A regular Power of Attorney ceases to exist when the Donor (the person giving the power of attorney) ceases to have mental capacity to give directions to the Attorney (the person appointed in the power of attorney to take care of financial affairs). That said, an Enduring Power of Attorney (“EPA”) ceases to exist when the Donor passes away. Should there be a need to deal with financial matters of the Donor, the Attorney can do that.
Why An Enduring Power Of Attorney Makes Sense
Many couples have everything in joint names and may not consider having EPA’s. Here are a few examples of why it makes sense to have one. A husband and wife are on the title to their house but do not have EPA’s and want to sell, however, one of them, since they originally bought the property has lost their mental capacity to act for themselves because of a stroke, dementia, or other illness.
An application to the Court would be required to have the owner without capacity declared a Dependent Adult which would cost approximately $4,000 to $5,000 compared to the cost of an EPA of about $300. The same would apply to a situation where there is only one owner who does not have mental capacity but has no EPA.
How An EPA Can Protect You
Here is a situation we encountered lately which further illustrates the point. The owner of a business has heart bypass surgery which through a series of complicating factors left the owner on a tube ventilator and sedated. The owner had no EPA. We did not act for the owner, but the bank has raised concerns about the owner’s partner who is not an officer, shareholder or director of the company doing anything. Needless to say, this has caused significant problems for the company to be able to conduct its business.
The EPA is a potential answer to these issues. There are two types of EPA’s: One which takes effect immediately in that the Donor has mental capacity but wants the Attorney to have immediate powers and the second, the “springing EPA” where it is initiated when the Attorney either one doctor or two doctors confirm the Donor does not have capacity.
The main point to consider is that the EPA is an extremely low cost, yet effective way of being proactive rather than reactive.
For more information regarding real estate law, we are Calgary’s leading legal real estate team to help you. Contact us today, 403 245 – 3500, or email us at [email protected].
