Understanding how your finances and property are managed if you become unable to make decisions is important. In Nova Scotia, there are laws that allow you to plan ahead for this situation.
One legal tool for this purpose is called an enduring power of attorney. This article explains what it is, how it works, and how it is different from other types of powers of attorney.
Each section provides clear facts about the law and process in Nova Scotia. The goal is to help you understand the basics of enduring powers of attorney in straightforward terms.
What Is An Enduring Power Of Attorney In Nova Scotia?
An enduring power of attorney is a legal document used in Nova Scotia. It allows a person, referred to as the "donor," to choose someone they trust, known as the "attorney," to manage their finances and property.
This arrangement is governed by Nova Scotia's Powers of Attorney Act. The word "enduring" means that the authority granted in this document remains in effect even if the donor loses the ability to make decisions for themselves due to illness or injury.
A regular power of attorney in Nova Scotia ends if the donor becomes mentally incapable. In contrast, an enduring power of attorney stays in effect after incapacity, making it a specific tool for long-term financial and property management.
The attorney can handle tasks like:
Managing bank accounts and investments
Paying bills and filing tax returns
Buying or selling property
Making legal and financial decisions
How Does An Enduring Power Differ From Other Powers Of Attorney?
There are several types of power of attorney documents in Nova Scotia. Each type serves a different purpose and works in a unique way.
General Power Of Attorney
A general power of attorney grants someone the authority to make decisions about finances and property on behalf of another person, but only while the person who made the document remains mentally capable. If the donor loses mental capacity, this type of power of attorney automatically ends. A general power of attorney is often used for temporary reasons, such as when someone is travelling and needs help managing their affairs.
Springing Power Of Attorney
A springing power of attorney only becomes effective if the donor becomes mentally incapable. This type means the chosen person cannot act until a specific event—usually incapacity—takes place. In Nova Scotia, springing powers of attorney are less commonly used compared to other provinces.
Personal Directive For Health Care
A personal directive is a separate legal document used for health and personal care decisions. This document allows a trusted person to make medical and personal care decisions if the person who made the directive loses the ability to make those choices. A personal directive does not cover decisions about finances or property, as a power of attorney or enduring power of attorney typically handles these matters.
Why You Should Have An Enduring Power Of Attorney
Suppose a person loses the ability to manage their own finances or property, and there is no enduring power of attorney in place. In that case, the law in Nova Scotia requires a guardian to be appointed by the court. This process can be slow and involves paperwork, legal fees, and waiting for a judge to decide who will take on the responsibility.
Disagreements can arise among family members about who makes decisions when there is no apparent legal authority. Banks and other financial institutions cannot release funds or allow changes to accounts without proper legal documents.
The benefits of an enduring power of attorney are as follows:
Helps avoid court proceedings. Prevents lengthy guardianship applications that can take months.
Protects family relationships. Clear legal authority helps prevent potential disputes among relatives.
Ensures bills get paid. The document ensures that the donor's financial obligations are maintained during incapacity.
Legal Requirements To Make A Valid Enduring Power Of Attorney
In Nova Scotia, the Powers of Attorney Act outlines specific rules for creating a valid enduring power of attorney. The document will only be legally recognized if it meets the below requirements.
Age And Capacity Of The Donor
A person making an enduring power of attorney in Nova Scotia is required to be at least 19 years old. The person is also required to be mentally capable at the time of signing. Mental capacity means being able to understand the nature and effect of the enduring power of attorney, including what property and finances are involved and the authority being given to the attorney.
Two Independent Witnesses
As of 2022, two independent witnesses are required for an enduring power of attorney to be valid in Nova Scotia. The previous law required only one witness. An independent witness is someone who is not named as the attorney, is not the spouse or partner of the attorney, and is not a beneficiary under the donor's will.
Wording That Ensures Endurance
The enduring power of attorney clearly states that it is intended to remain valid even if the person who made the document loses mental capacity. The document generally includes language such as: "This power of attorney continues to be effective even if I become mentally incapable after it is signed." Without this specific statement, the document may not qualify as an enduring power of attorney under Nova Scotia law.
Who Can Be Your Attorney Or Alternate
An attorney named in an enduring power of attorney manages property and financial matters for another person if that person becomes unable to do so. Choosing an attorney or alternate attorney involves following certain legal rules and considering several practical factors. We describe these in greater detail below.
