Power of Attorney (15:IV)

A Power of Attorney (POA) is a legally-binding document that allows a capable adult (called the Adult) to grant the authority to other capable adult(s) (called the Attorney(s)) to make financial and legal decisions on their behalf. A mentally capable adult does not give away their authority to an attorney. Rather, the effect of a POA is to share the authority with the attorney. POAs can vary in scope, depending on the:

• specific needs of the Adult;
• types of decisions an Attorney is permitted to make;
• time period (i.e. ongoing or set for a limited period);
• how many Attorneys are appointed; and
• need for unanimous decisions or task-specific roles.

The Adult can make very individualized and specific provisions in a POA. For example, a POA can be very narrow in scope, allowing the Attorney(s) to do one specific act e.g. cashing a pension cheque, transferring property, or paying insurance). Alternatively, the Adult can make a POA that is intentionally broad in scope, allowing the Attorney(s) to handle all financial decisions on behalf of the Adult.

Students should confer with their Supervising Lawyer if there is any doubt that the client understands and appreciates the nature and consequences of a POA. Also, note that an adult should not be required to have a POA as a condition of receiving any good or service.

The following sections explain in more detail: what type of POAs can be made; who is involved in a POA; how a POA can be made, changed, or revoked; the duties and powers of an Attorney; and what can be done if an adult is incapable and does not have a valid POA in place.

A. Types of POA

There are two types of POAs. It is important to find out what type of POA would best suit the client’s needs. Questions to ask include:

• What tasks does the Adult want the Attorney to be able to perform?
• When does the Adult want the Attorney to begin to act?
• Does the Adult want the POA to be used for a limited time only?
• Does the Adult want the POA to be in effect immediately or only when he or she becomes incapable?
• How will incapacity be decided?
• Does the Adult’s powers terminate if and when the Adult becomes incapable?

The two types of POA are as follows:

1. General: General POAs are governed by Part 1 of the Power of Attorney Act, and by common law for agency relationships. These are effective immediately, or as specific on the document, and ongoing until the loss of capacity, revocation or death. The test for capacity for making general POAs can be found in the BCLI’s Report on Common Law Test of Capacity.
2. Enduring: Enduring POAs (EPOAs) are governed by Part 2 of the Power of Attorney Act. These can be effective immediately, or springing. (See note below for details on springing EPOAs.) Enduring POAs continues in the event that the Adult lose capacity, and only ends upon revocation or death.
   • NOTE: A springing EPOA stays dormant until a future date or event (i.e. the loss of capacity) and ends only upon death. The Adult can decide in advance how capacity is to be determined, such as by requiring the agreement of a family member and two doctors. A springing EPOA is not active until the adult loses capacity. See Goodrich v British Columbia (Registrar of Land Titles), 2004 BCCA 100. (The BCCA decided that even though the PAA does not explicitly allow for a springing power of attorney, it is nevertheless possible to make one.)

Both general POAs and EPOAs can be limited in relation to assets, duration, or specific types of transactions. For example, an Adult could draft a POA for the Attorney to manage their bank accounts and pay their bills while they are on vacation, but not give authority to the Attorney over their real estate and investments. A bank’s POA will be limited to transactions at that institutions for the accounts identified.

In most cases, the POA will be effective immediately, once signed and witnessed by the Adult and Attorney(s), and will continue on an ongoing basis. The most common POA is the Enduring Power of Attorney (EPOA), which allows the Attorney to act while the Adult is capable and continues when/if the Adult becomes incapable. General POAs are rarely used in incapacity planning, as they become no longer in effect when an adult becomes incapable (which is often when a POA is most needed).

NOTE: Unless otherwise specified, all usage of the term “POA” in the subsequent sections of this chapter refers to an Enduring Power of Attorney as governed by Part 2 of the Power of Attorney Act.

