My previous blog ended with the following sentence: “Where a power of attorney for property is effective upon execution, proper safeguards should be put in place to ensure the power of attorney is not inappropriately acted upon”. This blog will expand on the meaning of that sentence.

Where a power of attorney for property is effective upon execution, there is the potential for misuse and abuse of the document. If the named attorney gets hold of the power of attorney document, there is the possibility that he/she could begin acting under the power of attorney without the grantor’s knowledge or consent.  It is up to the institution accepting the power of attorney to do its own due diligence before permitting its use, but to be cautious, a grantor may wish to keep the power of attorney in a safe and secure location to prevent against the possibility that the named attorney could begin acting prior to the grantor’s incapacity.  However, where a power of attorney for property is effective upon execution, it also permits ease of acting under the power of attorney, which a husband who has named his wife as his attorney (or vice versa) may be content with.

Where a power of attorney for property is triggered upon execution, the grantor should be informed of the potential misuse and abuse of the document if it is merely kept in an easily accessible location. Often, the lawyer who drafts the power of attorney is willing and able to safely store the document at their office or in a secure vault.  This adds a layer of protection, as the solicitor takes on the role of gatekeeper.  In this case, the drafting solicitor should discuss with the grantor how and when the power of attorney should be released to the named attorney and have the grantor sign a direction letter outlining the instructions for its release.

Where a power of attorney for property is springing upon a certain date or event occurring, the risk of misusing and abusing the document substantially decreases, as there is a built-in safeguard. It should be clear in the document how and when its use is triggered.  This type of power of attorney may delay the named attorney in being able to act, as there is an extra safeguard in place on the face of the document, which the institution that is presented with the document may have to abide by, such as a determination of incapacity of the grantor by a capacity assessor.

One type of power of attorney for property is not necessarily better than the other. Solicitors should discuss the different types with their clients and a decision should be made on a case-by-case basis.  Consideration should be given to the nature of the relationship of the grantor and the named attorney, and the level of comfort and confidence the grantor has in the named attorney.  Clients should be aware of the potency of the power of attorney document and should ensure they are appointing a reliable and trustworthy attorney.

Happy Holidays and Happy New Year!