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Power
of Attorney Tutorial
A power
of attorney is a document which authorizes someone
to act on your behalf in a number of matters ranging
from negotiating cheques or promissory notes;
purchasing, selling or dealing with stocks and
bonds; collecting rents, profits or commissions;
managing, buying or selling real estate, conducting
business operations or deciding issues about personal
care. A power of attorney terminates upon your
death, unlike a will which provides for the handling
and distribution of your estate after your death.
The
person who gives the authority is called a donor
or principal. The person to whom authority is
granted is called an agent, donee or attorney.
The most common form of such an arrangement would
be a real estate agent. The real estate agent's
authority, terms of appointment, duties and/or
remuneration are set out in the listing agreement
and the purchase and sale agreement.
Who
can grant a power of attorney - If you can
legally enter into a contract, in most cases you
are able to grant a power of attorney. Some exceptions
would be any individual under the age of majority
(called an "infant"); a person of unsound
mind, and some corporations.
Who
can act as agent or donee - Anyone other than
a mentally incompetent can be an agent or donee.
You should choose someone who is responsible and
who you can trust to carry out the necessary duties.
The donee or agent does not have to be a lawyer
or attorney.
General
Power of Attorney - A general power of attorney
extends to all kinds of business. An example would
be a document which contains the following language
"to do on my behalf anything that I can lawfully
do by an attorney."
Special
Power of Attorney - A special power of attorney
is more specific in outlining the duties or power
granted and would contain specific language which,
e.g., gives someone authority to sell your property
or to perform your banking matters. In general
banks use their own forms which they provide to
you at no charge.
Duties
of Donee or Agent - Certain duties of a donee
or agent are implied by a power of attorney unless
they are specifically excluded within the power
of attorney, e.g. a duty to use reasonable care
in the performance of acts done on behalf of the
donor; a duty to be accountable to the donor;
a duty to not make profits that the donor isn't
aware of; a duty not to act in conflict with the
interests of the donor.
Signing
a Power of Attorney - The power of attorney
should be witnessed by two people other than:
the donee/agent, the donee/agent's spouse, the
donor's spouse or the donor's child. An affidavit
of witness should be notarized if the power of
attorney needs to be recorded for real estate
transactions or other purposes. A sample affidavit
is included with the special power of attorney
for banking, taxes and real estate. In Canada,
only lawyers are notary publics and will likely
charge a fee of $20.00 or more to notarize
a document. In the U.S., you can obtain the services of a notary public by consulting your local yellow pages.
Terminating
a Power of Attorney - A power of attorney
can be terminated in the following manner:
1)
by fulfilling a specific provision of the agreement,
such as the completion of the task for which the
power of attorney was granted, e.g. the sale of
a property or a specified time period of three
months;
2)
revocation by the donor - a power of attorney
may be revoked unless the donor granted the power
to the donee for valuable consideration (such
as securing some benefit for the donee) or unless
it is specifically stated that it is not revocable.
The revocation should preferably be written, although
it could be revoked by way of the donor's action
in intervening in negotiations between the donee
and a thirty party or by verbal revocation. A
revocation of power of attorney can be found free
of charge in the Free Forms section of this site;
3)
by renouncement of the power of attorney by the
donee/agent - A renunciation should also be in
writing, signed by the donee and delivered to
the donor and any other people dealing with the
donee under the authority granted in the power
of attorney. A renunciation
of power of attorney can be found free of charge
in the Free Forms section of this site;
4)
by bankruptcy of the donor;
5)
in some provinces and states, by death or mental incompetence
of the donor. For example, under the Power of Attorney Act
of Manitoba if the power of attorney contains
wording which states that it is irrevocable, then
the power of attorney is not terminated upon the
death of the donor. Legislation in Manitoba also permits
a power of attorney to survive a donor's mental
incapacity if there is explicit wording to that
effect and if it is witnessed by someone other
than the donee/agent or his or her spouse. The
power of attorney will, however, terminate upon
a committee being appointed for the donor under
the Mental Health Act of Manitoba. Please be sure to read the current legislation for your jurisdiction. In almost all instances, this can be accessed via the internet.
Effects
of Termination - when a power of attorney
is terminated, the donor is no longer bound by
the acts of the donee. To ensure this, the donor
must give written notice of the termination or
the power of attorney may be terminated by "constructive
notice" such as by lapse of time. If notice
is not given, the donor is liable to anyone dealing
with the donor through the donee on the assumption
that the power of attorney still exists. In some
provinces and states, a donee who acts under a terminated
power of attorney may be liable to the donor for
damages, even if the donee did not know the power
was no longer valid. In Manitoba for example , a donee is not
liable if he or she did not know or, with reasonable
care, would not have known of the termination.
There
are also provincial and state laws which define the rights
and obligations of third parties who deal with
a donee whose authority has been revoked. In Manitoba for example,
a transaction is binding:
- if
a third party deals with a donee whose authority
has been revoked and if the third party does
not know of the termination, and
-
both the donee and the thirty part acted in
good faith. Please be sure to read the current legislation for your jurisdiction.
 POWER
OF ATTORNEY - SPRINGING
(a general power of attorney which comes into
effect upon incapacity)
POWER
OF ATTORNEY - SPECIAL
(a special power of attorney used for banking,
real estate, taxes)
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