Power of Attorneys - What You Need to Know
In Ontario, there are two types of Power of Attorneys that are commonly used:
Power of Attorney for Personal Care
A legal document that grants authority to someone else to deal with matters relating to your personal care. For example, if you are no longer able to manage yourself (most common situation is illness, mental incapacity, or post accident/comatose state), your appointed attorney or attorneys can make decisions on your behalf.
Continuing Power of Attorney for Property (General)
A legal document that grants authority to someone else to manage your affairs (such as bank accounts, investments and real property), in the event that you are unable to do so in your own capacity. It could be that you are out of town, or mentally incapable of signing on your own behalf.
Note: Power of attorneys are valid only while you are alive. They are automatically revoked on death.
Generally, we prepare power of attorneys as part of a client's estate planning, however they can be prepared separately. Sometimes, clients want to save some money - so they choose to only prepare Wills and opt not to have any power of attorneys prepared. Occasionally, they don't have anyone they trust to be appointed as their attorney.
The most common question that we are asked about power of attorneys:
Q: Do I really need to have these documents signed?
A: Such documents are not mandatory, but they are definitely recommended. Power of Attorneys are important documents.
What to keep in mind:
Requirement 1: Age of Majority
Not everyone can have power of attorneys prepared. There are some exceptions, but a grantor (the person signing the document) should be the age of majority (18).
Requirement 2: Capacity Requirements for Property POA
For continuing power of attorneys for property, a grantor must meet certain capacity requirements:
- They need to understand the nature and extent of their assets and approximate value of such assets
- They need to be aware of the obligations owed to their dependent(s), if any
- They need to be aware that their attorney(s) will be able to do anything on their behalf with respect to their assets that they could do if capable, except make a Will (of course there could be additional restrictions added to the power of attorney)
- They need to understand that they may revoke the power of attorney at any time if they meet all the capacity requirements
- They need to understand that the value of their assets may decline, unless their attorney(s) manage them prudently
- They need to understand that their attorney(s) could misuse the authority given to him/her/them, but even so, they must trust their attorney(s) completely and believe that he/she/they will discharge his/her/their duties honestly and diligently
- They will be making the power of attorney willingly and not under duress or coercion
Requirement 3: Personal Care POA Capacity
For power of attorneys for personal care, the capacity requirements are not as strict. However, a grantor must be aware that the person or people they are appointing genuinely care for their well-being.
Requirement 4: Document Security
Power of attorneys can be very useful documents to have signed, but they can also be misused by the person or people appointed as attorney(s). For that reason, it is not a good idea to give the original power of attorney document(s) to your attorney(s) for holding.
Professional Assessment
We have had cases where we could not assist with the preparation of power of attorneys, because the grantor was unable to meet the basic capacity requirements. In that case, the individual can get a formal assessment from a professional capacity assessor to determine their capacity prior to a lawyer preparing the documents.
