There are two types of Powers of Attorney available under the Substitute Decision Act enacted in 1992.
One is a power of attorney over property. The term “Property” can be misleading to the average lay person. “Property” does not refer to simply real estate and a home but rather anything of value that the grantor of the power of attorney may own. Also, the word “Attorney” can be misleading. The average person assumes this refers to a lawyer but that is not what Attorney means. Rather, it is the recipient of the power of attorney. The person that is being invested with power by the grantor of the power of attorney. We commonly refer to the granting of a power of attorney of property as akin to a blank cheque. You do not give away property or ownership of assets by way of power of attorney. Rather that is done by your will. What a power of attorney does do is it gives power away. It allows the recipient in most cases to make vicarious decisions on behalf of the grantor. While the attorney has an onerous fiduciary duty to the grantor, that will not do the grantor much good if the attorney is abusing the power granted to them. Or more simply put, your good friend that you trusted as your attorney may have serious legal responsibilities, but that will do you no good if they are broke.
It is also important to ensure that the attorney understands how serious their role is and how important it is especially if someone may in future look over their shoulder. Careful records and separation of assets must be kept.
It is crucial that an attorney not intermingle any of the property or assets of the grantor with their own. An attorney is entitled to receive some fee for their work but generally it is a labor motivated by responsibility. Often a familial responsibility such as taking care of your parents assets.
Most powers of attorney survive the grantor’s subsequent mental or physical incapacitation. In plain English, this means that the moment the power of attorney is signed, it begins to work. It generally does not start to work once the grantor becomes mentally incompetent.
For that reason alone, it is crucial that one pay careful attention in choosing the correct person. Not only must they be very responsible but they must be capable.
There is a way you can restrict a power of attorney to start only when you go “gaga” but you need a competent lawyer to set that up.
The risk of not doing a power of attorney is horrendous legal fees to come up with a court appointed substitute. That court appointed substitute usually is an order appointing someone as a guardian of property, such as for an incapacitated relative.
The costs are extreme, often in excess of $10,000.00 and are very laborious and time consuming.
There is the bitter irony that often, it is better to die without a will than then to become ill with no power of attorney. In no way are we advocating that one should skip doing a will but this is an exercise in explaining to all how foolish it is not to have proper powers of attorney in place.