B. Who is Involved in a Power of Attorney?

Only a capable adult (called an ‘Adult’ in the legislation) may make a POA. A POA requires at least one person to act as an Attorney. The Adult may name multiple or alternate Attorneys.

In some situations, the Public Guardian and Trustee can be appointed as the Attorney, particularly where an adult does not have family or friends who can act on his or her behalf. The Public Guardian and Trustee may also become involved where there is financial abuse, neglect or self-neglect, particularly if there are concerns that an Attorney is misusing a POA, or concerns that an Attorney is failing to fulfill their legal duties.

Below is a brief description of how an Adult, Attorney(s) and the Public Guardian and Trustee are involved in a POA. For more detailed information about the mental capacity of an Adult, refer to section II.B.1: Mental Capacity – Power of Attorney. For more information about reporting abuse or neglect to the Public Guardian and Trustee, refer to section VIII: Abuse and Neglect in this chapter.

1. The Adult

The Adult (as referred to in the legislation) is any adult who makes a POA to appoint another adult (called an Attorney) to make financial decisions on his or her behalf. The Adult must be:

• an individual who is 19 years of age or older;
• mentally capable of making a POA; and
• acting voluntarily, or on their own.

The Adult must have mental capacity at the time that the POA is signed, understanding the nature and implications of a POA. An adult who has mental capacity has the legal right to make decisions, including the legal right to choose whether to:

• determine the type, scope or purpose of the POA;
• define the roles and authority of the appointed Attorney(s);
• provide instructions to the Attorney(s);
• express wishes, values and beliefs; and
• change or revoke a POA.

2. Attorney(s)

An Attorney is an adult who is capable and willing to carry out the financial tasks and/or make financial decisions on behalf of another person (the Adult). An Attorney must be: (see PAA)

• an adult (i.e. at least 19 years of age), the Public Guardian and Trustee or certain financial institutions;
• mentally capable to carry out the financial tasks;
• able to understand and fulfill their legal duties;
• able and willing to act in accordance with the instructions, wishes, values and beliefs of the Adult; and
• acting voluntarily, or on their own.

Section 18 of the PAA states who may act as an Attorney. One or more of the following persons can be named:

• an individual, other than an individual who provides personal care or health care services to the adult for compensation or is an employee of a facility in which the adult resides and through which the adult receives personal care or health services (exception: if individual described is a child, parent or spouse of the adult, in which case they may be named as attorney);
• the Public Guardian and Trustee;
• a financial institution authorized to carry on trust business under the Financial Institutions Act.

The “Attorney” in a POA does not need to be a lawyer. However, in some circumstances the Adult may wish to appoint his or her lawyer to act as an Attorney.

More than one person can act as an Attorney. An adult who names more than one attorney may assign to each of them a different area of authority, or all or part of the same area of authority (s 18(4), PAA). The Adult might prefer to define distinct roles for each Attorney (i.e. appoint one adult as the Attorney for certain transactions (e.g. personal banking) and a second individual as their attorney over different matters (e.g. property). The POA should be clear about the roles and responsibilities of each Attorney and whether or not unanimous consent is necessary in each type of transaction.

According to s 18(5) of the PAA, where an Adult appoints multiple Attorneys for all or part of the same area of authority, the Attorneys must act unanimously in exercising their authority. The exception to this unanimous decision-making rule is where the Adult specifically does the following in the POA:

• describes circumstances where the Attorneys do not have to act unanimously;
• sets out how a conflict between Attorneys is to be resolved; or
• authorizes an Attorney to act only as an alternate and sets out: (i) the circumstances in which the alternate is authorized to act in place of the attorney, including, for example, if the attorney is unwilling to act, dies or is for any other reason unable to act, and (ii) the limits or conditions if any, on the exercise of authority by the alternate.

Where a POA appoints two or more attorneys to act for an Adult, all the Attorneys will need to be in agreement regarding decisions made for the adult, unless otherwise specified in the POA.

