Power of Attorney - Canadians Need to Know

“Power of attorney” is a common legal term that simply means that one person is given the legal authority to make decisions on behalf of another person. The person who gives over the authority is called the Principal, meaning that they are the central person in question, and it is their power being used by the other person. The person acting in the place of the Principal is called the Agent, because they are an agent or representative of the Principal. If George signs a document giving power of attorney to Fred, George is the Principal and Fred is the Agent.

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There are several different types of power of attorney, and several different situations in which it would be an advisable action to take. Some of these types are:

• Nondurable. Nondurable power of attorney is usually given to authorize one person to act in place of another for a specific transaction. If you are in another state, but wish to buy a house close to a relative, you can give that relative nondurable power of attorney to close on your sale for you while you cannot be physically present. It is also a temporary measure given when someone is unable to make legal decisions on their own behalf, such as if they are unconscious or mentally unable to make decisions. Nondurable power of attorney takes effect immediately, as soon as the documents are signed, and is in effect until the Principal revokes it, until the Principal is too mentally impaired to agree to it, or until the Principal dies.
  
• Durable. This is a long-term designation of power of attorney. It continues even after the emergency is resolved. One common usage of durable power of attorney is when the Principal is elderly or living in a medical facility, an adult child or other relative will be given durable power of attorney. This allows the relative to take over the burdens of legal decisions, as well as giving them the authority to pay bills, file taxes, invest your money or other legal actions.
  
• Springing. A springing power of attorney is one that “springs” into action at a certain time or in a certain set of circumstances. A person with a progressive disease may draw up documents for springing power of attorney to be activated once they become bedridden. An elderly parent may choose for springing power of attorney to become effective once they can no longer handle their own taxes or bills. In many cases, springing power of attorney is only activated when a doctor certifies that the Principal is no longer able to manage their own affairs.

Power of attorney can enable your Agent to act on your behalf to make gifts, file taxes and manage retirement funds and expenses, buy or sell real estate, manage property, conduct litigation, file insurance claims, do your banking, and invest your money. It does not entitle them to make health care decisions on your behalf, unless those decisions are specifically spelled out in a medical power of attorney.

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