08 Jan Do I Need a Power of Attorney?
A power of attorney, or a POA, is a legal document that allows one person, the “Adult”, to appoint another person, the “Attorney,” to assist with legal and financial matters (note that Attorney does not mean lawyer in this context). A POA is part of a basic estate plan which in addition to a POA, includes a representation agreement, a will and sometimes, trusts.
The Attorney can perform a number of financial transactions on behalf of the Adult, including but not limited to, the following:
- paying the Adult’s bills;
- preparing and filing tax returns;
- dealing with the Adult’s investments and accounts; and
- buying, selling or mortgaging the Adult’s property.
A POA is typically used as an incapacity planning tool, allowing someone to assist the Adult with their financial affairs should the Adult lose capacity. However, a POA can also be useful if the Adult will be unavailable to deal with their own financial affairs, for example if they are travelling.
Often, we have clients inform us that they don’t require a POA due to the fact that their spouse is joint on all assets with them. While this may reduce the requirement for a POA, a spouse still cannot sign the documentation necessary to refinance or buy or sell a property without the POA. Thus, if one of the owners of the property has lost capacity, the other owner of the property will be required to apply to the court for committeeship, a lengthy, expensive process.
Additionally, if you are the shareholder of a company you should be aware that if you have lost capacity, neither your spouse nor your Attorney can sign corporate documents on your behalf. Accordingly, shareholders of small companies should consider having a corporate POA prepared in order to allow the business to carry on in the event that the controlling shareholder loses capacity.
Consideration should be taken in choosing your Attorney as your Attorney will have full access to your finances. While they are prohibited from acting inappropriately, this prohibition certainly does not guarantee that there will not be any abuse by the Attorney. At Sitka Law Group, we recommend that we hold the original POA and only release on certain agreed upon conditions. It is our hope that this will reduce the possibility of abuse.
Should you have questions about a power of attorney or wish to have one prepared, please feel free to contact Sitka Law Group. We are conveniently located on Shelbourne Street near the intersection of the borders of Victoria, Oak Bay and Saanich.