This series of blog articles discusses topics related to the Power of Attorney (POA), with this being the first article.
The most notable difference between a POA and a Guardian is as follows:
- A POA is self-appointed, meaning that any capable individual, referred to here as the “grantor,” can designate a person through a valid POA document to act as the grantor’s decision-maker.
- A Guardian, on the other hand, is appointed by the court to act as the decision-maker for the principal.
Specifically, this area can be divided into six categories:
POA | POA for Porperty (blog 2/6) | The appointed attorney can do anything with grantor’s property |
POA for Health (blog 3/6) | The appointed attorney can make health care decision on behalf of the grantor | |
Guardian | Guardian for Property (blog 4/6) | The court-appointed guardian can deal with principal’s property |
Guardian for Health (blog 5/6) | The court-appointed guardian can make health care decision for the principal | |
Child | Custodian & Guardian of Child (blog 6/6) | Custodian is the person given custody of child in a will |
Guardian is the person given guardianship of a child’s property |
Broadly speaking, powers of attorney are governed by the common law of agency.
An agency relationship is established where one person (principal, donor, or grantor) authorizes another person (agent or attorney) to act as his or her agent (meaning agent acting on behalf of the principal).
The reality of the power of attorney is:
- Most people don’t feel that they need one because they’re capable of making their own decisions and acting for themselves.
- Then a power of attorney kicks in when someone is not capable of making their own decisions.
- Also, the power of attorney is legitimately able to use when the principal is for example, out of country, so he needs a power attorney to deal with his property.
At common law, an agency relationship terminates when the principal/donor becomes mentally incapable.
Recognizing this common law principle seriously limited the practical utility of powers of attorney with respect to property matters. Fortunately this principle is now overridden by the statute if it can be shown that the grantor had the intention in POA documentation for the attorney to hold onto authority.
The statute is Substitue Decision Act (SDA) 1992, the new law created a comprehensive statutory framework:
- Introduced “statutory guardian of property”
- Introduced code for court-appointed guardians of
- property, and
- personal health care
The basic idea is to plan for the worse.
- POA acts as the grantor’s fiduciary duty to account for and provide reasonable care, and POA must not act in a conflict with grantor’s best interests.
- Preplanning in the event of incapacity or unavailability, meaning the principle (in SDA it’s now called a “grantor”) chooses who makes decisions for himself and/or for his property
- Because when this grantor becomes “incapable”, it will be much more costly and time-consuming to have his family going back and forth to the court to get a court-appointed decision-maker. Hence the principle should have the “foresight” get:
- A document to appoint a trusted person to act as his property’s decision-maker, and
- Another document to appoint another person to be his personal care decision-making
- Because when this grantor becomes “incapable”, it will be much more costly and time-consuming to have his family going back and forth to the court to get a court-appointed decision-maker. Hence the principle should have the “foresight” get:
- Joining both types of POAs shoul be avoided, meaning the POA for property and for personal care, they should be separate documents
- Grantor must be able to select appropriate attorney, this means the grantor should make sure he is is not under influence and there is no fraud, no duress, no misrepresentation of what the grantor is signing, and no mistake involved.
- It is optional but recommended to have witnesses swear an affidavit of execution
- For POA, there could be more than one original copy, this is different than a will.
- Why? Because it may need more than one copy of POA of property for each piece of real estate
- Why? Because it may need more than one copy of POA of property for each piece of real estate
- POA’s compensation:
- POA for property
- Yes, the POA can be compensated
- POA for personal care
- No, the POA cannot be compensated
- POA for property
Important Notice:
Compared to drafting a will, creating a DIY POA is more challenging. This is partly due to the limited online resources available and the higher risk of errors when drafting POA documents or acting under a POA. Therefore, this series of blogs is intended only to provide a basic understanding of the POA field. If you or your family are involved with POA or guardianship matters, we strongly recommend consulting your lawyer.