What is a Power of Attorney?

A Power of Attorney is a legal document that appoints someone, called an Attorney, to look after your financial affairs. This document can be made for a specific purpose, such as signing Land Titles documents or effecting a sale of property, or can be made for a “general” purpose, meaning you appoint someone to look after all of your finances and assets.

Usually, a “general purpose” Power of Attorney is part of an Estate Plan. In most cases where the person making the Power of Attorney (called the Donor) is healthy and mobile, this power and authority only comes into effect if you lose mental capacity. If that were to happen, the Attorney and your medical provider would sign the Power of Attorney certifying that you have lost the mental ability to deal with your finances, and only then the Attorney would have the lawful authority to deal with your finances. At that point, the Attorney could access your bank accounts and investments, buy or sell your home, or otherwise do anything that you would do. The Attorney must ensure that any decisions he or she make is in your interests, and they deal with your assets and finances in a reasonable manner.

In circumstances where a Donor is older and has mobility problems, they may want the Power of Attorney to be effective immediately. This would appoint the Attorney to look after the Donor’s finances even though the Donor is still mentally competent. These types of Powers of Attorney are done for convenience, usually to help people who find managing their finances difficult due to age or limited mobility.

The Power of Attorney most often used in Estate Planning is “Enduring”, a legal term meaning that it stays in place even if a person loses mental capacity. If it is an Enduring Power of Attorney, the Attorney’s authority only ends when the Donor dies, if the Donor changes or renounces the Power of Attorney (while mentally competent), or by Court Order.