Estate Planning

Step 4: Powers of Attorney

By Hull & Hull LLP

So, you now have your Will underway and your lawyer suggests that you also prepare documents for while you're still "above the ground", i.e. powers of attorney.  The law relating to the delegation of decision making power in Ontario is governed by the Substitute Decisions Act, 1992, S.O. 1992.  A power of attorney is a written authorization given by one person (referred to as the "donor") to another person or person(s) or entity (referred to as the "attorney").  This document empowers the attorney to do legal acts on behalf of the donor and may be unlimited to the extent that it authorizes the attorney to do anything in respect of property that the grantor could do if capable, except make a Will.  This does not mean that the power of attorney takes away the donor's right to act on his or her own behalf - rather the named attorney is authorized to share in that power.

In Ontario, powers of attorney for property are commonly drafted to survive the incapacity of the donor.  They are referred to as "continuing" powers of attorney as they "continue" in effect after the incapacity of the donor, if the document so provides.  Failure to use this language will result in an incapacity revoking the document.  Other jurisdictions use the terms "durable" or "enduring" powers of attorney. 

One issue that bears discussing is that such documents are frequently drafted to become effective immediately, i.e. once they are executed.  This often comes as a surprise to many clients, as many underestimate the immense scope of such power (and the potential for abuse, see the issue discussed here and here).  This means that the attorney can act under the power of attorney and (depending on its terms) do anything in respect of property except make a Will, from the moment the donor signs the document.  Although the document can be conditional upon incapacity (for e.g. such as a "springing" power of attorney - which only "springs to life" upon a trigger - such as incapacity), most lawyers will advise making the document effective immediately to reduce the risk of interpretation issues when reliance of the document becomes necessary.  Therefore,  it is advisable to keep possession of your executed powers of attorney and tell your attorney where it is located in the event you wish for them to rely upon it.   

In the case of decisions pertaining to your personal care, a document referred to as a power of attorney for personal care is a key component of your estate plan.  This governs decisions relating to health care, housing, nutrition, shelter, hygiene and safety.  Unlike the power of attorney for property, this document only comes into play when the grantor is incapable of making such decisions for themselves.  You must be 16 years of age or older to appoint an attorney, and the attorney may also be 16 years of age or older (as opposed to 18 years of age for the attorney for property).  Directives for health care, such as a living will, can be incorporated at this stage as well.

Sarah Hyndman Fitzpatrick

Full post as published by Toronto Estate Law Blog on December 04, 2008 (boomark / email).