Estate Planning FAQ

What is an Ontario power of attorney?

First, it is a legal document. You must sign it with qualified witnesses. The power of attorney must also comply with certain legal requirements. You sign a power of attorney document to name an attorney. You give your attorney power to act for you.

You can create different powers of attorney in Ontario. Typically you sign one power of attorney for property and one for personal care decisions. You are called a grantor of the power of attorney. Your attorney is not a lawyer but your agent.

What is a continuing power of attorney?

A power of attorney can continue to be valid in the event a person becomes incapable. Otherwise, a regular power of attorney ceases to permit the attorney to operate as your agent.

A continuing power of attorney document requires two witnesses. You can specify it is a continuing power of attorney. You can also state your desire that the power of attorney be used if you are incapable.

What are the dangers of not having a power of attorney?

If you are incapable and have no power of attorney, the Office of the Public Guardian and Trustee steps in. This government agency must protect those who are vulnerable. All your money is turned over to the Public Guardian to protect you. If you have family or relatives, they must apply to the court. This is because they do not have your power of attorney. Someone must have a judge appoint them as the legal guardian for your property.

This court appointment process takes months and costs thousands of dollars. The government’s intrusion into your financial affairs is not always welcome. You may object. Your relatives may also be compelled to go to court to oppose the Public Guardian. Everyone will need lawyers. You’ll also need experts to satisfy judges if you are capable or not. Can you guess who is going to pay for all this? Your relatives will need to complete the legal paperwork. Medical proof of your capacity to manage your money will be required. Going to court will drain your bank account of tens of thousands of dollars.

What if you don’t have enough money to afford this battle?

No worries there. Your court-appointed guardian can decide you can no longer live in your house and then sell it. Your court-appointed guardian can put you into a care facility. Where will you go to live? I’m afraid you may not have a say. (You could have if you had chosen an attorney who would respect your wishes.) Your guardian can ship you off to “Last Chance Retirement Home”.

What if you had signed a power of attorney? Your attorney would have made decisions on your behalf. See the difference? Remember “attorney” is not another word for “lawyer”. It describes your agent/decision maker who can act for you.

Will my family fight over my money if I don’t have a power of attorney?

I see family fights over money involving elderly relatives. Those enjoying their golden years usually think they don’t have enough money to fight over. But if you have not signed a legal document to designate an attorney, your money can be wasted in legal costs.What is worse than having people fight over your money before you are gone?

It can easily happen when your relatives go to court. They can fight to determine who will be your court-appointed guardian. Fights over money can start anytime. You want a power of attorney document that is continuing. That means it is specifically set up to stay valid if you become unable to make your own financial decisions. Life goes on and your bills have to be paid.

Can I put restrictions in my power of attorney to protect myself from abuse?

You can place conditions in the power of attorney documents to have attorneys:

  • work together if you have more than one attorney
  • consult with your accountants and business advisors
  • submit annual reports and tax filings to relatives or people who are affected

Lisa was leaving for an extended vacation. She wanted her daughter, Donna, to handle her finances while she was away. Lisa can specify that Donna, as attorney, only handle her stock portfolio. Lisa could give Donna broader powers over all of her financial matters.

Lisa decided to allow Donna also to act if she became incapacitated. You can also revoke your power of attorney. You must have capacity to specifically cancel it. Usually you merely prepare a new power of attorney. You can state that you have revoked the older document.

You can also sign a written revocation with two witnesses. This is best done with legal advice. Deliver the revocation to your attorney and financial institutions, if necessary. Destroy any existing copies of the power of attorney.

Do I need independent legal advice to make a POA?

Barb cares for her mother who cannot pay her own bills. Barb wants her own lawyer to prepare her mother’s power of attorney. Barb’s mother, however, is nervous about signing any legal papers. She should consult her own lawyer to review her options.

