Real Estate Council of Alberta Fundamentals Practice Exam

Which type of Power of Attorney terminates upon loss of mental capacity or death?

1. Enduring

2. Immediate

3. General

4. Special

The correct answer is: Immediate

The type of Power of Attorney that terminates upon loss of mental capacity or death is the immediate Power of Attorney. This document gives the agent authority to act on behalf of the principal, but its effectiveness is directly tied to the principal's mental competence. If the principal becomes mentally incapacitated, the immediate Power of Attorney ceases to be valid. In contrast, an enduring or continuing Power of Attorney remains effective even after the principal loses mental capacity, allowing the agent to continue making decisions on the principal’s behalf. This is often used to ensure that necessary financial and legal matters can be managed if the principal can no longer do so themselves. Additionally, general and special Power of Attorney can also have provisions that might limit their effectiveness, but they typically do not specifically cater to the circumstance of loss of mental capacity in the same manner as the immediate type. Thus, the immediate Power of Attorney is specifically designed to become void under such conditions.