6 Things to Consider When Granting a Power of Attorney

6 Things to Consider When Granting a Power of Attorney

Power of Attorney is an arrangement that allows a person you trust to handle certain financial  and responsibilities for you in your absence. It is typically invoked when you are absent or unavailable for a certain period of time (e.g. taking an extended vacation, going overseas for military duty). The person you appoint can pay your bills, sell your house for you, and complete other important financial transactions.

Granting someone else power of attorney is one of those major life decisions that shouldn’t be made lightly or as a knee-jerk reaction to a crisis. There are six things you should give serious thought to before giving a friend or family member that responsibility.

Which power of attorney meets your needs?

In Alberta, there are two types of power of attorney. Enduring power of attorney (EPA), also known as springing and immediate power of attorney, gives someone else the authority to manage your assets if you become ill or incapacitated. Springing power of attorney comes into effect when a certain event takes place, such as medical confirmation that you are unable to make your own decisions, and remains in effect until you revoke the arrangement or pass away. Immediate power of attorney takes effect as soon as the document is signed and, like its springing counterpart, remains in effect until you rescind the document or die.

What person is best suited for the responsibility?

No matter how limited the arrangement is, granting someone power of attorney bestows a great deal of power and responsibility on them. You want to make sure that you have full confidence in their willingness and ability to act responsibly and with your best interests in mind at all times. You may feel close to and trust your sister, for example, but if she has a poor track record when it comes to handling money, she’s not an ideal candidate.

Is that person willing?

Power of attorney is a major responsibility, and not everyone, no matter how personally and financially competent they may be, is up for the challenge. Before naming someone, talk to them beforehand and confirm that they both understand what is being asked of them and are willing to accept the responsibility.

Will there be any limitations?

Do you want to grant your agent general power of attorney, or will certain limitations apply? If you want to narrow their role and responsibilities, considering creating a special power of attorney arrangement, which limits the capacities on which that person can act on your behalf. A common example of healthcare power of attorney, which is limited to medical decisions.

Are there any foreseeable conflicts?

If you foresee conflict over decisions that might have to be made, you want to select a person who can handle it without giving way and resist those who might try to obstruct your wishes from being carried out. This calls for personal fortitude as well as maturity and responsibility.

Who will be your alternate?

You should always appoint an alternate who can step in if your original choice is unable or unwilling to accept the responsibility when the time comes. All the factors and considerations listed above should be taken into account when you choose a backup power of attorney.

There’s a lot to consider when granting a power of attorney. That’s why you should create such an arrangement with assistance from a qualified and experienced estate planning lawyer. At Estate Connection we will listen to your needs and concerns and help you set up the power of attorney that addresses both.

Written by Stacy Maurier