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Published May 2, 2022

Power of Attorney: What it is and How it Works

Power of attorney gives someone the legal ability to act on your behalf, typically regarding matters of property, finances or health care.

A power of attorney is a legal tool that can help ensure your assets are properly managed if you become unable to oversee your own financial affairs. Understanding how power of attorney works can be helpful when making an estate plan.

What is a power of attorney?

A power of attorney is a legal document that gives one (or more) people that you trust the power to act on your behalf. You can choose to appoint an “attorney” (sometimes called an agent) to manage your finances and property. In this scenario, you would be known as the “grantor” or “donor.”

Depending on where you live in Canada, you may also use a power of attorney to oversee decisions about your health. This health care power of attorney is a separate document, and it may also be called a living will, a health directive or a health mandate.

Note that though the term is power of attorney, you don’t actually have to choose a professional lawyer to oversee your affairs. Many people choose a relative or close friend to be their power of attorney. Someone you know well who is responsible and who you believe will act in your best interest could potentially make a good power of attorney.

A power of attorney most commonly takes effect when a person is no longer able to act in their own interests, such as due to cognitive decline or dementia. You can also designate a power of attorney to have full or limited control over your assets for other reasons, such as traveling outside the country for a long period.

Who can act as a power of attorney?

Eligibility requirements for power of attorney differ by province and territory, so it’s always a good idea to confirm the rules of your jurisdiction with a legal professional. In general, however, an agent must:

  • Be the age of majority in your province or territory.
  • Be someone you trust.
  • Fully understand the responsibility they’re taking on.

Types of power of attorney and what they do

The official terms and requirements of a power of attorney depend on your province or territory. But when dealing with finances and property, there are two main kinds of power of attorney, general and enduring.

General power of attorney

This legal document gives your agent control over your money and property, subject to any limitations you set out. Unless you state otherwise, the person you grant power of attorney can do everything you can do with your finances and property, including making withdrawals, opening bank accounts, paying bills and even selling your real estate or possessions. That’s why it’s vital to ensure you trust your agent wholeheartedly and have complete faith they will work in your best interest.

You might use a general power of attorney if you are planning to go on an extended trip and want someone to have access to your assets so they can manage your stock portfolio, redeem any GICs, pay credit card bills or withdraw money from your savings accounts.

General powers of attorney can be “specific” or “limited.” You can set out specific dates the power of attorney will start and end, or state if it’s for a specific task, such as selling a house. However, if you become unable to manage your finances due to cognitive decline or impairment, a general power of attorney won’t be enough. Instead, you’ll need an enduring or continuing power of attorney.

Enduring or continuing power of attorney

This legal document gives someone the ability continue to manage your money and property on your behalf even if you become mentally incapable of handling your finances. This kind of power of attorney can either come into effect immediately upon being signed or only if the grantor is no longer capable of managing their own affairs.

An enduring or continuing power of attorney might be the right option if you want a trusted friend or family member to have complete freedom to access and manage your money, bank accounts and investments in case you become very ill or are unable to conduct your finances.

About health care power of attorney

Because of the variability throughout Canada in the rules and official wording needed to grant someone a power of attorney to make your health care decisions, it’s best to contact an estate lawyer to understand the laws concerning a health care power of attorney in your region. There are also affordable online services that can help you set up a health care directive based on your province’s rules.

How to give someone power of attorney in Canada

Once you have chosen someone to be your attorney, it’s a good idea to make sure they’re actually prepared to take on the responsibility — they have the right to refuse if they’re not interested or up for the task. Additionally, consider naming a substitute power of attorney in case your original agent is no longer able to act on your behalf, such as if they become ill.

You can get a family or estate lawyer to draw up the power of attorney documents. While this is the best way to ensure your power of attorney is legally binding and in line with the requirements of your jurisdiction, lawyers can be expensive. Alternatively, you could look into online services, like, that provide documents designed to conform to the rules of each province or territory.

Who can override a power of attorney?

You can cancel or change your power of attorney at any time, as long as you are mentally competent. A designated power of attorney can also refuse to act on your behalf at any time, in which case you would need to select a new legal representative. Furthermore, because powers of attorney are so dependent on your province or territory, you may need to update your documents if you move.

Despite the significant abilities granted by these documents, even a power of attorney can’t change your will, name a new beneficiary on your life insurance policy, or appoint a new power of attorney for you.

About the Author

Sandra MacGregor

Sandra MacGregor has been writing about personal finance, investing and credit cards for over a decade. Her work has appeared in a variety of publications like the New York Times, the UK Telegraph, the Washington Post, and the Toronto Star. You can follow her on Twitter at @MacgregorWrites.


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