Estate planning is often associated with deciding what will happen to property after death. However, planning can also involve considering who may manage financial and legal affairs if a person becomes unable to do so independently during their lifetime.
In British Columbia, an enduring power of attorney is one tool available for this purpose. It allows an adult to appoint another person to make certain decisions or take actions concerning the adult’s financial affairs, even if the adult later becomes incapable.
What Is an Enduring Power of Attorney?
Under British Columbia’s Power of Attorney Act, an enduring power of attorney is a document through which an adult authorizes another person, known as an attorney, to make decisions or take actions concerning the adult’s financial affairs.
Despite the terminology, the appointed “attorney” does not have to be a lawyer. The word refers to the person or authorized organization appointed to act on behalf of the adult.
Depending on how the document is drafted, the attorney’s authority may extend to banking, investments, real estate, business interests, debts, contracts, taxes and other financial or legal matters.
Why Is It Called “Enduring”?
A conventional power of attorney may cease to operate if the person who granted it becomes incapable. An enduring power of attorney is designed to continue despite incapability.
The document may authorize the attorney to act while the adult remains capable, or it may provide that the authority begins only after the adult becomes incapable of managing financial affairs.
If the authority is intended to begin only after a particular event, such as incapability, the document must address how that event will be confirmed.
Who Can Make an Enduring Power of Attorney?
An adult who is at least 19 years old may make an enduring power of attorney if they are capable of understanding its nature and consequences. Among other things, the adult must understand their property and its approximate value, the authority being granted to the attorney and the possibility that the attorney could misuse that authority.
British Columbia law generally presumes that adults are capable of making decisions about their financial affairs unless the contrary is demonstrated.
Choosing an Attorney
Choosing an attorney can be an important part of incapacity planning because the appointed person may eventually have significant authority over another person’s finances.
An attorney is generally required to be at least 19 before acting. Certain people who provide personal or health care services to the adult for compensation may be restricted from acting unless an exception applies.
An adult may also appoint more than one attorney. The document can establish whether they must act together, independently or according to another arrangement permitted by law.
What Can an Attorney Do?
The powers available to an attorney depend on the wording of the document. An adult may grant broad authority over financial affairs or limit the attorney to specific tasks. Depending on the terms of the document, an attorney may manage bank accounts, pay expenses, deal with property, manage investments and handle certain business or legal matters.
There are also limits. For example, an attorney cannot make or change the adult’s will. Gifts, loans and charitable donations from the adult’s property are also subject to statutory requirements.
Attorneys Have Legal Duties
An attorney does not have unrestricted discretion over another person’s assets. The Power of Attorney Act imposes legal obligations on attorneys.
An attorney must act honestly and in good faith, stay within the authority granted, and exercise the care, diligence and skill of a reasonably prudent person. When managing financial affairs, the attorney must act in the adult’s best interests while considering the adult’s wishes, beliefs and values where applicable.
Attorneys must also generally keep the adult’s property separate from their own and maintain appropriate financial records.
Enduring Power of Attorney vs. Representation Agreement
An enduring power of attorney primarily concerns financial affairs. It does not generally replace planning for health care and personal care decisions.
In BC, representation agreements provide a separate mechanism through which adults can appoint representatives to assist with or make certain health care and personal care decisions. Some representation agreements may also address limited financial matters.
For this reason, incapacity planning can involve more than one document, depending on the types of decisions an adult wants another person to be able to make.
An Enduring Power of Attorney Is Not a Will
A will and an enduring power of attorney serve different purposes. A will generally governs the administration and distribution of an estate after death. An enduring power of attorney operates during the adult’s lifetime and concerns financial matters within the authority granted by the document.
An attorney acting under an enduring power of attorney cannot create or change the adult’s will.
Can an Enduring Power of Attorney Be Changed or Revoked?
An adult may generally change or revoke an enduring power of attorney while capable of understanding the nature and consequences of doing so. Changes and revocations must comply with applicable statutory requirements, including notice requirements.
Changes in relationships, finances or the availability of an appointed attorney may therefore lead individuals to review their incapacity planning documents over time.
What Happens If There Is No Enduring Power of Attorney?
The absence of an enduring power of attorney does not automatically give a spouse, adult child or other relative unrestricted authority to manage an incapable person’s finances.
If an adult becomes incapable without appropriate advance planning in place, other legal processes may be required. Depending on the circumstances, this can include court proceedings relating to the appointment of a committee to manage the adult’s affairs.
An enduring power of attorney allows an adult to identify in advance who may manage certain financial matters if incapability arises.
Formal Requirements Matter
An enduring power of attorney must comply with the formal requirements of BC legislation. The document must generally be in writing, signed and dated by the adult in accordance with applicable witnessing rules, and accepted through the required signature of the attorney before the attorney can act.
The BC government provides standard forms, but their use is optional. Standard forms may not address every individual’s circumstances, so the terms of the document and the authority being granted remain important considerations.
Incapacity Planning as Part of Estate Planning
Estate planning can address more than the distribution of assets after death. It may also consider how financial affairs will be managed during incapability, who may make personal or health care decisions, and how different planning documents work together.
Enduring powers of attorney are one component of that framework in British Columbia. Understanding who will act, what authority they will have and when that authority takes effect can form an important part of broader incapacity and estate planning.
Contact CM Lawyers to Speak With a British Columbia Wills and Estates Lawyer About Enduring Powers of Attorney
Enduring powers of attorney can play an important role in estate and incapacity planning for individuals and families throughout British Columbia. The wills and estates lawyers at CM Lawyers can explain the requirements for an enduring power of attorney in British Columbia, discuss the appointment and authority of an attorney, and review how an enduring power of attorney may interact with a representation agreement, a will, and a broader estate plan.
Contact CM Lawyers online or call (250) 308-0338 to discuss enduring powers of attorney, representation agreements, wills, estate planning and incapacity planning in Vernon, Salmon Arm, Enderby, Abbotsford, and the surrounding areas.