A Power of Attorney is a document that allows you (the principal) to appoint someone (the agent) to act on your behalf. There are many reasons why you might want to appoint someone else to look after your financial affairs. For example, if you own a property in a different state you can give power to your agent to sell your property for you. You can also plan ahead and appoint an agent to take care of your finances if you are ever hospitalized for long periods of time.
A Power of Attorney is important to have and is simple to create. Below is a list of 4 things you should keep in mind when creating your Power of Attorney.
- Select a Power
A Power of Attorney allows you to choose from two types of powers that you can give to your agent; Durable and Ordinary.
Durable Power – is intended to remain in force in the event that the principal later becomes mentally incompetent. The Durable Power of Attorney ends when the principal passes away.
Ordinary Power – is valid as long as the principal is capable of acting for him or herself. An Ordinary Power of Attorney will end automatically when the principal becomes mentally incapacitated or passes away.
- Choose The Right Agent
When selecting your agent keep in mind that they will be carrying out decisions on your behalf. It is important to choose someone you trust and who will respect your wishes. Responsibilities of an agent are:
- To act in your best interest;
- To keep accurate records of dealings/transactions undertaken on your behalf;
- To act for you with the utmost good faith and avoid situations where there is a conflict of interest; and
- To keep your property and money separate from their own
- Agent Compensation
Depending on your relationship with your agent, you can decide to compensate them for their service or just pay them for out-of-pocket expenses. Out-of-pocket expense would include gas, parking, administration fees, etc.
- Signing Your Power of Attorney
Once you have completed creating your Power of Attorney, you will need to have it signed before a notary and have a witness or witnesses present. When signing your document use your usual cheque signing signature and initial each page of the document.
Note: Your witness cannot be the spouse (married or common-law) of the principal or agent.
Now that you know what information is needed for a Power of Attorney, it will be easy to create your own. There are many resources that can help you get started such as an online legal forms website. Whichever resource you choose, don’t wait until it’s too late to create your Power of Attorney.
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