Appointing more than one person has potential advantages and disadvantages. The practice can reduce the potential for an Attorney to misuse his or her power, providing in a sense for built in scrutiny by a second Attorney. But, having multiple Attorneys may make the decision-making process complicated and inefficient.

NOTE: As of September 1, 2011, a signature by the Attorney(s) on the POA is required to signify acceptance of the role and responsibility. If an Attorney is not willing to accept this role, then the Attorney should not sign the POA.

3. The Public Guardian and Trustee (PGT)

An adult who does not have relatives or friends who are willing and able to serve as an Attorney may ask the Public Guardian and Trustee to consider accepting an appointment to act as an Attorney in the event of incapacity. According to s 6(c) of the RAA, the Public Guardian and Trustee may agree to act as Attorney for a fee. If a client needs to appoint the Public Guardian and Trustee as Attorney, then contact the Public Guardian and Trustee to arrange a meeting.

Another circumstance where the Public Guardian and Trustee may become involved is where an Attorney is misusing a POA or otherwise failing to fulfill his or her legal obligations. Any person may notify the Public Guardian and Trustee if there is a reason to believe that fraud, undue pressure or some other form of abuse or neglect is being or was used to induce an adult to make, change or revoke financial or legal document. Any person may also notify the Public Guardian and Trustee where an Attorney is:

• incapable of acting as Attorney;
• abusing or neglecting the adult;
• failing to follow the instructions in the POA; or
• otherwise failing to comply with legal duties of an Attorney.

For more information about the role of the Public Guardian and Trustee where there is financial abuse, neglect or self-neglect, refer to section VIII: Abuse and Neglect in this chapter.

C. Creating a Power of Attorney

The most important aspect of drafting a POA is to ensure that the document accurately reflects the adult’s specific wishes. Questions to ask include:

• What does the client want to do?
• Does the client have capacity to make this POA?
• Does the client understand the nature of this POA?
• Does the client understand the potential legal impact of this POA?
• Has the client received suitable independent legal advice?
• What type of authority does the Attorney need?
• Does the Adult want to limit the Attorney’s authority?
• When should the POA be in effect (i.e. ongoing or limited?)
• Has the client created other POAs?

Any adult can draft a POA. However, it is advisable that an adult consults a lawyer or notary prior to finalizing a POA. Independent legal advice will help ensure that the POA only grants an Attorney the powers and authority that the Adult wants to give.

An adult with capacity must be free to choose—or not to choose—to sign a POA. It is important to be aware of situations where a person may be putting undue pressure (including physical, financial or emotional threats, manipulation or coercion). For more information, refer to the discussion of undue influence below in section IV.H A Practical Clinic Approach to POAs for LSLAP Students and section VIII: Abuse and Neglect in this chapter. Also refer to the BCLI guide on Undue Influence, which, though created to assist wills practitioners, is helpful for understanding the social dynamics surrounding undue influence in relation to other legal documents like POAs. The Appendix to the Guide contains a short, useful Reference Aid.

1. Formalities

Formalities are the specific requirements for a POA to be considered valid (i.e. whether the POA has to be signed or witnessed). According to s 16 and s 17 of the Power of Attorney Act [PAA], an enduring POA must be:

• in writing;
• signed and dated by the Adult in the presence of two witnesses (only one witness is required if that witness is a lawyer who is a member of the Law Society of British Columbia or a notary who is a member in good standing of the Society of Notaries Public of British Columbia); and
• signed and dated by the Attorney(s) who agree to act in the presence of two witnesses (unless one witness is a lawyer or a notary).

A new POA will need to be signed by both the Adult and the Attorney(s). These signatures do not need to be in each other’s presence. In other words, the Attorney and Adult may sign the document separately. However, these signatures must each be witnessed by two capable adults (unless one witness is a lawyer or notary).

