Set up a power of attorney that works for you

Not all powers of attorney are created equal, a reality Seana is coming to terms with.

Seana was proactive, ensuring her mother’s affairs would be in order. That included her mother, Beth, granting Seana power of attorney.

Beth, 81, lives independently but has been showing signs of dementia. About a year ago, her doctor assessed her incapable of driving. Beth’s imprudent sale of her vehicle, for 15% of what it was worth, brought her financial vulnerability to the forefront for Seana.

Seana took the power of attorney to the bank so she could access and monitor her mother’s transactions but she came up against a brick wall. The power of attorney contains a clause saying it doesn’t take effect until Beth has become incapable of managing her financial affairs and her lack of capacity is confirmed by a statutory declaration made by a doctor.

Has Beth’s dementia reached the level a doctor would assess her incapable of handling her financial affairs Seana doesn’t know. She’s unable to get her mother assessed because Beth was so upset by her doctor determining she was unable to drive, she now refuses to see the doctor.

Even if the assessment could be arranged, consider the administration and expense of having a statutory declaration prepared and then sworn by a doctor.

It didn’t have to be this way. A power of attorney is effective as soon as it is signed unless there is a clause that says otherwise. Your lawyer or notary shouldn’t put that clause in the document without explaining the implications to you.

My typical recommendation is to avoid such clauses, allowing the power of attorney to take effect immediately.

You won’t need help managing your financial affairs at the time you sign your power of attorney but why put an administratively difficult and expensive roadblock in place for when you do need help? A bonus is you might appreciate help looking after things while you are “snowbirding” in Palm Springs or if you begin to have mobility issues.

Most financial transactions can happen electronically, but some still require you attend in person. Your power of attorney can attend to anything you would otherwise have to do yourself.

So, what’s to stop your children, to whom you appoint power of attorney, from running amuck with your financial affairs before you need their help? It would be unlawful for your power of attorney to take any action without your direction while you remain capable of handling your own affairs. For your own piece of mind, you can choose to hang onto the document, not giving it to those you appoint until you want them to use it.

The power granted in a power of attorney cannot be exercised without having the actual document, or a certified copy, in hand. You can choose, at any time, to revoke it if you have second thoughts. Ensure you get advice about how to do that properly.

So what can Seana do to help protect her mother from financial vulnerability? Maybe her mother would agree to make a new power of attorney that doesn’t contain the restrictive clause. But, of course, she cannot do that if she is no longer cognitively capable. If not, and Seana cannot figure out a way to get her mother medially assessed, Seana could report the matter to the office of the Public Guardian and Trustee, as contemplated by section 32(b) of the Adult Guardianship Act.

I am not familiar with the actual steps the Public Guardian and Trustee’s office would take and how it could somehow secure a medical assessment when Seana is unable to, but I expect those steps would be expensive, paid for out of Beth’s assets.

There are many variations of powers of attorney. It’s not just a matter of choosing whether or not the power of attorney becomes immediately effective.

There is a range of powers you can grant, from very narrow to very broad. Also, if you appoint more than one, they can be required to act with the others or separately.

Ensure, when you have a power of attorney prepared, you are advised about the various options so you can make informed decisions resulting in a document that will optimally serve your purposes.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.