but need not be.

Sometimes, the power of attorney is restricted in ways which will be described below.  If the power is not restricted, it is called a general power of attorney.

If the power of attorney expresses the intention that it is to continue in effect even if the donor becomes incapable of managing property, it is called a continuing power of attorney.
 

There are many reasons for preparing a power of attorney.  Many people do it as they grow older, so that someone will be able to handle their affairs in the event that they become incapacitated.  Younger people give a power of attorney if they are concerned about the possibility of an accident or serious illness.  Many people get a power prepared before going into hospital for an operation, or if they are going to be away from home for an extended period of time.

Most people go to a lawyer for the preparation of a power of attorney, although this is not legally required.  General power of attorney forms are often available at stores selling office stationery.  However, seeing a lawyer can be helpful.  There are many options available when a power is prepared, and there are some risks involved.  A lawyer can consider your particular situation and advise you whether changes should be made to the standard form to suit your needs.  If your lawyer already knows you and is familiar with your circumstances, the cost should be quite reasonable.

Another advantage of having the power prepared by a lawyer is that he or she will be familiar with the requirements of proper execution of the document.  The power of attorney will be invalid, for example, if it is witnessed by the attorney, the attorney's spouse or partner, or certain other related people listed in the Substitute Decisions Act.  Particularly important is that the donor must be of sound mind at the time the power is s signed.  A lawyer knows how to look for this, and will make a good witness in the event that the validity of the power is ever called into question.

Banks, stockbrokers and other institutions often have their own power of attorney forms intended for specific purposes.   These are usually satisfactory for those purposes, but problems might arise if, for example, you have given a power over a bank account to one person, and a general power to someone else.  The granting of a new power of attorney usually  results in the revocation of all earlier ones, unless proper precautions are taken.  If you have need to give more than one power of attorney, you should ensure that they mesh properly.
 

A power of attorney may be restricted in a variety of ways:

-  it may expire at a given date
-  it may authorize the attorney to deal with sums of money up to a certain limit,
-  it may require two or more attorneys to agree before any action can be taken or,
-  it may be limited to dealings with only a particular asset.

In fact, there is an infinite number of ways in which a power of attorney can be restricted.  Your lawyer can help you decide whether restrictions are necessary,  and how they should be worded.

One common restriction that clients request is a clause which makes the power take effect only in the event that the donor later becomes either mentally or physically incapacitated.  A condition like this may cause problems: how can the person who is being asked by the attorney to rely upon the power verify that the necessary triggering condition has occurred?

For example, if the power provides that it takes effect only when you are mentally incapacitated, how is the bank teller who receives a withdrawal slip from your attorney going to satisfy herself that you really are mental incapacitated?

An alternative way of dealing with this problem is to draw up the power as an unrestricted one, leave all copies with your lawyer, and instruct your lawyer that the documents  are to be released to your attorney only in the case of your incapacity.  You and the lawyer should agree upon what criteria will be used as proof of incapacity.  Perhaps it will be the opinion of your family doctor.  Then, give your doctor written authorization to discuss your condition with the lawyer if there are signs that you are becoming incapacitated.

You must be aware when you execute a general power of attorney that it immediately gives your attorney the opportunity to "rob you blind".  It is not legal for your attorney to do this, but the document makes it easy for a dishonest attorney to abuse the power with little chance of getting caught.  Obviously, you should not give a power of attorney to someone you do not trust.

While you may be satisfied that you can trust your attorney, there may be other people who should be satisfied as well.  Sibling rivalry often rears its head when one child in the family is named attorney and the others are not.  If the donor is elderly and has made a will, the non-attorney children may suspect the attorney of making decisions which will have a beneficial effect on the attorney's eventual share in the estate, to the detriment of the others.  In such a case, it may be best to appoint two or more attorneys and require them to make all decisions jointly.

As long as you have legal capacity (i.e. you are of sound mind), you can revoke a power of attorney.  The revocation must be in writing, executed in the proper manner.  Of course, you should make every effort to keep track of where your original powers of attorney are being held, so that you will be able to provide notice of the revocation to those who might otherwise rely upon the power.
 

 
HOW ELSE DOES A POWER OF ATTORNEY TERMINATE?

A continuing power of attorney terminates upon the death of the grantor.  It also terminates on the death, incapacity, or resignation of the attorney, unless provisions have been made for an alternate attorney to take over.

A continuing power of attorney can also be terminated if a court appoints someone to be the guardian of the grantor’s estate.  And, as mentioned earlier, it will terminate by the execution of a new power of attorney, unless the grantor states that there are to be multiple continuing powers of attorney.

Ontario law allows you to prepare another document, called a Power of Attorney for Personal Care, in which you can delegate the power to make decisions about your medical care and other personal care matters.  See the article on this web site on this subject.

Lawyers Karen A. Selick or James F. O’Brien would be happy to meet with you to discuss other questions you might have regarding powers of attorney.