Activating a Power of Attorney: 10 Things to Know

DISCLAIMER

This information is intended for business owners in Canada and serves as general guidance only. Always consult with a qualified advisor before making any legal decision. 

What is a Power of Attorney?

Having a Power of Attorney is a huge responsibility. If one is ever granted a power attorney by a loved one, the person who grants that authority (the “Grantor”) is putting you in charge of them if they were ever to become mentally incapacitated.

Here are 10 important things to know if you are holding a Power of Attorney.

1. Ensure you have a valid Power of Attorney and financial representation agreement.

Make sure your agreement is valid under the Power of Attorney Act (British Columbia). For instance, if you are appointed an enduring Power of Attorney prepared by a lawyer or notary public in British Columbia, it is likely valid and will continue throughout the Grantor’s incapacity.

However, if the document is specific, conditional, prepared, signed in another jurisdiction, or hand-drawn, the document might not be valid. If this happens, you may not have the authority to act under the Power of Attorney.

If you are unclear whether or not the Power of Attorney is valid, obtain legal advice as soon as possible. If you are not authorized to act as power attorney but do act, you will be held liable. If the Power of Attorney is invalid, consider handling the matter at the Public Guardian and Trustee or apply to become a committee of the individual.

2. Determine if there is a living will and/or health care representation agreement.

Health care decisions must be made under the Health Care (Consent) and Care Facility (Admission) Act. This act states that all decisions made about the person in medical care can only be through the person who is authorized under this act. This includes decisions made about their health care, as well as the health care facility itself.

3. Obtain & safeguard assets

Ensure that all of the Grantor’s assets are accounted for. Properly ensure and secure all assets as needed. This includes organizing and tracking online financial transactions. Make sure PIN numbers, bank accounts, locks, et cetera are not being used by others. It is recommended to change locks on the house as well, as well as take any other necessary security precautions.

4. Keep financial records

It is wise to keep records of all of your actions as Attorney, as you may need to access them later. It is especially important to keep all financial records in writing. It is suggested to refrain from using a debit card to obtain cash from the donor’s bank account.

Instead, make all transactions from a separate chequing account for which you receive the returned cheques. This way, you are able to reimburse yourself for reasonable and necessary expenses.

If the Grantor is still mentally capable but wishes for you to act due to ill health, you should come up with a plan together to allow the Grantor some access.

One common solution is to create a separate account with some spending money for the Grantor, making it easier for you to track expenses between the two of you.

5. Change of Grantor capacity

Always be conscientious of a person’s Grantor capacity. Their mental and physical state should be monitored regularly in case they are improving or regressing by both whoever has Power of Attorney and health care professionals. Whenever possible, the Grantor should be part of the decision-making process.

6. Communicate

Power of Attorney requires good communication with all involved. It is especially important to communicate with other family members who might be involved in the Grantor’s status whenever possible.

Communication should include what you are doing, and why you are doing it. Failure to communicate often leads to problems, especially during a stressful time for all, so be sure to keep those involved in the situation informed.

7. Act in the Grantor’s best interest

If you are acting under Power of Attorney, remember to act in the Grantor’s best interest. This might not always be in the interest of a potential beneficiary under the Grantor’s will.

For example, if better care costs more money, remember it should be spent on the Grantor, not tucked away for future use of beneficiaries under the Grantor’s will.

8. Check the will

It is imperative to check the will for who the ultimate beneficiaries are. This way, you won’t act in conflict with the estate plant. Ensure the proper assets are given away to the beneficiaries of the Grantor’s choice. Additionally, don’t inadvertently delete RRIF beneficiaries by changing financial institutions.

9. Seek professional advice

In the complex world of estate management, tensions can often escalate between the family members of the Grantor and the individual granted Power of Attorney. When such a fractious relationship begins to brew, it's imperative to seek professional advice, especially when law, healthcare, or finance matters require an expert hand.

Accepting the mantle of Power of Attorney often leads to a myriad of uncertainties and questions. It's entirely typical to grapple with inquiries such as "Who has the authority to override a Power of Attorney?" or "How does one invoke such a responsibility?", even "Can the agent of a Power of Attorney legally transfer funds to themselves?" Such uncertainties are par for the course, and we at Parr Business Law stand ready to support you.

10. Taking the next step

Remember, whenever you're facing a crossroads and uncertainty clouds your judgment, it's crucial not to hesitate to seek legal advice. We are here to light your path, ensuring you feel empowered and confident in making the best possible decisions in your unique circumstances. Having Power of Attorney is extremely important, and often complicated. If you are ready to take on this responsibility, call or text us today for a consultation.