A power of attorney (POA and sometimes also called a general power of attorney) is a legal document that grants one or more persons (the "agent" or "attorney") the legal authority to act on behalf of another person (the "principal" or “grantor”) regarding health and/or financial and legal decisions. It's important to note that a Power of Attorney for healthcare and a Power of Attorney for property are two separate documents, each specifically tailored to address different aspects of decision-making and authority.The grantor chooses someone they trust (such as a family member or friend) to make decisions in their best interest in the event they are unable to manage their own affairs because they are out of the country, seriously ill or incapacitated. It's important to note that a power of attorney can only be created when the principal is of sound mind and can comprehend the nature of the document they are signing.
There are two main types of power of attorney in Canada; a POA for property (which would involve making property and financial decisions on the grantor’s behalf) and a POA for personal care (which concerns healthcare decisions). These two main types of POA could also be classified as “General” powers of attorney because the agent granted the powers has a wide range of powers in regards to the grantor’s health or property and finances. However, there is also something called a special power of attorney.
A special power of attorney (also known as a limited power of attorney) is different than a general power of attorney in that it very clearly defines and restricts the circumstances in which an agent can act on a grantor’s behalf.
What is a Special Power of Attorney?
A special power of attorney is a legally binding document designed for situations where you only want to delegate some powers to your agent rather than granting them broad or general authority over your affairs.
The special power of attorney puts specific limitations on the powers and responsibilities that your agent will have. These powers can be narrowly defined and can include actions such as handling one specific financial transaction, representing the principal in a legal proceeding, or selling a specific property. The authority granted by a special power of attorney is strictly confined to the tasks or transactions enumerated in the document.
A special power of attorney can be particularly useful when you need assistance with one particular task but don’t want to give your representative unrestricted control over all your financial affairs and/or healthcare matters.
Creating a special power of attorney is much the same process as creating a general power of attorney. It's important, however, to note that the laws and regulations related to POAs can vary substantially between provinces and territories in Canada. Therefore, it's wise to consult with legal professionals to ensure that your SPOW is valid and legally binding.
In general, there is no single standardized template for a power of attorney. You need to ensure that the document identifies itself as a POA and explicitly outlines that you are granting specific powers to a designated representative. You must be of sound mind. The document should also specify the circumstances under which these powers will come into force. Additionally, the document should be signed in the presence of two witnesses to ensure its validity. Witnesses may need to be the age of majority (again, this may vary by region in Canada). Generally, witnesses can’t be:
- The grantor
- The agent or the agent’s spouse
- A substitute agent
- The grantor’s child or a person whom the grantor treats as his or her child
What is the Difference Between a Special Power of Attorney and a Regular Power of Attorney?
The main difference between a special power of attorney and a regular power of attorney is the scope of authority granted to the agent. Here are some of the key distinctions between the two:
Special power of attorney:
- Limited Scope: A special power of attorney gives the agent specific and limited powers to perform clearly delineated tasks or to make specific decisions on behalf of the grantor. These tasks or decisions are explicitly outlined in the POA document and the agent does not have authority to make decisions for any matters not clearly stated in the power of attorney.
- When to Use: A special power of attorney is useful when you need assistance or representation for a specific task, transaction, or situation, but you don’t want to grant an agent broad authority over all aspects of your personal, financial or medical affairs.
Examples: Here are some examples of when you might want to use a special power of attorney: to sell a specific property while you are out of the country, for someone to act on your behalf in a legal matter, to buy a car, submit your taxes, or oversee your child’s care if you are not available.
Regular power of attorney:
- Broad Scope: A regular power of attorney, on the other hand, grants your agent much broader and more comprehensive authority to manage a range of your financial, legal, personal and/or health concerns on your behalf. Your agent can make decisions and take actions in your financial/property or personal care matters unless the document includes specific limitations.
- When to Use: A general power of attorney is suitable when you want to delegate authority to your agent for multiple financial, legal, and personal matters, often because you are no longer able to handle matters yourself due to a serious illness, you’re out of the country or mentally incapacitated.
- Examples: You may wish to use a general power of attorney to a trusted family member or friend to handle all your financial matters like your bank accounts, investments, paying bills, and signing contracts if you are traveling out of the country for several months.
In essence, the key distinction between the two types of powers of attorney is the level of authority granted.