A Power of Attorney remains a vital tool for estate planning in Canada, enabling a trusted person (known as the Principal) to manage a person’s financial affairs on a temporary basis should they be unable to do so for any reason.
Whether illness, injury, or even travel prevents you (the Principal) from effectively managing your finances, appointing a qualified attorney can relieve stress and worry about your money should anything happen. But it’s important to know that there are two types of power of attorney (power of attorney and enduring power of attorney), and understanding the difference between the two can help ensure you have the most appropriate protection in place should you need it.
A Certificate detailing that the Power of Attorney (POA) is a document that confirms the appointment of an individual (the “Agent” or “Attorney-in-Fact”) to act on behalf of another person (the “Principal”) in specific legal, financial, or medical matters. This certificate typically includes key information such as the full names of both the Principal and the Agent, the scope of authority granted to the Agent, the duration of the Power of Attorney, and any limitations on the Agent’s powers. It may also verify the signature of the Principal and be notarized to ensure its legality. The certificate serves as an official record that the POA is valid and can be presented to third parties, such as banks or healthcare providers, when the Agent is exercising their authority. Depending on the jurisdiction, the format and requirements for such a certificate may vary.
What is the difference between the two?
The primary difference between both forms is that an enduring power of attorney in Alberta continues to be effective after the Principal has lost their physical and mental ability to make informed, rational decisions about their financial affairs. A general power of attorney stops once the Principal is no longer able to make those decisions.
Let’s look in a little more detail at the two forms:
A general power of attorney explained:
A general power of attorney is a legal document enabling an appointed individual (or individuals) to make decisions and manage a person’s financial assets on their behalf when they’re no longer able to do so. The legal document does not, however, give the appointed attorney any control over the choices the principal may make in relation to choices over health and lifestyle. Only an Enduring Guardian can make those kinds of decisions, and, should the Principal lose their capacity to make rational decisions physically and mentally, the General Power of Attorney ceases to be in effect.
An enduring power of attorney explained:
This legal document continues to permit an appointed person to manage the principal’s financial affairs when they’re no longer physically and mentally able to do so.
Because an Enduring Power of Attorney will be given considerably more responsibility and control over an individual’s finances, there are some additional requirements that the legal document must fulfill:
- The individual’s desire for continuing powers in the event of their reduced mental capacity must be stated clearly.
- The document must be signed by the appointed attorney as confirmation of their consent.
- The document must be signed by a person such as a solicitor (a prescribed witness), who must also sign a declaration certificate detailing that the Power of Attorney was explained to, and understood by, the individual.
It’s always wise to safeguard your best interests when it comes to your finances should you become incapacitated—even though, of course, none of us want to imagine when that day might come—and appointing a power of attorney in Alberta is the best way to do this.
With both legal documents of exceptional importance in terms of estate planning, if you haven’t already done so, you should schedule an appointment with a local wills and estate lawyer to discuss your options in detail, at the earliest.