As of September 1, 2011, an Attorney must sign an EPOA in the presence of two witnesses before assuming their authority (PAA, s 17). If a person who is named as an Attorney does not sign the POA, then the person is not required or legally able to act as an Attorney. If a person named as Attorney does not sign, the authority of any other named Attorney is not affected (unless the POA states otherwise).

According to s 16(6), the following persons must not act as a witness to the signing of an EPOA:

• a person named as an Attorney;
• a spouse, child or parent of a person named as an Attorney;
• an employee or agent of a person named as an Attorney, unless the person named as an Attorney is a lawyer, a notary, the Public Guardian or Trustee or a financial institution authorized to carry on trust business under the Financial Institutions Act;
• a person who is not at least 19 years of age; or
• a person who does not understand the type of communication used by the Adult (unless interpretive assistance is used).

The Power of Attorney Act [PAA] provides a standard form that can be used to create a POA. The most up-to-date version of this form is generally also posted on the government of BC website: http://www.bclaws.ca.

Although there is no legal requirement to register a POA, an EPOA can be registered through the Nidus e-Registry. More information about this service is available on their website: http://www.nidus.ca.

2. Land Transactions

An Adult might authorize the Attorney(s) to make a transaction involving land (i.e. transfer of title, closure of sale of property, etc.) on behalf of the Adult. If the authority of an Attorney involves transactions concerning land and land title, then the POA must be executed and witnessed in accordance with the Land Title Act [LTA].

A POA that grants authority to the Attorney to make land transactions will expire after 3 years of its execution. There is an exception to this where an Adult signs an EPOA, or the POA expressly exempts itself from these provisions (s 56 of the LTA).

A POA that confers the power to deal with land transactions and registration of land titles must be witnessed and notarized by a lawyer who is a member of the Law Society of British Columbia or a notary who is a member of the Society of Notaries Public of British Columbia. This is because POAs that involve land transactions require more care and consultation to ensure that the Adult is aware of the legal impact of conveying this authority to the Attorney(s).

3. Banks, Credit Unions and Other Financial Service Providers

Financial institutions and agents (e.g. banks, credit unions, investment advisors, customer service Representatives, estate planners, etc.) may ask your client to complete their institution’s POA. This request normally occurs where, for example, an Adult wishes to grant the Attorney access to bank accounts for the purpose of paying bills, making transfers, etc. The financial institution may request that the Adult and Attorney to fill out their institution’s Limited POA. For more information about financial institution’s POA requirements and joint accounts refer to the Canadian Bankers Association website. They have created a PDF accessible at http://www.cba.ca/en/consumer-information/92-protecting-yourself-from-financial-abuse/694-powers-of-attorney-what-consumers-need-to-know.

If the client signs an institution’s POA, this can sometimes create a conflict between POAs. These important questions should be asked:

• What does the client want to do?
• What kind of POA should apply?
• Is the financial institution’s form suitable?
• Has the client received suitable independent legal advice?

A client should not sign a POA form without seeking legal advice. The client must also be made aware of the legal effect of signing, such as the possible revocation of a previous POA. Examples of suitable forms are available in Appendix B in this chapter.

NOTE: It is good practice for the client to notify financial institutions and agents that a new POA has been made and/or that the previous POA has been revoked. This can be done in writing, with a copy of the new POA.

D. Other Jurisdictions

As of September 1, 2011, Enduring POAs (EPOAs) that have been made in some jurisdictions outside of BC, including other Canadian provinces and territories, or in some other countries (e.g. United States, United Kingdom, Australia and New Zealand) may be recognized as legally valid in BC. These new provisions are set out in s 38 of the PAA, and subject to the Power of Attorney Regulation [PAR].

Extra-jurisdictional EPOAs must be certified. Section 4(3) of the PAR currently requires that the EPOA from another jurisdiction must be accompanied by a certificate, which is from a solicitor who is permitted to practice in the jurisdiction where the EPOA was made. The certificate must indicate that the EPOA meets the requirements set out in s 2(a) to (c) of the PAR.

