Until the late 20th century a power of attorney was a document that very few people had even heard about, let alone entering into one. This has changed dramatically with powers of attorney becoming more necessary and, therefore, more common.
In the simplest of terms, a power of attorney is a written authorization given by one person to another, enabling the latter to act on behalf of the former in respect to specific matters or in general. The person who is given the power of attorney can deal with the other person’s assets and affairs as if they were his or her own; always, of course, within any restrictions contained in the power of attorney of itself.
Dealing with personal affairs, especially financial affairs, requires good judgement. If judgement becomes impaired as a result of illness, accident, or a general loss of mental competence the consequences can be severe. The solution is to grant a power of attorney to a trusted person or persons, which would become effective upon the occurrence of certain events, such as the grantor of the power being certified incompetent by two doctors, say the family physician and a specialist. Obviously, an effective power of attorney has to be drawn up while the person granting it is still competent. Many people enter into a power of attorney when they draw up their wills.
Some people shy away from doing a power of attorney out of fear of losing control of their financial affairs. But a power of attorney can be tailored to fit any particular set of circumstances, thereby offsetting any personal concerns a person might have. But, if a person becomes mentally incompetent without having drawn up a power of attorney the effect is somewhat akin to dying without a will. Application to a court would have to be made to gain control of the affected person’s affairs. This takes time, during which a lot can happen, and recourse to the courts is always cumbersome, expensive and upsetting.
If you’re the person granting a power of attorney, be sure to follow these suggestions:
1) Have it drawn up by a competent lawyer of your choosing.
2) Have your lawyer explain it fully in plain language.
3) Be sure it’s tailored to fit your particular circumstances and concerns; there’s no one-size-fits-all.
4) Choose the grantees carefully, using the same criteria you would for executors of your will; many grantors choose the same people for both documents.
5) Be sure the document is in a safe place; many people leave it with their lawyer until a triggering event occurs.
6) Explain it in detail to all members of your immediate family; including where the document is held for safekeeping and why you chose the people you gave the power to.
If you’re the person to whom the power is given, be sure of the following:
1) You’re able and willing to act, taking into account the specific terms of the document.
2) The powers granted allow you to seek professional help, with the cost to be borne by the grantor.
3) That every decision and action you take in the execution of your duties is clearly documented.