An individual “the donor” can appoint more than one person “the attorney” to make decisions and to sign legal documents for them by signing a document called a “power of attorney”. It is important to understand that the term “attorney” does not necessarily refer to a lawyer and generally doesn’t.
In addition to signing legal documents, there are other uses, particularly where a person has an illness or mobility issues permitting the attorney to deal with every day issues such as banking or paying bills.
The main benefit of a power of attorney for property is that if a person becomes mentally incapable the authority continues. That is why it is called an “enduring” or continuing power of attorney.
A power of attorney for personal care is equally beneficial since it has the effect of granting the attorney legal authority to make medical and other decisions related to healthcare if, and only if, the person becomes incapable of making their own decisions. It can also direct the person’s wishes concerning future medical treatment.
By entering into a valid power of attorney for property and personal care there is no necessity to apply to the court for the appointment of a guardian. This has already been done by the person signing the power of attorney.
Without a valid power of attorney for property or personal care, it would be necessary to have a court application to have the person declared incapable and have a person appointed as a guardian of property. This would avoid the expense and delay of a court application and possible family discord if more than one person wishes to be appointed as the guardian.
This means that the person whom you trust and feel would be best able to act in your own best interests would be selected by you and not the court. In short, the power of attorney for property and personal care is a necessary part of estate planning to satisfy the proper management of your affairs.
There are disadvantages to having a power of attorney for property and personal care.
It must be understood that in giving a person authority over your affairs there is a possibility of abuse through innocent mismanagement or intentional abuse. This is particularly true where the person becomes incapable of managing their affairs after having signed the power of attorney.
In Ontario, an attorney for property can be required to account for their dealings with the donor’s property by the donor or the Public Guardian and trustee. Alternatively, any interested person can apply to the court to obtain an order requiring the attorney to pass their accounts.
Although it is rarely found in powers of attorney in Ontario it is possible to use a “monitor” clause. This means that the donor may require the appointed attorney to report to a third person to demonstrate that their actions have been honest and to account for their administration. This is particularly important where the donor has become incapable. This means that the attorney will not be able to deal with the donor’s assets without some form of oversight.
A power of attorney for personal care can incorporate a “health care directive” to deal with appropriate medical treatment by leaving instructions in advance as to future medical decisions. This would help the attorney (substitute decision-maker) to know what the wishes of the donor were if competent. In Ontario, this is called an “advance directive”.
It is quite common to direct the healthcare attorney to not implement “heroic methods” in the event of imminent death. This is to ask the substitute decision-maker to remove medical devices that prolong the donor’s life or not have them used at the outset. One provision, however, is to say that the person wishes to be kept pain-free to the extent this can be done by the use of painkilling medication.
A major advantage of having a health care directive in place is to guide the attorney and to the family members as to the wishes of the donor at the time they were capable. We have all heard of situations where families wherein disagreement as to the treatment to be given to the dying in very emotional circumstances.
While some people do not wish to discuss this the family members and the donor need to have these crucial talks in advance of incapacity so that the chance for disagreement and family discord is minimized, if not eliminated. The importance of this discussion cannot be overemphasized!
As with all legal documents the person must have the mental capacity to make it effective. This means that the donor must have the capacity to understand the nature and purpose of the power of attorney. They must understand the nature of their property, its approximate value and understand the obligations which they owe to their dependents.
Additionally, they must understand that the value of their property may decline if the attorney does not act wisely and that the attorney may misuse the powers given to them under the power of attorney document.
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The Ontario government has recognized that “capacity assessors” can assist in determining capacity and has appointed certain individuals to make this determination. On occasion, lawyers will have a capacity assessor assist in the determination of capacity to reduce the chances of the donor’s being incapable and subject to allegations of incapacity at a later date.
In Ontario, the donor must be at least 18 years of age to sign a power of attorney for property and 16 years of age to sign a power of attorney for personal care.
As with any legal document, there are certain procedures to be followed in signing (executing) it. In Ontario, the power of attorney must be signed by the donor and witnessed by two people not connected with the donor all three of whom must sign at the same time. This is the same for the execution of a will.
There is no requirement that a lawyer is present or prepare the power of attorney however this should be the case. The Ontario government has made a precedent form but it is inadequate in many areas and should only be used in the most extreme circumstances.
Unless the power of attorney states otherwise it is valid and effective on the date it was signed. It is possible to provide for the document to become effective on the happening of a certain event such as incapacity. This is called a “springing” power of attorney. It is very important to clearly define the terms under which the power of attorney springs into effectiveness. This could lead to some confusion and generally, a springing power of attorney is not advisable. On the contrary, the power of attorney for personal care (health care directive) only takes effect when the donor is no longer capable of making health care decisions.
In selecting who should be your attorney under your power of attorney it is important to select someone whom you trust and believe has the integrity to follow your wishes honestly and competently. This is not something to be decided upon without a lot of thought!
The attorney stands in the shoes of the donor and should be trusted to make the decisions that the donor would have made if they were capable. In short, does the donor believe the attorney has sufficient knowledge of the donor’s wishes values and beliefs to determine what the donor would decide in a given situation? The donor has trust in the person chosen to make an honest and reliable decision.
It is not required that the donor choose the same person to be an attorney under the continuing power of attorney for property and the power of attorney for personal care. If they are different people it is important that they can deal with each other effectively without personality conflict.
Geography is also important. Choosing an attorney for property who lives in another jurisdiction can be problematic. The attorney for personal care should have some proximity to the donor.
More than one attorney under a power of attorney for property can be chosen, either jointly or jointly and severally. If they are jointly chosen then they must act unanimously. If they are joint and several they are each able to act independently of the other. If three attorneys are chosen it is advisable to have a “majority rule” clause so that in the event of a disagreement there is a settlement mechanism built-in.
Where one person is chosen as the attorney it is equally important to have an alternate attorney named so that in the event of incapacity of the first person to act there will be a backup attorney to carry on.
Generally, a power of attorney for property does not contain restrictions in the ability of the attorney to act. It is possible however to place restrictions on the powers given to the attorney under the power of attorney documents such as dealing only with a certain piece of real estate or bank account.
In Ontario, there are provisions for compensation in the regulations to the Substitute Decisions Act to ensure that the attorney is properly paid for their time and effort. Some reference to compensation would be advisable to be inserted in the power of attorney document.
A review of the power of attorney regularly is advisable since circumstances change and the power of attorney may be out of date. An attorney may have moved, died or become incompetent for instance. This is also true of wills.
The question of whether to give the power of attorney for property to the attorney after signing is always problematic. If they are not given the document they obviously cannot act upon it to the detriment of the donor on the other hand if they do not have the document in their possession they cannot act upon it if it is needed.
A power of attorney for property can be revoked assuming that the donor is legally capable of doing so by signing the revocation in the same manner as it was first executed, a signature date and two witnesses will be necessary. If the power of attorney is revoked it is important to notify the previously named attorney and any banks or other asset holders who might need to be aware of the revocation.
This article is not intended to be relied upon as legal advice but only to give the reader an overview of the law in Ontario applicable to powers of attorney for property and personal care. You need to consult your legal representative to determine the best procedure in your particular circumstances.
