An Enduring power of attorney and a personal directive deal with the instance where you are not able to make certain decisions but your wishes under your Will have not yet taken effect. Neither of these are to be confused with supported decision making, which can be a precursor to these documents taking effect as in supported decision making you will make the decisions in conjunction with another person or you are granting another person access to your information. Enduring Powers of Attorney and Personal Directives, in contrast, allow someone else to completely step into your shoes and are part of a comprehensive estate plan that should provide you with comfort that your affairs will be handled in an appropriate way if you are not able to handle them yourself.
Power of Attorney
A power of attorney is a legal document that gives one person (or persons) the power to make financial and legal decisions on another person’s behalf. Any competent adult or financial institution can be appointed power of attorney. Essentially this means someone else will be able to deal with your property in the exact same manner as you would and you should consider carefully who the most appropriate person may be. Many people find an independent party with experience, such as a trust company, is a good option.
The donor is the person who is creating the power of attorney document and is contemplating for the possibility that someone else will need to manage his or her financial and legal affairs. The attorney is the person or institution who will be making the decisions if the document comes into effect.
A person must have capacity when they sign a power of attorney, and the document will take effect upon the occurrence of a specified event within the document. A Power of attorney can take effect immediately, when the donor becomes mentally incapacitated or any other event specifically named in the document. For a determination of mental incapacity, it is recommended that the written opinion of two independent medical practitioners is used. Powers of Attorney that take effect upon the occurrence of a future event, such as incapacity, are referred to as ‘springing’ powers of attorney. Powers of Attorney that do not end unless they are specifically revoked or the donor passes, are referred to as ‘enduring’ powers of attorney. For estate planning purposes, we recommend a document that is both ‘springing’ and ‘enduring’.
An enduring power of attorney should not be confused with a general power of attorney, which may be used for a specific transaction such as the sale of real estate while a person is away. A general power of attorney is likely not sufficient for estate planning purposes.
Once invoked, a power of attorney can be revoked provided the donor has capacity to do so. Generally the same test for determining incapacity will be used to determine if a donor has regained capacity.
Personal Directive/Representation Agreement
A personal directive or representation agreement, occasionally referred to as a living will, is a legal written document that gives another person the authority to make non-financial decisions on your behalf such as health care treatments and living accommodations. Many people choose a family member or close friend as delicate decisions are made under a personal directive. Unlike a power of attorney, though, a personal directive only takes effect upon you ceasing to have the capacity to make a decision. Like a power of attorney, you can specify who will determine the point when you cease to have capacity. It is recommended that you use the determination of two independent medical practitioners. The same mechanism will be used to determine if you have regained your capacity, thereby ceasing the delegation of decision making authority.
The maker is the person who is creating the personal directive document and is contemplating the possibility that someone else will need to make personal decisions on his or her behalf. The agent is the person who will be make the decisions if the document comes into effect.
A personal directive can be drafted broadly, which basically gives full discretion to the agent to make the decisions the agent deems best in the situation or a personal directive can include information and instructions.
A personal directive can be registered with the Personal Directives Registry which is operated by the Public Guardian and Trustees Office, if a person so wishes.
It is foreseeable that your personal directive and enduring power of attorney may come into conflict. For example, if your personal directive states that you would like to live at home as long as possible you may eventually need a live-in nurse to be hired. Your attorney is the one responsible for determining how much can be spent on a nurse and if it is financially feasible. Therefore, it may be prudent to include language appointing a third party tie-breaker (in case your agent and attorney are different people) or state which person’s decisions will take precedence in the event of conflict.
Both an attorney under a Power of Attorney and an agent under a Personal Directive must act in the best interest of the person for whom they are making decisions and must treat all information acquired in confidence. If an attorney or agent does not act in a person’s best interest, or it can be shown they acted in bad faith, they may be held liable for their actions.