Tag: Power of Attorney for Property
A power of attorney (POA) is a legal document that gives someone else the authority to make decisions on your behalf. The term “attorney” refers to the person(s) that you have chosen to act on your behalf. There are three types of POA in Ontario: general POAs for property, continuing POA for property, and POA for personal care. These documents can be very useful planning tools; however, it is important to understand the differences between them so that they can be used optimally. This blog compares the three types of POAs in Ontario.
1. General Power of Attorney for Property
A general POA for property can give your attorney the right to make decisions with respect to all or some of your finances and property. Unless you expressly restrict your attorney’s powers in the POA document, they will be able to do anything that you can do concerning your property, except make a Will.
A general POA can be limited by task, by type of property, and/or by time. For example, you may want to grant a POA for the specific purpose of selling your home. If you do not want everything you own to be managed by your appointed attorney, you could limit the property that is covered by your POA. A common example is to exclude all corporate assets from your POA. You can also specify whether the general POA starts from the moment it is executed or upon a specific date or event. To ensure that the POA is used as intended and without issue, any restrictions placed on the attorney’s powers should be clearly and unequivocally set out in the POA document.
It is important to note that a general POA allows your attorney to act on your behalf only while you are mentally capable of managing your own affairs. The general POA ends and cannot be used if and when you become mentally incapable.
2. Continuing Power of Attorney for Property
A continuing or enduring POA for property is essentially the same as a general POA for property with one key difference: the continuing POA for property allows your attorney to continue acting on your behalf even after you become mentally incapable of managing your own affairs. To ensure that the POA endures beyond your incapacity, the document must be a Continuing Power of Attorney for Property or expressly state that your attorney(s) may continue to act if you become mentally incapable.
In order to make a POA for property, you must be at least 18 years old and possess the requisite level of mental capacity as described in s. 8(1) of the Substitute Decisions Act.
3. Power of Attorney for Personal Care
A POA for personal care covers decisions relating to your personal health and well-being, such as medical treatment, diet, housing, clothing, hygiene, and safety. Similar to a POA for property, the attorney for personal care will have the authority to make almost every decision related to your personal care that you would normally make for yourself unless their powers are otherwise restricted in the POA document.
Unlike a POA for property, a POA for personal care may only be used when you are not mentally capable of making the personal care decision yourself. In other words, your attorney can only step in when there is a personal care decision that you are incapable of making for yourself. Depending on the specific decision at issue, either your attorney or a health professional must determine whether you are incapable of making the decision before your attorney can act on your behalf.
In order to make a POA for personal care, you must be at least 16 years old and possess the requisite level of mental capacity as described in s.47 of the Substitute Decisions Act.
The Office of the Public Guardian and Trustee provides POA document templates, which can be found here. However, it is best to obtain legal advice when creating a POA to ensure that it is drafted in a way that will allow your attorneys to manage your property and/or personal care as you intended.
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The recent Ontario Court of Appeal decision in Dzelme v Dzelme acts as a helpful reminder that even if an attorney has standing to seek a passing of accounts, the Court may still refuse to grant the passing.
John was named as the attorney for personal care for his father, Ritvers, and sought an accounting of Ritver’s financial affairs from his brother Arnis (Ritvers’ other son) who was the attorney for property. Both John and Arnis agreed that John, given that he was an attorney for personal care, could apply under section 42(4)(1) of the Substitute Decisions Act for a passing of accounts without leave. Nonetheless, the Court of Appeal identified that even if a person has standing to apply for an accounting, it remains the discretion of the Court to order a passing of accounts.
In deciding whether to order the passing, the superior court judge made the following findings of fact: (i) both the father and mother were capable when they executed written instructions to Arnis not to produce any financial information about his affairs to John; (ii) the mother maintained this position in response to John’s motion; (iii) a capacity assessment found that the mother was capable of making her own decisions; (iv) a third brother corroborated Arnis’ evidence that he was abiding by his parent’s wishes; (v) the application judge did not doubt that Arnis was following his mother’s wishes; and, (vi) there was no reason to suspect that Arnis was acting improperly with respect to certain transactions.
On this basis, the Court of Appeal upheld the application judge’s dismissal of John’s request for an order that Arnis pass his accounts of Ritver’s property.
