Most people understand the importance of having a Will, but planning for incapacity is equally important. In British Columbia, an Enduring Power of Attorney (“POA”), allows you to choose a trusted person to manage your financial and legal affairs if you become unable to do so yourself.
However, not everyone has the opportunity to plan ahead, and even well-crafted plans may become unworkable. In these circumstances, families may need to consider a committeeship under the Patients Property Act.
While both of these tools allow someone to act on another person’s behalf, they serve different purposes. A POA is a proactive planning tool that reflects the individual’s choices while they have capacity. A committeeship is often a reactive solution when advance planning was not completed or has failed.
A Power of Attorney (“POA”) lets you choose, in advance, who will manage your financial and legal affairs if you lose capacity. A committeeship is a court-appointed alternative used when no workable POA exists. Planning ahead with a POA is usually faster, less expensive, and gives you more control.
Benefits of a Power of Attorney (POA)?
A POA is a legal document which allows a person (the “adult”), to appoint someone they trust (the “attorney”) to make financial and legal decisions on their behalf. Depending on its terms, a POA may take effect immediately or at a specified time, such as when the adult loses capacity.
Importantly, appointing an attorney does not mean surrendering control. Many people use a POA to receive assistance with managing their affairs while continuing to make their own decisions. Capacity exists on a spectrum, and a person may be capable of handling some matters while needing help with others.
A key advantage of a POA is flexibility. The adult can choose who will act, define the scope of the attorney’s authority, and provide instructions as to how their affairs should be managed. As long as you have capacity, you can revoke a POA, appoint a different attorney, or amend the terms.
Unfortunately, advance planning is not always possible. A person may lose capacity before signing a POA, or an existing POA may become unworkable because the appointed attorney has died, become incapable, is unwilling to act, or is the subject of a dispute. In these instances, a committeeship may be necessary.
What is a Committeeship? The last resort.
When a person is incapable of managing their financial or legal affairs and does not have a workable POA, the Court can appoint a representative, known as a “committee”, to act on their behalf.
To do so, the Court requires medical opinions and evidence that the adult is incapable of managing their affairs, and that the proposed committee is suitable for the role. Unlike a POA, which can be effective while an adult retains capacity, a committeeship requires a Court declaration that the adult is incapable and gives full decision-making authority to the committee.
Because of this responsibility, committees are subject to ongoing oversight and reporting obligations. Obtaining a committeeship is also significantly more expensive and time-consuming than preparing a POA, as it requires medical evidence, financial disclosure, and a court application.
The Case for Advanced Planning:
Preparing a POA while you have capacity is generally the preferred approach. It provides flexibility, preserves personal choice, and can help avoid the expense and complexity of a committeeship. However, when advance planning was not possible or an existing POA is no longer workable, a committeeship may provide an effective solution.
At Fulton, our Wills and Estates team can assist with both incapacity planning and committeeship applications, helping families navigate these challenging situations.
Frequently Asked Questions
- Do I lose control if I sign a Power of Attorney? Appointing an attorney does not mean surrendering control. Many people use a POA to receive assistance while continuing to make their own decisions.
- Can I change or cancel a Power of Attorney? As long as you have capacity, you can revoke a POA, appoint a different attorney, or amend its terms.
- What if there is no POA and the person is incompetent? A committeeship may be necessary when a person loses capacity before signing a POA, or when an existing POA becomes unworkable because the attorney has died, become incapable, is unwilling to act, or is the subject of a dispute.
- Which option is better? Preparing a POA while you have capacity is generally the preferred approach because it offers flexibility, preserves personal choice, and can help avoid the expense and complexity of a committeeship.
- Do I still need a Power of Attorney if I own almost everything jointly with my spouse? Usually, yes. Joint ownership does not cover every situation, and a POA still matters for several reasons:
- Some assets are held individually. Many important assets are handled in one name only — for example, RRSPs, RRIFs, pensions, and life insurance policies.
- A spouse cannot act for everything. Your spouse cannot deal with government benefits or sign on your behalf for assets held only in your name.
- Jointly held real estate still needs both signatures. To sell, refinance, or place a mortgage on jointly held property, both owners generally must sign, so a spouse cannot act alone if you lose capacity.
- Your spouse may lose capacity too. Joint ownership assumes your spouse can always act, but they may become incapable at the same time or before you — for example through illness, injury, or an accident affecting you both.
- A POA covers everything. A POA ensures your spouse (or another trusted person) can manage all of your financial and legal affairs, not just the assets you happen to hold jointly.