As the second installment in our mini series on wills & estates, we will review some of the basic legal principles about powers of attorney in Ontario, why they are important and how they fit into your overall estate plan.
A will is only effective from the date of the death of the testator. People however often need assistance in managing their “estate” (their property) or their personal care while they are alive if they are unable to do so themselves. This could be because of mental infirmity or because of an accident or physical limitations.
Therefore it has become customary when making a will to also prepare two power of attorney documents in order to have a complete estate plan in place. There is a Power of Attorney for Property and a separate one called a Power of Attorney for Personal Care. These documents give the “Grantor’s” power or authority to the appointed person(s), the “Attorney”, to manage his/her affairs and property and to make care decisions such as giving legally binding consent to proposed medical treatment or withdrawal of medical treatment or life support systems.
You should carefully consider who you wish to have this authority. These two kinds of Powers of Attorney are very different. There are different rules for when they come into effect and they involve very different kinds of decision making. You can appoint one or more attorneys, and if you appoint more than one, you can decide if they have to make decisions together or can act on their own. Your attorney for property and your attorney for personal care can be the same person or different people and they can be the same person as your executor. You could consider appointing an alternate attorney(s) in case the primary one is unable or unwilling to act.
Many people consider the appointment to be a statement about who the Grantor trusts more or who is the favourite, and worry that someone will be offended if not appointed. The duties of an attorney can however be very onerous. The law requires an attorney to keep very detailed accounting records, more detailed than a lot of people realize. The law sets out various duties to consult before making decisions, and requires attorneys to always act in the best interests of the grantor, not for one’s personal benefit. There are investment rules and other limitations on what an attorney can do. There are numerous court disputes over whether the attorney kept proper accounts or made proper decisions. Once the initial glow of being appointed wears off most attorney’s find out it is a lot of work and leaves them open to complaint or second guessing by various other people with the benefit of hindsight.
You should also keep in mind that a power of attorney made in Ontario might not suffice if the “grantor” moves to another province or country.
The bottom line is that powers of attorney for property and personal care are vital parts of any good estate plan, but you should understand and discuss all of these issues with your lawyer carefully before completing them.