Eligibility Rules And Restrictions
The person chosen as an attorney is required to be at least 19 years old and mentally capable when the document is signed. An attorney cannot also act as a witness to the signing of the enduring power of attorney. The law allows a corporation, such as a trust company, to be appointed as an attorney to manage financial affairs, though this is not common for most personal estate plans.
Factors For Choosing A Trustworthy Attorney
Selecting someone for the role of attorney involves considering qualities that support sound decision-making and reliable management of finances and property. Naming an alternate attorney is possible; this person steps in if the first attorney cannot or will not act.
Key qualities for the role of attorney include:
Financial responsibility. This person manages money well and understands basic financial concepts.
Availability. They live nearby or can travel when needed to handle urgent matters.
Family harmony. The choice of attorney will not create conflicts among family members.
The person being considered for the role of attorney cannot have any undischarged bankruptcies or criminal convictions of dishonesty. This qualification was brought in with changes to the law in 2022.
Duties And Responsibilities Of An Attorney
An attorney named under an enduring power of attorney in Nova Scotia has legal responsibilities set out by law. The attorney's main responsibility is to manage the donor's property and finances according to the instructions in the document.
Fiduciary Duty And Best Interest Standard
An attorney is considered a fiduciary, which means they are in a position of trust. The attorney is required by law to act in the best interests of the donor at all times. This means putting the donor's needs before their own and avoiding any situation where their personal interests could conflict with those of the donor.
The attorney manages the donor's money, property, and financial matters honestly and carefully. The attorney cannot use the donor's property for personal benefit unless the enduring power of attorney document specifically allows it.
Record-Keeping And Reporting Under The Act
Nova Scotia law requires an attorney to keep accurate and complete financial records of all transactions made on behalf of the donor. This includes tracking money spent, received, or moved, and keeping receipts, statements, and other documents as evidence.
The attorney is required to provide an accounting if asked by the donor, certain family members, or other "interested persons." This means the attorney shares details about what has been done with the donor's property and money. Courts in Nova Scotia may also review an attorney's actions if questions or concerns arise.
Step-By-Step Guide To Creating An Enduring Power Of Attorney
1. Choose Your Attorney And Alternate
The person creating the enduring power of attorney selects a primary attorney and an alternate. The primary attorney is the first person who will have authority to act. The alternate can act if the primary attorney is unable or unwilling to take on the responsibility.
2. Define The Scope Of Authority
The enduring power of attorney may grant broad powers or limit authority to specific areas, such as managing bank accounts, paying bills, or selling real estate. It is possible to set restrictions, for example, prohibiting the attorney from making gifts or requiring additional approvals for selling property.
3. Draft The Document With Proper Language
The enduring power of attorney is written using clear legal language. The document includes an enduring clause that states the authority continues even if the person who created it loses mental capacity. It describes what powers are given, any limits, and any special instructions.
4. Sign Before Two Qualified Witnesses
The document is signed in the presence of two independent witnesses. Witnesses are people who do not benefit from the document and are not related to the attorney. All parties are present at the same time during the signing.
5. Register Or Notify Financial Institutions
Once the enduring power of attorney is signed and witnessed, financial institutions such as banks and investment firms are notified. If the authority includes managing or selling real estate, the document is registered with the Land Registry Office.
Witnessing Notarization And Registration Rules
An enduring power of attorney in Nova Scotia typically requires two independent witnesses. These witnesses confirm that the person signing the document understands what they are doing and is doing so voluntarily.
When Notarization Is Required
Notarization is not part of the standard process for an enduring power of attorney in Nova Scotia. A notary public is not required to witness the signing for the document to be valid under Nova Scotia law. However, some banks or financial institutions may prefer or ask for a notarized copy before accepting the document.
Land Registry Filing For Real Property
When an attorney might need to sell, mortgage, or otherwise deal with real property such as a house or land, filing the document with Nova Scotia's Land Registry Office is required. The registration process involves submitting the original or a certified copy of the enduring power of attorney to the Land Registry Office, along with a registration form and payment of the prescribed fee.
How To Activate Or Revoke An Enduring Power Of Attorney
An enduring power of attorney in Nova Scotia can become active in two main ways. Some documents state that the attorney's authority begins as soon as the document is signed. Others say the attorney's authority only begins if the person who made the document becomes mentally incapable.
Most enduring powers of attorney made in Nova Scotia are effective immediately, but attorneys are expected to act only when it is necessary, such as when the donor is unable to manage their finances or property due to incapacity.
