In Ontario, ensuring that a Power of Attorney (POA) is valid is a critical part of effective estate planning. A valid POA allows a designated person (the “attorney”) to make important decisions on behalf of the individual granting the authority (the “grantor”). There are three types of POAs in Ontario, each governed by different laws and serving different purposes. These include the General Power of Attorney, the Continuing Power of Attorney for Property, and the Power of Attorney for Personal Care. Understanding their differences, as well as the formal requirements for validity, can help individuals ensure that their affairs are properly managed in the event of incapacity.[1]
Types of Power of Attorney in Ontario
- General Power of Attorney
A General Power of Attorney is governed by the Powers of Attorney Act.[2] It allows an attorney to manage the grantor’s property but is only valid while the grantor is capable of making decisions. This type of POA is typically used in temporary situations, such as when the grantor is travelling or otherwise unavailable, but it ceases to be effective once the grantor becomes mentally incapable.[3]
- Continuing Power of Attorney for Property (CPOAP)
The Continuing Power of Attorney for Property is governed by the Substitute Decisions Act (SDA).[4] Unlike a General POA, this document remains effective even if the grantor becomes mentally incapable, making it essential for long-term financial management.[5]
- Power of Attorney for Personal Care (POAPC)
Also governed by the Substitute Decisions Act[6], a Power of Attorney for Personal Care allows the attorney to make decisions related to the grantor’s health care, living arrangements, and personal needs. This type of POA becomes effective only when the grantor is deemed incapable of making personal care decisions.[7]
Validity Requirements
For any POA to be valid in Ontario, the following conditions must be met:
- Capacity of the Grantor:
The grantor must have the mental capacity to understand the nature and consequences of granting a POA. While the capacity standards vary between property and personal care POAs, in all cases, the grantor must comprehend the authority they are delegating to the attorney.[8] For instance, the grantor of a CPOAP must understand the extent of their assets and that the attorney will manage these assets if they become incapable. Similarly, a grantor of a POAPC must recognize the attorney’s concern for their well-being and acknowledge that the attorney may have to make personal decisions on their behalf.
- Signing and Witnessing:
The POA must be signed by the grantor in the presence of two witnesses, who must also sign the document. Certain individuals, such as the attorney, their spouse or partner, the grantor’s spouse or partner, or minors under 18, cannot act as witnesses.[9] [10]
- Special Wording for Continuing Powers:
For a CPOAP to be valid, it must either state that it is a “Continuing Power of Attorney” or explicitly say that it remains effective even after the grantor becomes mentally incapable.[11]
Who Can Be an Attorney?
Under the Substitute Decisions Act, specific rules govern who can serve as an attorney. The attorney must be at least 18 years old for a CPOAP and at least 16 years old for a POAPC. Furthermore, individuals who provide the grantor with care services for compensation, such as healthcare providers or caregivers, cannot be appointed unless they are family members.[12]
Appointing multiple attorneys can provide oversight and accountability, but it may also lead to disagreements if the attorneys have differing opinions on key decisions.[13]
Advantages of Having a Power of Attorney
- Financial Control:
A POA for property ensures that someone trustworthy can manage the grantor’s finances in case they are unable to do so themselves. Without a valid POA, family members or friends would need to seek a court-appointed guardian, a process that can be both costly and time-consuming. As estate lawyer Suzana Popovic-Montag notes, it is far better for individuals to select their own attorney while they are capable than to have someone appointed by the courts.[14]
- Personal Care Decisions:
A POA for personal care gives the grantor peace of mind by allowing them to choose who will make important health and personal care decisions on their behalf. Without such a document, families may face limitations in making critical decisions for an incapacitated loved one.[15]
Risks of a Power of Attorney
While a POA can be a powerful tool, there are risks involved, particularly when it comes to granting authority over financial matters. A CPOAP, for example, becomes effective the moment it is signed, even if the grantor is still mentally capable. Although the grantor can place restrictions on when the attorney’s authority begins, the potential for misuse remains a concern. Which is why it is essential to choose an attorney who is trustworthy and who will act in the grantor’s best interest because they will wield significant control over the grantor’s affairs.[16]
Additionally, POAs are not immune to abuse. Attorneys have broad powers, and without proper oversight, there is always the risk that the attorney may mismanage the grantor’s assets or make decisions that do not align with the grantor’s wishes.[17]
Do You Need a Lawyer?
Though several websites containing templates for creating your own POA documents without legal assistance, however, using these is not always advisable, particularly for those with complex financial situations, business interests, or challenging family dynamics.[18] This holds true in the face of a great deal of abuse and misuse of a powerful document, especially in circumstances where there might be a successive POA document. Consulting a lawyer can help ensure that the POA accurately reflects the grantor’s wishes and complies with all legal requirements.