Mom can limit the power of attorney to banking. She can make someone a joint attorney to keep a watchful eye over Barb. If you are elderly, ill or vulnerable, you need to protect yourself from possible abuse. Have documents prepared and reviewed by your lawyer. Documents that contain no restrictions become effective once they are signed and witnessed.

Tips on Powers of Attorney

Ask your attorneys to consent before you name them in your power of attorney. Always name a backup in case your first choice is unable to act. You don’t need to give a copy to your attorney in advance. Advise attorneys where your documents are stored. Your attorney must know how the documents can be accessed.

Be realistic about possible attorney abuse, mismanagement and loss of your assets. Name more than one attorney to work together if you have concerns. Are you acting as someone’s attorney? Make sure you get proper legal advice about your duties and responsibilities. Attorneys are often sued for not properly handling a person’s finances. Read more tips on powers of attorney at my blog.

What qualities do attorneys need and who are possible choices?

What should you look for in your attorney?

  • honesty
  • trustworthiness
  • able to be geographically close
  • available for consultations with financial advisors

Who should you consider for your attorney?

  • anyone you choose as executor or estate beneficiary
  • spouse or family member over the age of 18 in the same city or province
  • combination of family member and professional advisor
  • people with no conflict of interest

If you have no close friends or relatives, a public trust company or professional can act as your attorney. You can contact them for information about their terms, compensation and fee schedules.

Do financial institutions have to approve my POA?

Identity and power of attorney fraud happen every day. Abuses by attorneys also cause financial institutions headaches. They must protect clients and themselves from potential losses. They may suspect any power of attorney documents that:

  • are prepared by non-lawyers
  • are created online/computer software without legal advice
  • use old, out-of-date language and forms

In many jurisdictions, there is no mandatory form for a POA. Each and every POA must be examined by lawyers for flaws.What if your broker’s or banker’s legal department refuses to recognize your POA documents? You still have the very same problem the documents were designed to solve. Do you own real estate in Ontario? Make sure you have an up-to-date POA. It must be verified by your lawyer to be used for real estate.

Are homemade powers of attorney dangerous?

Abuse by power of attorney is common. I do not recommend that people rely on do-it-yourself POA forms or kits. Clients need to invest in a professionally prepared power of attorney.

What is the risk?

What if a client prepares the power of attorney document themselves? Such a document may be considered invalid when it is needed. When a power of attorney is used to sell or mortgage real estate, lawyers have new responsibilities. Financial institutions also will insist on their legal departments reviewing all powers of attorney. If a power of attorney does not meet the new rules for approval, you could be without one. Families of persons without valid powers of attorney can end up in costly court proceedings. Typical cases can cost tens of thousands of dollars.

What could possibly go wrong?

An attorney may try to sell a person’s house. The sale proceeds are needed to pay for nursing care. The attorney then digs up the client’s homemade POA to sell the house. However, the homemade POA does not comply with power of attorney legal requirements and the sale cannot be completed.

Why would a POA be invalid?

If you own real estate, especially in Ontario, you better know the risks. Whenever someone attempts to sell real estate with a power of attorney, lawyers must determine the validity of the POA.

Lawyers must ask questions including:

  • How was the POA prepared?
  • Was the POA prepared by a law firm that can answer questions?
  • Can a lawyer personally confirm having met the grantor who was capable when the POA was signed?
  • Are the restrictions or conditions in the POA satisfied?
  • Does the signature on the POA match other signatures available for comparison?
  • What is the relationship between the attorney and the grantor – the person granting the POA?
  • Can the witnesses be contacted?
  • How and where was the document signed?
  • Who benefits from the transaction?
  • Is the grantor available to confirm the POA was not revoked?

This is an incomplete list of questions to consider. In the above example, if the homemade power of attorney is not valid, what happens? Relatives go to court. Someone must be appointed guardian to handle the client’s financial affairs. Only a court-appointed guardian can sell property if there is no valid power of attorney.

Phone 416 769 - 9800 Email Us Email