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It is often said that an Attorney for Property can do anything on behalf of the grantor’s behalf except make a will. This is on account of section 7(2) of the Substitute Decisions Act (the “SDA“), which provides:
“The continuing power of attorney may authorize the person named as attorney to do on the grantor’s behalf anything in respect of property that the grantor could do if capable, except make a will.” [emphasis added]
Although at first glance it would appear that the potential tasks that an Attorney for Property could complete on behalf of a grantor are almost absolute, with the Attorney for Property being able to do anything on behalf of the grantor except sign a new will, in reality the tasks that an Attorney for Property may complete relative to the grantor’s estate planning is more restrictive than this would suggest at first glance. This is because the definition of “will” in the SDA is defined as being the same as that contained in the Succession Law Reform Act (the “SLRA“), with the SLRA in turn defining “will” as including not only typical testamentary documents such as a Last Will and Testament or Codicil, but also “any other testamentary disposition“. As a result, the stipulation that an Attorney for Property can do anything on behalf of the grantor “except make a will” would include not only a restriction on the Attorney for Property’s ability to sign a new Last Will and Testament or Codicil on behalf of the grantor, but also a restriction on the Attorney for Property’s ability to make “any other testamentary disposition” on behalf of the grantor.
It is fairly common for individuals such as spouses to own real property as joint-tenants with the right of survivorship. When one joint-owner dies ownership of the property automatically passes to the surviving joint-owner by right of survivorship, with no portion of the property forming part of the deceased joint-owner’s estate. Although such an ownership structure may make sense when the property is originally purchased, it is not uncommon for circumstances to arise after the property was registered (i.e. a divorce or separation) which may make one of the joint-owners no longer want the property to carry the right of survivorship. Should such circumstances arise, one of the joint-owners will often “sever” title to the property so that the property is now held as tenants-in-common without the right of survivorship, making efforts to attempt to ensure that at least 50% of the property would form part of their estate should they predecease the other joint-owner.
Although severing title to a property is fairly straight forward while the owner is still capable, circumstances could become more complicated should the owner become incapable as questions may emerge regarding whether their Attorney for Property has the authority to sever title to the property on behalf of the grantor, or whether such an action is a “testamentary disposition” and therefor barred by section 7(2) of the SDA.
The issue of whether an Attorney for Property severing title to a property is a “testamentary disposition” was in part dealt with by the Ontario Court of Appeal in Champion v. Guibord, 2007 ONCA 161, where the court states:
“The appellants argue that the severing of the joint tenancies here constituted a change in testamentary designation or disposition and is therefore prohibited by s. 31(1) of the Substitute Decisions Act because it is the making of a will.
While we are inclined to the view that the severance of a joint tenancy is not a testamentary disposition, we need not decide that question in this case. Even if it were, we see no error in the disposition made by the application judge, because of s. 35.1(3)(a) of the Substitute Decisions Act.” [emphasis added]
Although the Court of Appeal does not conclusively settle the issue in Champion v. Guibord, the court appears to strongly suggest that they are of the position that an Attorney for Property severing a joint-tenancy is not a “testamentary disposition” within the confines of the SDA.
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Being a Power of Attorney for Property can often be a difficult and thankless job. It is not unforeseeable that, after originally accepting the job, circumstances may arise which leads the Attorney for Property to want to resign. But how do you go about actually resigning as Attorney for Property? Is it enough to simply stop acting as Attorney for Property, or to loudly scream “I quit!” to those that have caused you the frustration, or are additional steps required for the resignation to become effective?
The resignation process for an Attorney for Property is governed by section 11(1) of the Substitute Decisions Act, which provides:
“An attorney under a continuing power of attorney may resign but, if the attorney has acted under the power of attorney, the resignation is not effective until the attorney delivers a copy of the resignation to,
(a) the grantor;
(b) any other attorneys under the power of attorney;
(c) the person named by the power of attorney as a substitute for the attorney who is resigning, if the power of attorney provides for the substitution of another person; and
(d) unless the power of attorney provides otherwise, the grantor’s spouse or partner and the relatives of the grantor who are known to the attorney and reside in Ontario, if,
(i) the attorney is of the opinion that the grantor is incapable of managing property, and
(ii) the power of attorney does not provide for the substitution of another person or the substitute is not able and willing to act.”
As a result of section 11(1) of the Substitute Decisions Act, if an Attorney for Property wishes to resign from their position they must put such resignation in writing, which must then be delivered to the certain individuals, including the grantor, any other Attorneys for Property named in the document, as well as the grantor’s spouse and next-of-kin if the grantor is incapable and the Power of Attorney does not provide for a substitute Attorney for Property or the substitute is not willing or able to act. Once the resignation has been received by all of such individuals, the resignation is effective, and the individual is no longer the grantor’s Attorney for Property.
It should of course be noted that resigning as Attorney for Property would not release the individual of any liability for their historic administration of the grantor’s property. To do so, the resigning Attorney for Property would likely have to commence an Application to Pass Accounts regarding their management of the grantor’s property, or seek a release from the grantor if the grantor was still capable. This, however, is a topic for a further blog on a different day.
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