MAKING FINANCIAL DECISIONS: POWER OF ATTORNEY, ENDURING POWER OF ATTORNEY & TRUSTEESHIP ORDERS


The topics in the Dial-A-Law series provide general information on legal issues within the Province of Alberta. The purpose of this topic is to inform you of your legal rights and responsibilities. This is not legal advice. If you require legal advice, you should contact a lawyer.

This document will provide information on the options available to you when you are seeking someone to make financial decisions on your behalf.

POWER OF ATTORNEY

What is a Power of Attorney?

A Power of Attorney gives someone authority to handle your financial and estate matters. It is a written document that says someone else, your “attorney”, can step into your shoes and act with the same authority as you have in looking after your finances and estate. You may want to have an attorney look after your affairs when you leave the country on vacation or when you become ill.

  

How Much Power Does My Attorney Have?

You have the power to decide what your appointed attorney can and cannot do. You may give your attorney general powers to act with very few restrictions, or you may give your attorney special powers to act for a specific purpose only. Giving your attorney general powers would mean allowing your attorney to step into your shoes and conduct your affairs with very few restrictions. For example, if you want someone to run all your financial affairs such as selling your house, administering your bank accounts, stocks and other investments, paying your bills and so forth, then a general power of attorney is required. You cannot give your attorney powers that you do not have yourself. If you want your attorney to act for one specific purpose, then you can restrict exactly what they are acting for. For example, you may want to give your attorney power to only look after your rental property. You can also limit the time your attorney acts on your behalf. For instance, you can specify that your attorney takes care of all your finances for only three months or you can allow them to look after your finances and property even after you have lost mental capacity to make decisions on your own. The latter option is known as an “enduring power of attorney”.  

Although you are giving your attorney the power to act on your behalf, you can still consult with them and make your own decisions on your finances and property, unless you no longer have the mental capacity to do so.

How Should I Choose My Attorney?

When choosing an attorney to act on your behalf, it is a good idea to consider someone you trust such as a family member or a close friend. Although it may sound like it, an attorney does not need to be a lawyer. Your attorney must treat all information concerning your financial and property matters in confidence. They must always act in your best interests. Both you and your attorney must be at least 18 years of age.  They must also have full mental capacity and understand the role, responsibilities and consequences of being your attorney under the power of attorney.

It’s important to note that as long as your attorney acts according to your instructions, you are bound by your attorney’s decisions and actions. It would be as if you made the decision yourself.  For example, if you give someone a power of attorney to sell your car and they succeeds in selling it, you must give possession of the car to the buyer. However, if your attorney acts beyond his authority under the power of attorney (beyond what you gave them power to do), then you are not bound by such actions; Therefore, its important to choose an attorney who understands financial and property matters, so that they can make sound decisions on your behalf.

 

How Do I Create A Power of Attorney?

You may purchase the documents for a power of attorney from a stationery store, or a registry, or you may have your lawyer draft the document. You must sign and date the power of attorney in the presence of a witness. The person you appoint to be your attorney cannot be a witness in your document.

Should I Pay My Attorney?

You don’t have to pay your attorney unless they are a legal, financial professional or a trust company, but you can if you want to. Its important to discuss this with your attorney and outline your payment plan in your power of attorney.

How Do I End My Power of Attorney?

Your power of attorney will end in one of three ways:

  1. You tell or write a notice to your agent that you want the power of attorney to end;
  1. When you lose your mental capacity, unless your power of attorney is an Enduring Power of Attorney” (see below) made in accordance with the Power of Attorney Act in Alberta; or
  1. When you die.

Third Parties Dealing with An Attorney

If you are a third party dealing with an attorney, you should carefully inspect the power of attorney and be sure you know the limits of the attorney’s authority. If a person does not have a power of attorney but says they do, then you may sue this unauthorized attorney for damages if you had relied on their statement and suffered loss as a result. For example, you planned to start a small courier business and you made arrangements to purchase a van from someone claiming to have a power of attorney to sell that van. If you incurred any loss from that transaction and you later discovered that the person had no authority to sell you the car, you have a right to sue that unauthorized attorney for damages.

 

ENDURING POWER OF ATTORNEY

An enduring power of attorney allows you the “donor” to assign an “attorney” to deal with your finances and property for an extended time.   An enduring power of attorney gives an individual the power to make decisions on your behalf even when you are no longer mentally capable of making them on your own. This option allows you to plan for the future and place your assets in the hands of a trusted individual or individuals who will make sound decisions even when you are not able to.

 

When Does an Enduring Power of Attorney Start?

