Many older British Columbia residents have a poor understanding of financial powers of attorney. Conversely, some of the people who are appointed to serve as “attorney” in these documents do not understand them very well either. It is essential that everyone involved with a power of attorney know and understand what they are, how they are used and the risks and benefits of such documents.
Basically, when one creates a power of attorney, he or she is giving another party or parties the authority to manage property or money. Even though the person who is appointed in the document is called the attorney, this person may or may not be an actual lawyer. The appointee can be a family member, a close friend or whomever you wish.
The document itself dictates what the person you appoint can and cannot do on your behalf. For example, the person can manage your bank accounts, buy goods and services for you and even purchase property. However, the appointee cannot create or change your will, modify your insurance policies or give the power of attorney to another party.
Below you will find a few benefits and risks associated with having a power of attorney.
— Benefit: They are flexible and convenient
— Risk: Could lead to financial mismanagement or abuse
— Benefit: Can be customized to match your needs
— Risk: If not kept up-to-date, the document may no longer be valid
— Benefit: Protects your interests if you become incapacitated
— Risk: The person you appoint may not act in your financial best interests
Despite the risks of having a power of attorney in place, it remains an excellent option for older Canadians. You should also know that you can minimize some of the risks of a power of attorney by working closely with lawyer familiar with estate law in British Columbia.
Source: Government of Canada | Seniors, “What every older Canadian should know about: Powers of attorney (for financial matters and property) and joint bank accounts,” accessed March 30, 2016