According to s 4(2)(a) to (c) of the PAR, a EPOA from outside BC will be deemed a valid EPOA in BC where it:

• grants authority to an Attorney that comes into effect or continues to have effect while an adult is incapable of making decisions about his or her own affairs;
• was made by a person who was, at the time of its making, ordinarily resides elsewhere in Canada or in the United States, the United Kingdom, Australia or New Zealand; and
• is in accordance with the laws and continues to have legal effect in the jurisdiction in which it was made.

Furthermore, s 4(3) requires a certificate from a solicitor permitted to practise in the jurisdiction in which the deemed enduring power of attorney was made indicating that the deemed enduring power of attorney meets the requirements set out in subsection (2) (a) to (c). Section 4(4) states that the EPOA is limited by the PAA and the jurisdiction in which the deemed enduring power of attorney was made.

Section 4(4) also requires that an Attorney and the Adult must both be at least 19 years of age before the Attorney can exercise any powers or perform any duties.

E. Acting as an Attorney

Below is a description of the various duties and powers held by an Attorney. In most POAs, the Attorney(s) will immediately be able to act on behalf of the Adult. However, in some types of POAs (e.g. a Springing or Limited), the terms of the POA will specify a “triggering event” or date that will signify when an Attorney has the authority to act on the Adult’s behalf. Regardless of when an Attorney is permitted to act, the following duties and powers apply.

1. Duties

The primary responsibility of an Attorney is to act in accordance with the Adult’s instructions, wishes, beliefs and values. The PAA explicitly sets out a number of statutory duties and powers. According to s 19(1) of the PAA, an Attorney must:

• act honestly and in good faith;
• exercise the care, diligence and skill of a reasonably prudent person;
• act within the authority given in the POA; and
• keep prescribed records and produce these records for inspection and copying upon request.

An attorney must act in the Adult’s best interest, taking into account the Adult’s current wishes, known beliefs and values and explicit directions in the POA (s 19(2)).

Where reasonable, an Attorney must give priority to meeting the personal care and health care needs of the adult, foster the independence of the Adult, and encourage the Adult’s involvement in any decision-making (s 19(3)). Concerning the Adult’s personal property and real property, an Attorney must keep the Adult’s property separate from his or her own property (s 19(4)). If the property is jointly owned by the Adult and the Attorney as joint tenants, or has been substituted for, or derived from, property owned as joint tenants, an Attorney must also:

• only invest the adult’s property in accordance with the Trustee Act [TA];
• not dispose of property that is subject to a specific testamentary gift in an Adult’s will; and
• keep the Adult’s personal effects at the disposal of the Adult.

If an EPOA explicitly says that an Attorney will be exempt from these provisions, then the Attorney is not legally obligated to fulfill these duties.

2. Powers

An Adult may grant general or specific powers to an Attorney in a POA. An Attorney may also be permitted to exercise statutory powers to act on behalf of the Adult. According to s 20 of the PAA, an Attorney named has the statutory power to:

• make a gift or loan, or charitable gift, if the POA permits or certain conditions set out in the PAA are met (see section 3 below);
• receive a gift or loan, if the POA permits;
• retain the services of a qualified person to assist the Attorney; and
• change or make a beneficiary designation, in limited circumstances (see 4 below)

The scope of an Attorney’s powers can be limited or expanded in the express wording of a POA. An Attorney is exercising authority improperly if the Attorney acts when the authority of the Attorney is suspended or has ended; or the EPOA is not in effect, is suspended, terminated or invalid.

3. Gifts, Loans and Charitable Donations

An Attorney may make a gift or loan, or a charitable gift from the Adult’s property if the EPOA permits the Attorney to do so, or if (s 20):

• the Adult will have sufficient property remaining to meet the personal care and health care needs of the Adult and the Adult’s dependents, and to satisfy other legal obligations;
• the Adult, when capable, made gifts or loans, or charitable gifts, of that nature; and
• the total value of all gifts, loans and charitable gifts in a year is equal to or less than a prescribed value. (See s 3, PAR for prescribed value.)