Comments
A valid Power of Attorney is an important part of estate planning in Ontario, ensuring that a trusted person can manage the grantor’s property and personal care in case of incapacity. By understanding the different types of POAs and meeting the legal requirements for capacity, signing, and witnessing, individuals can safeguard their affairs and reduce the likelihood of future disputes or legal complications. For those with more complex needs, seeking legal advice can provide additional protection and peace of mind.
—
[1] Ontario, “Make a power of Attorney”, online: Ontario.ca <https://www.ontario.ca/page/make-power-attorney>
[2] Powers of Attorney Act, RSO 1990, c P.20, <https://canlii.ca/t/1j2n>
[3] Iulio, Arielle Di, Hull & Hull LLP “Comparing Powers of Attorney in Ontario” (August 2021), online: <Comparing Powers of Attorney in Ontario – Hull and Hull LLP>
[4] Substitute Decisions Act, 1992, SO 1992, c 30, <https://canlii.ca/t/568d7>
[5] Supra note 3
[6] Substitute Decisions Act, 1992, SO 1992, c 30, <https://canlii.ca/t/568d7>
[7] Supra note 3
[8] Substitute Decisions Act, 1992, SO 1992, c 30, s 2, <https://canlii.ca/t/2tq#sec2>
[9] Substitute Decisions Act, 1992, SO 1992, c 30, s 10, <https://canlii.ca/t/2tq#sec10>
[10] Substitute Decisions Act, 1992, SO 1992, c 30, s 48, <https://canlii.ca/t/2tq#sec48>
[11] Substitute Decisions Act, 1992, SO 1992, c 30, s 7, <https://canlii.ca/t/2tq#sec7>
[12] Substitute Decisions Act, 1992, SO 1992, c 30, s 46, <https://canlii.ca/t/2tq#sec46>
[13] Substitute Decisions Act, 1992, SO 1992, c 30, s 7(4), <https://canlii.ca/t/2tq#sec7>
[14] Iulio, Arielle Di, Hull & Hull LLP “Comparing Powers of Attorney in Ontario”, (August 2021), online: <Comparing Powers of Attorney in Ontario – Hull and Hull LLP>
[15] Ibid
[16] Ibid
[17] Ibid
[18] Ibid
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Written by: Chhavi Monga
Posted on: November 8, 2024
Categories: Articling Weekly, Commentary, Powers of Attorney
In Ontario, ensuring that a Power of Attorney (POA) is valid is a critical part of effective estate planning. A valid POA allows a designated person (the “attorney”) to make important decisions on behalf of the individual granting the authority (the “grantor”). There are three types of POAs in Ontario, each governed by different laws and serving different purposes. These include the General Power of Attorney, the Continuing Power of Attorney for Property, and the Power of Attorney for Personal Care. Understanding their differences, as well as the formal requirements for validity, can help individuals ensure that their affairs are properly managed in the event of incapacity.[1]
Types of Power of Attorney in Ontario
A General Power of Attorney is governed by the Powers of Attorney Act.[2] It allows an attorney to manage the grantor’s property but is only valid while the grantor is capable of making decisions. This type of POA is typically used in temporary situations, such as when the grantor is travelling or otherwise unavailable, but it ceases to be effective once the grantor becomes mentally incapable.[3]
The Continuing Power of Attorney for Property is governed by the Substitute Decisions Act (SDA).[4] Unlike a General POA, this document remains effective even if the grantor becomes mentally incapable, making it essential for long-term financial management.[5]
Also governed by the Substitute Decisions Act[6], a Power of Attorney for Personal Care allows the attorney to make decisions related to the grantor’s health care, living arrangements, and personal needs. This type of POA becomes effective only when the grantor is deemed incapable of making personal care decisions.[7]
Validity Requirements
For any POA to be valid in Ontario, the following conditions must be met:
The grantor must have the mental capacity to understand the nature and consequences of granting a POA. While the capacity standards vary between property and personal care POAs, in all cases, the grantor must comprehend the authority they are delegating to the attorney.[8] For instance, the grantor of a CPOAP must understand the extent of their assets and that the attorney will manage these assets if they become incapable. Similarly, a grantor of a POAPC must recognize the attorney’s concern for their well-being and acknowledge that the attorney may have to make personal decisions on their behalf.
