Planning for Incapacity – Power of Attorney for Finance and Property

A Power of Attorney is a legal document by which you appoint and authorize another person (usually a trusted friend, family member, colleague or adviser) to act on your behalf in the event that you become incapacitated.

In order for a Power of Attorney to apply when you are incapacitated, it will need to be stated to be a durable Power of Attorney. Ordinary powers of attorney cease to have legal effect once you become incapacitated. A durable Power of Attorney remains valid or, in some cases, only commences if you become incapacitated.

 

Durable Power of Attorney come in two forms – a durable general Power of Attorney and a durable limited Power of Attorney. Under a durable general Power of Attorney, you can appoint an agent to whom you give authority to collect and disburse money on your behalf; operate your bank accounts; buy and sell property in your name; refurbish and rent out your property; and generally sign documents and deeds as your alter ego. It permits your agent to act as your authorized legal representative in relation to the whole cross-section of your legal and financial affairs, until such time as the authorization granted under the Power of Attorney is revoked or comes to an end.

 

You can of course limit the scope of your agent’s authority by creating a durable limited Power of Attorney. This is similar to a durable general Power of Attorney except that, under the terms of this document, you can expressly limit the agent’s authority to carrying out certain functions such as, for example, the management of your business, selling a property or another specific task.

 

Most responsible individuals plan how their property will be divided amongst their loved ones following their death. However, all of these plans can seem like a waste of time and effort if the individual, through an accident or illness, finds themselves in a position where they cannot manage their own affair while they are still alive. The individual’s inability to manage his or her own assets, in particular, could result in a substantial depletion of the value of these assets. This could, in turn, render meaningless the individual’s plans for the distribution of his or her assets on death.

 

The individual’s family could be left facing serious financial hardship due to their inability to access the individual’s assets while he or she is still alive. What if the individual’s signature is required to access the family savings? What if assets need to be sold to pay for his or her medical care…but because he or she cannot sign the relevant documents, the family cannot raise the funds.

 

You can avoid this situation entirely by simply granting a durable Power of Attorney to a close friend or family member. If the need arises, they can take charge of your affairs and ensure that same are managed in much the same way as you would have done in the circumstances.

 


 

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