Powers of attorney are intricately mixed into Ontario’s current law regarding wills and estates. A power of attorney is a legal document that authorizes an agent to act on the principal’s behalf in legal, financial, or personal matters. Understanding the limitations of different types of powers of attorney is essential to ensure appropriate decision-making, protect the principal’s interests, prevent misuse, comply with legal requirements, facilitate smooth transitions, and uphold the principal’s wishes.
This blog post will briefly outline the differences between the different types of powers of attorney, their creation, form, execution, and termination.
In the 1970s, the Ontario government reformed the law concerning powers of attorney under the Substitute Decisions Act. The Substitute Decisions Act created a framework for two types of powers of attorney: personal and property. It defines the process of appointing substitute decision-makers, their authority to make decisions, and their duties, ensuring that the best interests of the incapacitated individuals are upheld. It also aims to provide a structured approach to managing the affairs and welfare of those unable to do so independently while incorporating safeguards to prevent abuse or neglect of their rights.
A power of attorney for property is a continuing power of attorney, which means that the agent’s authority continues even if the principal becomes incapacitated or unable to make decisions independently. However, the document must state that it is a continuing power of attorney, and the principal’s intention to enter into a continuing power of attorney must be expressed for the power of attorney to be valid.
The Substitute Decisions Act specifically outlines the scope of the agent’s authority for a power of attorney, providing that the agent can do “anything in respect of property that the grantor could do if capable, except make a will.” The scope is extensive, but can be limited by the principal’s specifications in the power of attorney. It is not uncommon for the agent’s authority to be confined to specific property or to begin after a particular time or event, such as the principal being deemed mentally incapacitated.
The Substitute Decisions Act does not require the document to be in any specific form as long as it satisfies the requirements referred to above (i.e., the express provision of a continuing power of attorney for property). However, there are important considerations for drafting this document if two or more agents are appointed. Clear language must define the role of each agent, and if there is to be more than two, there must be a straightforward decision-making process.
It is important to note that powers of attorney must be executed in the presence of two witnesses, which cannot include the agent or their partner, the principal’s partner or child, a person whose property is under guardianship and a person under the age of 18.
Although these requirements are explicit in the legislation, the Act also grants the courts the power to look past any informalities as long as it is in the interests of the principal and their dependents to do so. Even so, it is important to follow these requirements to avoid the risk of a power of attorney for property being found invalid.
The Substitute Decisions Act provides certain situations where the power of attorney for property is terminated, including when:
- The principal is incapable of managing property, or resigns, unless a substitute is provided for in the document,
- A court appoints a guardian,
- A new document is signed, unless the document includes provisions for multiple powers of attorney, or
- The principal revokes the power of attorney.
This power of attorney involves appointing an agent to make decisions regarding the principal’s “personal care”, which can include “health care, nutrition, shelter, clothing, hygiene or safety.”
Due to the personal consequences involved, the Substitute Decisions Act limits when a principal can give a power of attorney. The Substitute Decisions Act expressly requires that the principal “has the ability to understand whether the proposed attorney has a genuine concern for the person’s welfare” and “appreciates that the person may need to have the proposed attorney make decisions for the person.” Even so, the Substitute Decisions Act prohibits anyone under the age of 16 from making decisions under this power of attorney.
Unlike a power of attorney for property, a personal power of attorney is not exercisable at any time. Instead, it is only enacted when the principal becomes incapacitated. To prevent any confusion over the agent’s authority, the legislation contains safeguards regarding when a decision can be made. Expressly, it permits decisions in two circumstances:
- when the Health Care Consent Act enables the agent to act, or
- where the agent reasonably believes the principal is incapable of making the decision, unless there is a more stringent test set out in the power of attorney.
Our experienced estate planning lawyers at Bader Law understand the intricate nuances and questions which can arise relating to the different types of powers of attorney, which is why we work closely with each client to understand their circumstances and ensure that their needs are met. With a keen eye for detail and a commitment to safeguarding your interests, our firm is dedicated to crafting power of attorney documents that reflect your wishes accurately. We also provide assistance with other legal matters involving employment law, real estate, and corporate law disputes. Contact us online or at (289) 652-9092 to schedule a confidential consultation with a member of our team.