The POA must be signed by the grantor in the presence of two witnesses, who must also sign the document. Certain individuals, such as the attorney, their spouse or partner, the grantor’s spouse or partner, or minors under 18, cannot act as witnesses.[9] [10]
For a CPOAP to be valid, it must either state that it is a “Continuing Power of Attorney” or explicitly say that it remains effective even after the grantor becomes mentally incapable.[11]
Who Can Be an Attorney?
Under the Substitute Decisions Act, specific rules govern who can serve as an attorney. The attorney must be at least 18 years old for a CPOAP and at least 16 years old for a POAPC. Furthermore, individuals who provide the grantor with care services for compensation, such as healthcare providers or caregivers, cannot be appointed unless they are family members.[12]
Appointing multiple attorneys can provide oversight and accountability, but it may also lead to disagreements if the attorneys have differing opinions on key decisions.[13]
Advantages of Having a Power of Attorney
A POA for property ensures that someone trustworthy can manage the grantor’s finances in case they are unable to do so themselves. Without a valid POA, family members or friends would need to seek a court-appointed guardian, a process that can be both costly and time-consuming. As estate lawyer Suzana Popovic-Montag notes, it is far better for individuals to select their own attorney while they are capable than to have someone appointed by the courts.[14]
A POA for personal care gives the grantor peace of mind by allowing them to choose who will make important health and personal care decisions on their behalf. Without such a document, families may face limitations in making critical decisions for an incapacitated loved one.[15]
Risks of a Power of Attorney
While a POA can be a powerful tool, there are risks involved, particularly when it comes to granting authority over financial matters. A CPOAP, for example, becomes effective the moment it is signed, even if the grantor is still mentally capable. Although the grantor can place restrictions on when the attorney’s authority begins, the potential for misuse remains a concern. Which is why it is essential to choose an attorney who is trustworthy and who will act in the grantor’s best interest because they will wield significant control over the grantor’s affairs.[16]
Additionally, POAs are not immune to abuse. Attorneys have broad powers, and without proper oversight, there is always the risk that the attorney may mismanage the grantor’s assets or make decisions that do not align with the grantor’s wishes.[17]
Do You Need a Lawyer?
Though several websites containing templates for creating your own POA documents without legal assistance, however, using these is not always advisable, particularly for those with complex financial situations, business interests, or challenging family dynamics.[18] This holds true in the face of a great deal of abuse and misuse of a powerful document, especially in circumstances where there might be a successive POA document. Consulting a lawyer can help ensure that the POA accurately reflects the grantor’s wishes and complies with all legal requirements.
Comments
A valid Power of Attorney is an important part of estate planning in Ontario, ensuring that a trusted person can manage the grantor’s property and personal care in case of incapacity. By understanding the different types of POAs and meeting the legal requirements for capacity, signing, and witnessing, individuals can safeguard their affairs and reduce the likelihood of future disputes or legal complications. For those with more complex needs, seeking legal advice can provide additional protection and peace of mind.
—
[1] Ontario, “Make a power of Attorney”, online: Ontario.ca <https://www.ontario.ca/page/make-power-attorney>
[2] Powers of Attorney Act, RSO 1990, c P.20, <https://canlii.ca/t/1j2n>
[3] Iulio, Arielle Di, Hull & Hull LLP “Comparing Powers of Attorney in Ontario” (August 2021), online: <Comparing Powers of Attorney in Ontario – Hull and Hull LLP>
[4] Substitute Decisions Act, 1992, SO 1992, c 30, <https://canlii.ca/t/568d7>
[5] Supra note 3
[6] Substitute Decisions Act, 1992, SO 1992, c 30, <https://canlii.ca/t/568d7>
[7] Supra note 3
[8] Substitute Decisions Act, 1992, SO 1992, c 30, s 2, <https://canlii.ca/t/2tq#sec2>
[9] Substitute Decisions Act, 1992, SO 1992, c 30, s 10, <https://canlii.ca/t/2tq#sec10>
[10] Substitute Decisions Act, 1992, SO 1992, c 30, s 48, <https://canlii.ca/t/2tq#sec48>
[11] Substitute Decisions Act, 1992, SO 1992, c 30, s 7, <https://canlii.ca/t/2tq#sec7>
[12] Substitute Decisions Act, 1992, SO 1992, c 30, s 46, <https://canlii.ca/t/2tq#sec46>
[13] Substitute Decisions Act, 1992, SO 1992, c 30, s 7(4), <https://canlii.ca/t/2tq#sec7>
[14] Iulio, Arielle Di, Hull & Hull LLP “Comparing Powers of Attorney in Ontario”, (August 2021), online: <Comparing Powers of Attorney in Ontario – Hull and Hull LLP>
[15] Ibid
[16] Ibid
[17] Ibid
[18] Ibid
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