ESTATE PLANNING POWERS OF ATTORNEY

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1 À votre service...pour le soin de votre avenir. Depuis ESTATE PLANNING POWERS OF ATTORNEY E-5 Here for you now... Here for your future. Since A. Introduction This fact sheet is general information only. It is not legal advice. It is a general outline of the law in Ontario. If you have a legal problem, you should talk to a lawyer. B. A Power of Attorney -- Definition A power of attorney is a legal document which authorizes another person, (your attorney ) to act on your behalf. There are two types of power of attorney, one for property/financial matters and the other for personal care including medical treatment. One does not necessarily have to appoint a lawyer or barrister and solicitor as your attorney. You can appoint any mentally capable adult. It could be your spouse, a friend, a relative, a lawyer, an accountant or any other person whom you trust. You can give power of attorney to a trust company if you wish. You can appoint multiple attorneys to act together, so that one will act if the others cannot. Powers of attorney for property and powers of attorney for personal care involve different concepts and this should be dealt with separately. C. Difference Between a Power of Attorney and a Will Power of attorney is NOT the same as a will. A power of attorney can only be used during your lifetime and terminates when you die. A will deals with the disposition of your property and other assets after you die. D. Maintaining Control Appointing an attorney does not deprive you of the ability to make your own decisions about the management of your property or your personal care. You can revoke, change the conditions of or terminate a power of attorney at any time provided that you have the mental capacity to do so. Even if you are incapable of managing your own property, you may still be capable of making a power of attorney for property. E. Limiting the Power of Attorney By giving clear written instructions about its use, you can restrict the power of attorney to certain actions or to certain occasions. For example, you might want to grant someone power of attorney to buy or sell a piece of property for you if you are going to be unavailable or out of the country. Or you might grant someone ongoing power of attorney to negotiate certain securities or investment transactions when you are not available to do so yourself. CAUTION: If you have granted more than one power of attorney, you should seek legal advice to ensure that the power of attorneys work harmoniously with each other. You should know that the rules and procedures may be different in the other provinces or countries, so consult a lawyer in the province where you live. Page 1 of 6

2 F. A General Continuing Power of Attorney for Property Regardless of age or health, a general power of attorney gives another person broad power to act on your behalf if you become incapable of acting on your own. You can restrict the general power of attorney that you give, but in those areas that you do not restrict, the power of attorney can grant authority to make virtually any type of decision relating to your property that you could make yourself, EXCEPT MAKING A WILL. Generally, you can indicate that the power should be continuing, meaning that it can still be used if you become mentally incapable. If you do not have a continuing power of attorney legally executed and you become mentally incapable, your family or friends may have to go through an expensive and time-consuming legal process to get authority to manage your financial affairs for you. A general power of attorney does not give anyone authority over your personal care and should not be confused with a living will. G. Selecting the Person(s) to be Appointed as my Attorney(s) Your attorney should be someone whom you totally trust to act in your best interests even if you lose the capacity to make your own decisions. You can appoint more than one attorney if you wish, but if you do, you should stipulate how they are to make decisions: together, by majority vote or individually. The person(s) you select to handle your property should be versed in financial matters or should be astute enough to seek financial advice when required. You should talk first with the people to whom you intend to give power of attorney to make sure they are willing to act on your behalf now and in the future. H. Power of Attorney Coming Into Effect In Ontario, power of attorney can be established to come into effect only if a certain event (such as an assessment of mental incapacity) occurs or it can be structured to come into effect immediately upon its being legally executed. A general power of attorney is usually prepared to have immediate effect and contains a continuing clause so that it will remain in effect if you become mentally incapable. You should consult your lawyer in drafting the power of attorney document so as to minimize the risk of the power of attorney being abused. For instance, you might leave original executed copies of the power of attorney with your lawyer with a direction as to when it may be released. You can then inform your attorney about the conditions contained in the direction to your lawyer before any copies of the power of attorney are released to them. I. Risks in Giving Someone the Power of Attorney There is always the possibility that the power of attorney could be abused or that your assets could be mismanaged. Be certain to store any executed or notarized copies of the power of attorney in a safe place such as with your lawyer and keep a record of who has copies. If you decide to change, cancel or revoke your power of attorney at a later date, you should seek legal advice to be sure that you have done so in a legally effective manner. After you have made changes to your power of attorney, you should also notify any person or institution that your attorney may have dealt with in the past on your behalf, and retrieve and destroy all copies of the previous power of attorney if you can. Page 2 of 6

3 J. Writing your Own Power of Attorney It is not a wise idea to write your own power of attorney. When you appoint an attorney, that person or those persons will have important power over aspects of your financial affairs. The decisions that they will have to make are often complex. Further, if the power of attorney document is not properly signed, witnessed and executed, it will be invalid. A properly prepared power of attorney document sets out your intentions and ensures that your wishes will be fulfilled if mental incapacity should occur. For all these reasons, it is strongly recommended that you obtain the advice of your lawyer when developing your power of attorney document. K. Conclusion The law relating to power of attorney is complicated and involves the interaction of various statutes. For further information, two additional sources of information are attached as Appendices to this Fact Sheet: Appendix A: Powers of Attorney for Personal Care (prepared by Borden Ladner Gervais, LLP) Appendix B: Video Issues Behind Signing a Power of Attorney (Community Legal Education Ontario) Page 3 of 6