According to s 20(2) of the PAA, an Attorney may receive a gift or loan, if the EPOA permits.

4. Creating a Will and Designating Beneficiaries

Attorneys are not allowed to make a will on behalf of an Adult. According to s 21 of the PAA, any will that is made or changed by the Attorney on behalf of an Adult is not legally valid. Further, if the Adult has given instructions prohibiting delivery of the Will to the Attorney(s), then a person must not provide the Will to the Attorney(s).

An Attorney is also not allowed to dispose of property that is designated as a testamentary gift in the Adult's will. Section 19(3)(d) of the PAA provides an exception to this only where the disposition is necessary to comply with the Attorney’s duties. According to s 20(5), an Attorney is allowed to change a beneficiary designation, in an instrument other than a will, in very limited circumstances set out in s 20(5)(b) of the PAA. These limited circumstances include:

• a change to a beneficiary designation if the court authorizes the change; or
• the creation of a new beneficiary designation if the designation is made in:
  • an instrument that is renewing, replacing or converting a similar instrument made by the capable adult, and the designated beneficiary remains the same; or
  • a new instrument that is not renewing, replacing or converting a similar instrument made by the capable adult, and the newly designated beneficiary is the adult’s estate.

5. Deeds

Where there exists a POA, an Attorney may execute a deed under the seal of the Attorney on behalf of the Adult (whether an individual or a corporation). According to s 7 of the PAA, as long as it is within the scope of the Attorney’s authority, such a deed is binding on the Adult and is of the same effect as if it were under the seal of the Adult.

6. Delegating and Retaining Services

An Attorney is not allowed to delegate their authority to another person. According to s 23 of the PAA an Attorney must not delegate powers and authorities to others, unless expressly empowered to do so in the POA. An Attorney may delegate financial decisions concerning investment matters to a qualified investment specialist (e.g. mutual fund manager) in accordance with the Public Guardian and Trustee Act, RSBC 1996, c 383 [PAA] or the Trustee Act, RSBC 1996, c 464 [TA], s 15.5.

Despite the inability to delegate authority, an Attorney is permitted to retain services. According to s 20(4) of the PAA, an Attorney may retain the services of a qualified person to assist the Attorney in doing anything the Adult has authorized.

7. Liability

An Attorney who acts in the course of their legal duties is not liable for any loss or damage to the Adult’s financial affairs, if the Attorney complies with (s 22):

• the statutory duties of the Attorney, as set out in s 19 of the PAA;
• any directions given by the court under s 36(1)(a) of the PAA; and
• any other duty that may be imposed by law

To protect innocent persons from liability that would arise from transactions made after the POA relationship has been terminated, BC’s PAA modifies the common law with regard to the effects of termination. If the attorney or a third party has acted in good faith, the Act shifts the loss from the attorney or third parties to the adult.

Section 3 of the PAA protects the attorney from liability for acts done in good faith and in ignorance of the termination of his or her authority. Section 4 protects third parties who deal in good faith with the attorney, where the third party and attorney are unaware of the termination.

NOTE: Section 57 of the LTA provides that the principal may file the termination of the agency in the Land Title Office. Filing the notice protects the principal from registration of “instruments” (as defined in the LTA) executed by the attorney after the termination of his or her authority, even though the attorney and a third party may have been ignorant of the termination.

8. Records and Accounts

The Adult’s account must be kept up to date (s 2, PAR), and the Adult’s assets and accounts must be kept separate from those of the Attorney and any third parties (s 19(4), PAA). Per s 2 of the PAR, all assets belonging to the adult which are held by the Attorney, and all books, documents, and account records entrusted to the attorney must be available for production to the capable adult at a reasonable time (usually during annual reviews).