Powers of Attorney for Property (Part II)
There are two types of Powers of Attorney, one deals with property (financial and otherwise) and one deals with personal care. Both should be a part of any long-term plan.
When you designate a Power of Attorney for property, the authority of the attorney is dictated by you in the terms of the POA. Most Powers of Attorney for Property will have a general one-line statement saying the attorney can do anything you can legally do regarding your property, except make a will. However, you have every right to restrict the authority of your attorney to specific assets, or to specific transactions with those assets.
A lack of detail in the POA can lead to problems. As financial portfolios become more and more diversified, boilerplate clauses can actually become a barrier to the effective use of a POA. This can be particularly true in the case of life insurance contracts since most boilerplate clauses do not include any references to insurance policies.
One way of avoiding these problems is to review the types of assets you have with your lawyer when preparing a POA. Read the language of the document carefully. Ensure that all the major assets you own are covered in any non-inclusive list of assets and powers. Are there any powers you do not want your attorney to have? If so, review them with your lawyer and specifically include any restrictions in the language of the document.
In the life insurance context, POA’s present unique issues. For example, many institutions are unable to accept an application for life insurance executed by an attorney, and do not permit attorneys to obtain loans or withdrawals from, or surrender a policy unless the POA expressly provides that the attorney may do so. Most importantly, the validity of beneficiary designations made by an attorney is unclear under Canadian law. We strongly recommend that only the policy owner make such designations.