An enduring power of attorney can start as soon as its signed, or after a certain event takes place. It can also be invoked when the donor no longer has mental capacity. As the donor, you can decide when you would like your enduring power of attorney to begin. Further, just like a general power of attorney, you have the power to decide what your donor can and cannot do.

How Do I Create an Enduring Power of Attorney?

There is no special form for an Enduring Power of Attorney.  It can be handwritten or typed.  You may begin the document by saying: “This is an Enduring Power of Attorney under the Power of Attorney Act”.  It is a good idea to hire a lawyer to prepare these legal documents for you.  Under the Act, there are certain formalities required for your Enduring Power of Attorney to be valid:

  • It is in writing
  • It is dated
  • It is signed at the end of the document by you and one witness in the presence of each other, and the witness must not be your spouse, your Agent or the spouse of your Agent.

You can obtain a publication titled “Enduring Power of Attorney” from the Office of the Public Trustee if you wish to know more about this subject.  The telephone number is 403-297-6541 for its Calgary Office and 780-427-2744 for its Edmonton Office.  Outside these cities go through the government RITE Line at 310-0000.

When Does an Enduring Power of Attorney End?

An enduring power of attorney can end in one of many ways such as:

  • The donor passes away;
  • The donor changes their mind and cancels or changes the enduring power of attorney. The donor must have mental capacity at the time;
  • The attorney passes away or quits
  • A court determines it no longer has affect; and
  • The donor regains mental capacity and can look after their own affairs.

What Happens If I Do Not Create an Enduring Power of Attorney?

If you lose your mental capacity and do not have an enduring power of attorney a person close to you may create a trusteeship order with the court and apply to be your “trustee”

TRUSTEESHIP ORDERS

A Trusteeship Order gives you, a “trustee” powers and authority to make decisions concerning a “represented adult’s” financial affairs.  A represented adult’s financial affairs includes all property owned by the dependent adult such as land and buildings, household articles, jewelry, cash, bank accounts, stocks, bonds, registered savings and other forms of investments.  The power to act as a trustee is given by the court in cases where a represented adult no longer has the mental capacity to make financial decisions on their own and they did not previously create an enduring power of attorney.

A trustee can do almost anything when it comes to a represented adult’s finances such as keeping records of any relevant transaction, investing in property without taking undue risk, and maintaining the represented adult’s property while keeping it separate from your own.

A trustee cannot:

  • Change a represented adult’s will or life insurance;
  • Appoint a power of attorney for the represented adult; and
  • Buy or sell a represented adult’s property beyond what is stated in the trusteeship order.

How Do I Create A Trusteeship Order?

If you are interested in becoming a trustee for a loved one you must first, ensure you are over the age of 18 and that you are mentally capable of making financial decisions on behalf of someone else. In order to be a trustee, you must show that you will act in the best interest of the represented adult and that you will act in good faith.

To become a trustee, you must first ensure that the represented adult does not have an enduring power of attorney. Then you can begin by creating a trusteeship plan. A trusteeship plan allows you to explain in detail to the courts how you will manage the representative’s assets and how you will deal with their finances in the future. It is important to ensure your plan is detailed enough to cover your basis but not so detailed that it restricts the trustee from acting in their full capacity.  It is important to remember that a trustee cannot make decisions on a represented adult’s health unless they are also the personal directive or the guardian. Before filing your application and trusteeship plan to the court, the represented adult must complete a “Capacity Assessment Report” by a health care provider. More information about this report can be found here.  Once you have the necessary paperwork, you can then file the application to the court or through a “desk application” if there are no contested issues. The judge will then review your application and decide if this is the best option for the represented adult.

NOTE: If no close member of the represented adult can be found and that adult is in financial danger, then a public trustee may be appointed.

 

Can I Have A Trustee and A Supported-Decision Maker/ Co-Decision-Maker?

If you are a trustee, you cannot opt into to be your loved ones supported-decision maker/co-decision-maker as well. When applying to be a trustee, you are telling the court that the represented adult is either capable or not capable. There is no in-between option like there is for personal decision making. If you would like to be a trustee AND a supported decision-maker or a co-decision-maker than you can consider creating an informal trustee.

Can a Trustee Be Paid for Their Work?

Yes, the fee scheduled is set out in the Adult Guardianship and Trusteeship Regulations. A trustee must still seek court approval before taking the compensation. A trustee will also be reimbursed for any expenses made on behalf of the represented adult. If there are more than one trustee, they must share the compensation amount.

How Does A Trusteeship Order Come to An End?

A trusteeship order will end if it is terminated by the court or if the represented adult passes away.

For more information check out the Centre for Public Legal Education Alberta.

Dial-A-Law is a Calgary Legal Guidance public service project funded in part by the Alberta Law Foundation.