4 APPENDIX A DO YOU NEED A POWER OF ATTORNEY FOR PERSONAL CARE? The short answer is, yes. Most Ontarians should have a power of attorney for personal care that has either been released to the named attorney, or placed where the attorney may quickly gain access to it. Why so? What is Personal Care? Your attorney for personal care has the authority to make personal care decisions for you, if you become incapable of making your own decisions. Section 45 of Ontario s Substitute Decisions Act, 1992 defines personal care to include health care, nutrition, shelter, clothing, hygiene, or safety. These words cover most imaginable aspect of personal care. For practical purposes, think of personal case as falling into two broad domains: that governed by Ontario s Health Care Consent Act, 1996 (hereafter, the HCCA) and everything else. What if I don t have a Power of Attorney for Personal Care? The HCCA governs three aspects of health care; treatment (very broadly defined), admission to regulated long term care facilities (for example, Nursing Homes); and personal assistance services provided to people in such facilities. Section 21 of the Act lists the categories of people entitled to make decisions about these matters for a mentally incapable person. The list is hierarchical, so that persons described higher on the list have a higher right to make decisions that do person described lower down. An attorney for personal care with the authority to make health care decisions trumps all other deciders, except a guardian appointed by a court. Under the HCCA, in the absence of an attorney for personal care, a spouse trumps most other family members. Since most people appoint their spouse as their attorney for personal care, the power would seem to have o practical advantages. But what if both spouses are simultaneously incapable (e.g. injured in an automobile accident) or one spouse predeceases the other? In such circumstances, the HCCA s.21 list may generate perverse results. For example, the list ranks a partner ahead of other family members. Partners are defined as two people who have lived together for a least one year and have close personal relationship that is of primary importance in both persons lives. This definition is, for example, broad enough to rank a long time roommate ahead of a person s children. Also, evenly ranked deciders (e.g. all of person s children) have an equal right to act. But if one child disagrees with another, then it may be necessary to call in a public official, the Public Guardian and Trustee to make the disputed decision. More pointedly, if you want to be sure that the right people will make decisions for you if you cannot do so for yourself, and that the wrong people will not be able to make decisions, you should consider making a power of attorney for personal care. What of matters to which the HCCA does not apply? In the absence of a power of attorney for personal care often no one has the authority to make such decisions. At times this means either that people do without the best possible care, or that their families are forced to bring expensive applications for court-appointed guardianship to get the authority to make decisions. A common example is admission to a retirement home, or comparable non-regulated institution for other people. These non-regulated facilities are sometimes vastly preferable to the available regulated facilities (for example, a Nursing Home). Page 4 of 6

5 But in the absence of a power, no one may have the authority to consent to admission to an incapable person s admission to a non-regulated facility. As we move towards the provision of more and more care and treatment outside of hospitals and other traditional care institutions, there will be a correspondingly greater advantage to having a power of attorney for personal care. Finally, a power of attorney for personal care is often a good way of resolving dispute. If people are quarrelling over your care, you should consider making a power of attorney for personal care that appoints the people you want to make decisions for you. Alternatively, you might use the power as a vehicle for expressing legally binding wishes that your attorneys will be obligated to follow. Do not be surprised if your lawyer asks you to accept an assessment of capacity from a psychiatrist, or other medical professional, before he lets you sign a power that is intended to resolve a dispute. This does not necessarily mean that your lawyer has doubts about your mental capacity. Rather, it probably means that he or she wants to be sure that the power will be respected and followed if someone else (like one of the people you have excluded from acting as a decision maker) later tries to argue that the power, or a wish it contains, is invalid because you did not have the mental capacity to make it. Page 5 of 6

6 APPENDIX B The Issues Behind Signing A Power of Attorney Source The Advocacy Centre for the Elderly 2 Carlton Street, Suite 701 Toronto, On M5B 1J3 Telephone: (416) Fax: (416) Website: Cost $15.00 Content of Video The video shows three scenarios in which a (20 minutes) senior is thinking about preparing a Power of Attorney and now has some concerns about it. This video highlights important information which should be kept in mind when considering signing a Power of Attorney and what to do if you want to make changes to a Power of Attorney. Target Audience Seniors and persons involved in providing services to seniors. Suggested Uses 1. As an information session for groups. 2. Facilitate a discussion on the points in the video. 3. Used in conjunction with a group leader such as a lawyer. 4. Used in conjunction with a discussion on Wills and Living Wills Available from Community Legal Education Ontario (416) or Page 6 of 6