A. Beth Moore, B.A., LL.B.

When You Need A Lawyer: Power of Attorney for Property

Making a Power of Attorney has important legal consequences. This article outlines what a Continuing Power of Attorney for Property is and how you go about appointing an attorney.

As your lawyer, I can assist you in deciding whether you should appoint an attorney, who should be appointed and what powers your attorney(s) will have. I will then prepare the document and meet with you when you sign it to ensure that it is properly signed and witnessed.

What is a Power of Attorney?

A Power of Attorney is a legal document that gives someone else the power to act on your behalf. This person is called your “attorney.” In Ontario there are two types, the Continuing Power of Attorney for Property and the Power of Attorney for Personal Care. This article deals with the Continuing Power of Attorney for Property.

Your attorney for property has the power to manage your property in the same way that you could do so. For example, your attorney may:

• Open and close your bank accounts
• Re-direct pensions and other income
• Apply for benefits and supplementary income for you
• Collect debts owing to you
• Maintain or sell your house, cottage or vehicle
• Deal with your investments.

Your attorney cannot make or change your Will or your insurance beneficiary designations. Normally a Continuing Power of Attorney for Property takes effect as soon as it is signed and witnessed. If it contains an appropriate provision, a Continuing Power of Attorney for Property will allow your attorney to act for you if you become mentally incapable of managing your property. To be valid, Powers of Attorney must be signed in front of two witnesses who are 18 or over and are not your attorney or the spouse, partner or child of you or your attorney.

Can anyone give a Continuing Power of Attorney for Property?

You can give a valid Continuing Power of Attorney for Property if you are at least 18 years of age and mentally capable of doing so. Mental capacity in this case means you:

• know what property you have and its approximate value
• are aware of your obligations to your dependants
• understand that it is possible that your attorney(s) could misuse their authority
• know that you can revoke your Power of Attorney if you are mentally capable
• understand that mismanagement of your property by your attorney could cause you and your heirs financial loss
• know that your attorney(s) are accountable for their decisions.

It is essential that you have full trust in the integrity, good faith and capability of any person you name as your attorney.

Conditions and Restrictions

You can include conditions and restrictions in your Continuing Power of Attorney for Property. However restrictions will make it more difficult for your attorney to assist you so they should be carefully considered. For example, a restriction that it can only be used if and when you are legally incapable of managing your affairs means that your attorney will have to arrange for capacity assessments to be carried out and provide proof of your incapacity to any person who is being asked to accept the Power of Attorney before he or she will be able to use it. This will involve both expense and delay. Appointing someone you trust who will not use the powers until you request him or her to do so or are clearly unable to manage your own property is the preferable approach.

Can I appoint more than one attorney?

If you appoint two or more attorneys you must specify whether they can act separately or must act jointly. To act jointly your attorneys must agree on each decision that is made on your behalf and sign all documents that need to be signed by your attorneys. If you state that they can act “jointly and severally” they can act either individually or together. You can also name a “substitute attorney”. The substitute attorney will have the same powers as the primary attorney(s) and can act for you if none of your primary attorneys is willing or able to act. The substitute attorney will have to provide proof that each primary attorney is dead or otherwise unable to act for you.

Can I cancel my Power of Attorney?

As long as you are mentally capable of making a Continuing Power of Attorney for Property you can revoke it. This must be done by signing a written statement (a “revocation”) in front of two witnesses. Prompt notice of the revocation must be given to anyone with whom your attorney may have been dealing on your behalf.

Making a new Continuing Power of Attorney for Property revokes all existing previous ones that you have made unless the new one says otherwise.

When does my Continuing Power of Attorney for Property end?

Your power of attorney terminates:

• when you die
• when all named attorneys have died, become incapable, or resigned
• when a court appoints a guardian of the person for you
• when you revoke the Power of Attorney while you are still mentally capable.

What happens if I do not have a Continuing Power of Attorney for Property?

If you do not have a Continuing Power of Attorney for Property, and you become mentally incapable of managing your property, one of the following things could happen:

• Some of your property, such as pensions and social benefits, could be managed informally by relatives and friends
• Someone could ask the court to formally appoint him or her to manage property as your Guardian of Property”

The Office of the Public Guardian and Trustee could be appointed to manage your property. This is known as a “statutory guardianship”.

Is my attorney entitled to compensation?

You may provide in your Continuing Power of Attorney for Property that your attorney may be compensated from your estate.

Not every attorney for property wants, or is entitled to be paid for the work involved in looking after your property. An attorney for property who wishes to be compensated for managing the incapable person’s property is required to exercise the degree of care, diligence and skill that a person in the business of managing the property of others is required to exercise. This is a higher standard than the standard applied to someone who is acting as your attorney on a voluntary basis. A person acting for you without compensation is required to act honestly and in good faith and to take reasonable care in managing your affairs.

The compensation an attorney for property is allowed to take is regulated by the government and is as follows:

• 3 % of the value of the capital and income received by the attorney;
• 3% of the value of the capital and income paid by the attorney; andw
• 3/5 of 1% of the average annual value of the assets (also known as the care and management fee).

When should I make a Continuing Power of Attorney for Property?

Powers of Attorney are often prepared in conjunction with the preparation of Wills but they do not have to be done at the same time. Your Powers of Attorney will be in effect during your lifetime and end on your death. Your Will does not come into effect until you die. It is often appropriate to appoint the same person (or persons) as your Executor/Estate Trustee and as your Attorney for Property.

If you have questions about appointing an Attorney for Property please contact me.