A power of attorney is a legal document by which you (called the “grantor”) appoint a person or persons (the “attorney”) to make decisions and take actions on your behalf. There are two types of Power of Attorney: a Power of Attorney for Property and a Power of Attorney for Personal Care. These documents are usually prepared in conjunction with your Will.
Power of Attorney for Property
A Power of Attorney for Property authorizes your attorney to make decisions and take actions on your behalf with respect to your assets. It is usually a very broad power, enabling your attorney to do anything in respect of your property that you could do if capable, except make a will. However, there are limitations on an attorney’s powers under both the governing legislation (the Substitute Decisions Act) and at common law. The document itself can put restrictions or conditions on the attorney’s powers.
Traditionally, there are two types of Power of Attorney for Property. A Continuing Power of Attorney for Property is effective immediately and provides that the power of attorney will continue during your subsequent incapacity. A Springing Power of Attorney for Property is only effective in the event you become incapable of managing your property.
A person is deemed incapable of managing his or her property if he or she is unable to understand the information that is relevant to making a decision or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision. Depending on what is provided for in the power of attorney document, the determination of incapacity can be made by a doctor(s) or a regulated capacity assessor.
There are also Limited Powers of Attorney for Property which authorize the attorney to make decisions and/or take actions on your behalf only with respect to specific assets or for a specified period of time. This type of Power of Attorney is most commonly used in real estate transactions where the you won’t be available at the time the agreement of purchase and sale is signed or the transaction closes.
Power of Attorney for Personal Care
A Power of Attorney for Personal Care authorizes your attorney to make decisions on your behalf with respect to your personal care. The power is only effective in the event you are deemed incapable of making personal care decisions for yourself. A person is deemed to be incapable of managing his or her personal care if he or she is not able to understand the information that is relevant to his or her own health care, nutrition, shelter, clothing, hygiene or safety, or is unable to appreciate the reasonably foreseeable consequences of a decision or lack of decision.
Often, a Power of Attorney for Personal Care includes a provision (commonly referred to as a ”DNR” ) advising your attorney that you do not want to be kept alive by heroic measures or artificial means in the event you have a serious illness, condition or disease that is either wholly or very substantially debilitating and from which, in the option of a doctor(s), there is no reasonable expectation of significant improvement or recovery.
Why Do I Need Powers of Attorney?
A Power of Attorney can only be given while you are capable of managing your property or your personal care. If you are deemed to be incapable and don’t have a valid Power of Attorney in place, your family will have to apply to the Court for a guardianship order. This is the case even if you are married and all of your assets are held jointly with your spouse. Your spouse may be able to pay your bills from your joint account, but your spouse won’t be able to sell or mortgage your family home or deal with third parties (such as Canada Revenue Agency or your employer) on your behalf without a valid Power of Attorney.
The guardianship application is a public document which will contain detailed information about your health, assets, finances and debts. Notice of the application must be served on your family members (including your parents, siblings and children) who may challenge the prospective guardian’s application. The Office of the Public Guardian and Trustee (the government body that protects mentally incapable adults) reviews every guardianship application and can oppose the application or request that conditions or restrictions be imposed on the guardian.
A guardianship proceeding can cost tens of thousands of dollars and can take several months or more. If no one is able or willing to act as your guardian of property or your guardian of person, then the Office of the Public Guardian and Trustee will act on your behalf.
Planning for incapacity is just as important as planning for death. Get in touch today for a complimentary, no obligation call to discuss your needs.