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Wednesday, November 25, 2009

Clarifying joint and alternate attorney's roles

Yesterday I spent some time on the phone with a senior banking officer from a Scotiabank branch who had customers in her office with a question. The customers were acting for their parent under an Enduring Power of Attorney. They were named as joint attorneys. They wanted to know why both of them had to sign the banking documents and why it wasn't alright for just one of them to do the banking. My banking colleagues tell me that this is a question that many customers ask.

The problem arises because the logistics of a joint arrangement are not really explained to the customers at the time the Enduring Power is prepared by the lawyer. What clients really want, in my experience, is a document that says "either/or" - in other words they want it to say that sometimes one can act as attorney and at other times the other person can take care of things. Unfortunately it doesn't work that way. If you are named as joint attorneys, all decisions must be jointly made and both of you have to sign all documents.

If you are a joint attorney, you might think this is inconvenient, but you might reconsider that if you think about your own liability. Say you and your brother are joint attorneys for your mother. Without your knowledge, your brother empties out your mother's bank account and uses the funds for personal use. When the loss is discovered, your brother insists that you were aware of it and that it was usual practice between the two of you only to get one signature on banking documents. You would be on the hook for something you didn't do. If, on the other hand, two signatures are used for everything, your brother would not be able to get away with this in the first place, much less blame it on you.

Customers often misunderstand the alternate attorney arrangement as well. Typically an Enduring Power of Attorney will name a primary or first choice person, then go on to name an alternate or second choice person. The language used is generally something like "if my primary attorney refuses or is unable to act as attorney, then my alternate attorney shall act." This does not mean that if the primary person refuses to do a particular thing on a particular day, or is out of town that day, the alternate can step in. The "refusal or inability" mentioned means a complete refusal to be the attorney at all, not a refusal to take care of one transaction.

The alternate only gets to step in if the primary person is completely out of the picture.

If you are named in any legal document, don't assume that you know what you can legally do. There is always legal liability hiding around the corner if you act for someone else in financial transactions, so it is important to clarify what your rights and responsibilities are. If you wish, you can read the law itself (in this case the Powers of Attorney Act). A good place to see Canadian law for free is

A better idea is that if you are named in a Power of Attorney and it's time for you to act, get some one-on-one legal advice before you do anything. Ask specific questions about how things work and who is entitled to do what. Also ask about the restrictions or limitations on your authority.

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