Power of attorney

How BC law treats it

Under the Power of Attorney Act, RSBC 1996, c 370, an ordinary (general) power of attorney ends if the adult becomes mentally incapable. An enduring power of attorney, which states that it continues despite incapacity, is the usual tool for planning. It must be signed by the adult and the attorney in the required form and witnessed by two qualified witnesses, or by one witness who is a BC lawyer or notary. The Act excludes certain people, such as the attorney and the attorney's spouse, child or parent, from acting as witnesses. A power of attorney covers financial and legal affairs, not health or personal care. Health and personal care decisions are made under a representation agreement under the Representation Agreement Act, RSBC 1996, c 405. An attorney must act honestly and in good faith, in the adult's best interests, keep records, and keep the adult's property separate from the attorney's own. Where more than one attorney is appointed, the document should say whether they may act separately (jointly and severally) or must act together. If the document is silent, attorneys generally must act unanimously. To use a power of attorney for land, it must also meet Land Title Act, RSBC 1996, c 250 requirements and be filed in the Land Title Office. For companies, signing authority usually comes from the articles and directors' resolutions, not a power of attorney. A corporate power of attorney can be used for specific purposes, such as signing documents abroad.

What it means for your business

An owner-manager who becomes ill or incapable without an enduring power of attorney can leave the business unable to deal with personal shares, guarantees or bank accounts, and family may need a costly court application. Owners should coordinate their power of attorney with the company's articles, shareholder agreement and banking arrangements. A power of attorney does not authorize someone to act as a director in the owner's place. Example: The sole director and shareholder of a Victoria company signs an enduring power of attorney naming her business partner to deal with her shares and finances. After a stroke, he can vote her shares to appoint an interim director so the company keeps operating.

Risks and common mistakes

Using a general power of attorney for planning, which ends when it is most needed. Having an excluded person, such as the attorney's spouse, witness the document. Assuming a power of attorney lets the attorney make health care decisions. Assuming an attorney can act as a director in the owner's place. Naming two attorneys without saying whether they can act separately.