In the dynamic and intricate world of high-net-worth family-owned enterprises, the importance of precise and…
With an aging population, more and more Canadians are finding themselves in need of assistance in managing their financial affairs. A power of attorney for property allows a person of your choosing to exercise financial decision making when you are unable. Shajani can assist your attorney in meeting their reporting requirement.
The power of attorney allows for a smooth continuation of financial management by the attorney. In the absence of such a document, there may be a vacuum of decision-making authority and no one will legally be able to make financial decisions unless the public trustee becomes involved.
A power of attorney for property is a written document by which one person (the grantor) appoints another person (the attorney) to act (as a substitute decision maker) on the grantor’s behalf with respect to the grantor’s property or financial affairs.
A general power of attorney would permit the attorney to do anything the grantor can do. This would take immediate effect and no incapacity would be required. A springing power of attorney is subject to a condition, such as mental incapacity, before the power of attorney is granted to the substitute decision maker.
It is important that the grantor understands the nature and extent of their property and financial affairs along with the powers being granted. When a power of attorney is granted, the attorney will have the power to take complete control of grantor’s financial affairs. The attorney will be able to do anything the grantor could do with the grantor’s property. This authority will continue in the event the grantor becomes mentally incapable, and once the grantor becomes incapable, the power of attorney will be irrevocable.
There are limitations to the power of attorney. The power of attorney terminates on death, bankruptcy, or mental incapacity and is only for financial matters. This power can be revoked any time by grantor if the grantor has capacity. The attorney has a fiduciary duty, including a duty to account.
The duty to account is significant. The attorney must keep records of all transactions and be prepared to account for every transaction from the time the attorney started acting as an attorney. Generally, once the attorney has commenced exercising his or her powers, the duty to account for all transactions will commence, regardless of the grantor’s capability. The attorney must keep meticulous records and be prepared to formally “pass accounts” before the court.
Shajani provides services to assist with the duty to account, including annual accounting for those who have a power of attorney.
This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2023 Shajani CPA.
Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning services.