Revoking, or cancelling, an enduring power of attorney is possible at any time as long as the person who made it is still mentally capable. To revoke an enduring power of attorney, the donor provides written notice to the attorney and any third parties, such as banks or other institutions that may rely on the document.
Risks If You Do Not Have An Enduring Power Of Attorney
If an enduring power of attorney is not in place and a person becomes mentally incapable, several legal and financial issues may arise. For instance:
Court guardianship is required. The court may have to appoint someone to manage an individual's personal finances and property through a lengthy legal process.
Family disputes. Without clear legal authority, family members may disagree about who handles financial and property matters.
Financial hardship. Access to bank accounts and assets may be blocked, bills may go unpaid, and financial opportunities may be lost.
DIY Kits Versus Working With A Lawyer
There are two main ways to create an enduring power of attorney in Nova Scotia: using a DIY kit or working with a lawyer. Each approach has differences in cost, convenience, and the amount of legal expertise involved.
Cost And Convenience Comparison
DIY kits are less expensive than hiring a lawyer and are designed for straightforward situations that can be completed at home. However, DIY kits may not fit less common situations or allow for much customization. They typically follow a standard template and may not address all individual concerns.
Lawyers charge higher fees but offer advice tailored to a person's specific circumstances. Legal professionals can draft documents that include particular instructions or adapt the language for unique family, property, or business matters.
When Professional Advice Is Essential
Professional legal advice is important in certain situations. These include cases where an estate is complex, where there are family dynamics that could lead to disagreements, or where business interests are involved. A lawyer can help when there are specific restrictions or instructions that are included in the enduring power of attorney.
Safeguards Against Financial Abuse Under The 2022 Act
Nova Scotia's Powers of Attorney Act contains rules to help prevent financial abuse by attorneys under an enduring power of attorney. These rules are designed to protect the interests of the person who created the enduring power of attorney.
Court Oversight And Interested Persons
Courts have the power to review the actions of an attorney if someone raises a concern. Family members and other people known as "interested persons" can ask the attorney to provide a record of what they have done with the donor's money and property. If there is a disagreement or suspicion of misuse, these individuals can ask the court to look at the attorney's actions.
Remedies For Misuse Of Authority
There can be legal consequences if an attorney does not follow the law or uses their power inappropriately. The court can order the attorney to return money or property to the donor or to compensate for losses. The court can also remove the attorney from their role if it finds that they did not act in the best interests of the donor.
Next Steps For Protecting Your Estate And Finances
Preparing an enduring power of attorney is only one part of the estate planning process. Other common documents include a will, which addresses what happens to assets (money and property) after death, and a personal directive, which appoints someone to make health and personal care decisions if mental capacity is lost.
Preparing these documents simultaneously, as opposed to at different times, can help ensure that a person's financial, medical, and personal affairs are managed according to their individual wishes. Each document has a specific legal purpose and requires particular steps to be legally valid in Nova Scotia.
If you are in need of legal advice about enduring powers of attorney or estate planning, contact LM Legal Solutions, a law firm in Dartmouth serving clients throughout Nova Scotia. Our experienced team can provide guidance on your estate planning needs and help ensure your documents are properly prepared and executed.
FAQs About Enduring Power Of Attorney In Nova Scotia
Can an enduring power of attorney made in another province be used in Nova Scotia?
An enduring power of attorney created in another province is generally recognized in Nova Scotia. However, banks and other organizations in Nova Scotia may ask for the document to be registered locally or may request additional paperwork before accepting it.
What are the typical legal fees for having a lawyer prepare an enduring power of attorney in Nova Scotia?
Legal fees for preparing an enduring power of attorney vary based on how complex the situation is. Professional preparation ensures the document meets Nova Scotia's legal requirements and is tailored to your specific circumstances and wishes.
Can I appoint multiple attorneys to act together on my enduring power of attorney?
Yes, it is possible to appoint more than one attorney to act at the same time. Some people choose to require joint decision-making, which means all attorneys have to agree before taking action. This arrangement can make decisions slower if the attorneys do not agree or if one is unavailable.
How long does the process take to prepare and execute an enduring power of attorney in Nova Scotia?
If the situation is straightforward, an enduring power of attorney can be prepared and signed within a few days. If there are complicated instructions, special conditions, or multiple people involved, the process may take several weeks and can require more than one meeting.
