Understanding the Different Types of Power of Attorney

A Power of Attorney (POA) authorizes another person to handle your financial, legal, and / or personal matters. In Alberta, there are different types of POA, each one intended to fulfill a specific need. For example, you may want someone to temporarily take care of your affairs while you are deployed with the Canadian military or head south for the winter. Alternatively, you might want to appoint someone to take decisions on your behalf if you become incapacitated. Some powers of attorney are for specific purposes only, while others have powers that are broader in scope.

Specific Power of Attorney

A specific power of attorney is used when you want someone to accomplish a certain transaction on your behalf. It is limited strictly to that particular purpose, such as selling your house or managing a piece of real estate for you.

General Power of Attorney

When you grant someone general power of attorney, you are essentially giving them the ability to do anything you could legally do, such as administering your financial affairs, paying your bills, and selling your house. For that reason alone, it is crucial that you appoint someone whose judgment and financial acumen you absolutely trust. It is also important to remember that if you become incapacitated, a general power of attorney will no longer be able to act on your behalf. In this situation, you will want to have an enduring POA available.

Enduring Power of Attorney

Should you become incapacitated for any reason, an enduring power of attorney grants someone the legal ability to manage your finances, handle your assets, and deal with various entities such as the government and financial institutions on your behalf. Depending on how the enduring power of attorney is written, it may come into effect immediately (otherwise known as an immediate POA) or be triggered by a specific event, such as illness or injury (an arrangement called a springing POA).

Immediate Power of Attorney

An immediate power of attorney comes into effect the moment the document is signed. You and your POA may  both pay your bills, sign financial agreements, manage investment accounts, etc. This arrangement is often used for people who travel extensively or have mobility issues and need someone to attend face-to-face meetings on their behalf. Immediate POAs last until you either terminate the agreement or pass away.

Springing Power of Attorney

With a springing power of attorney, the person you select is empowered when a specified event occurs, such as illness or injuries that prevent you from making your own decisions. Once your situation improves, you can go back to managing your own affairs.

Selecting the right power of attorney can be complicated, so let the estate planning team at Estate Connection provide you with the insights and advice that will result in the best arrangement for your situation. Call us today!

Written by Stacy Maurier