All of us are vulnerable to conditions of physical or mental incapacity. It may result from the gradual decline in mental acuity associated with disease, such as Alzheimer’s, or occur suddenly, from accident or stroke. When such conditions of impairment do occur, the courts can appoint a representative with legal authority to make decisions regarding the management of your estate and on-going financial matters. One way to insure that a stranger does not end up making legal decisions on your behalf is through the use of a valid power of attorney.

A power of attorney is a document in which one person, (the donor), grants another person, (the attorney), full power and authority to represent him or her. It must be signed by both the donor and attorney, witnessed and preferably be notarized. In general, all powers of attorney fall into one of two categories in terms of nature of authority:

1) Matters of financial affairs, as they might arise regarding the management of personal property, including the paying of mortgages and other bills, authority over bank and investment accounts, the filing of income tax and the like.

2) Personal care decisions, which would include any and all matters dealing with health and general welfare, accommodation, nutrition, personal hygiene and physical safety.

The statutes regarding powers of attorney can vary significantly from province to province. The person granting the power of attorney can be known as the “principal”, rather than the donor. The individual receiving the power of attorney is referred to variously as the “attorney”, “attorney in fact”, “agent” or “donee”. In Quebec the power of attorney is governed by the Civil Code of that province; the power of attorney document is called a “mandate”, the term “mandatary” is used to designate the attorney and the donor is referred to as “mandator”. Some provinces require a power of attorney to be drawn up on a special legal form, whereas other provinces have restrictions on who can serve as an attorney. In British Columbia, a Representative Agreement, in which the powers of attorney for property and personal care are combined, is expected to replace the continuing power of attorney altogether.

In Ontario, three different types of power of attorney are recognized.

• A General Power of Attorney for Property takes its authority from the Power of Attorney Act. A general power of attorney grants full authority to make all decisions regarding the donor’s property, except the power to make or amend a Will. A more limited form of a general power of attorney for property may be drawn up to grant authority only for a specific period of time, or restricting an attorney to act only with respect to a particular aspect of one’s property or estate. In either case, a general power of attorney for property ends if the person who gave it becomes mentally incapable.

• A Continuing Power of Attorney for Property - sometimes known as enduring or durable power of attorney - grants authority to an attorney to continue to manage affairs in the event the donor becomes mentally incapable. A continuing power of attorney is considered an important estate planning document because it ensures the proper management of your estate in event of a future, unforeseen incapacity.

• A Power of Attorney for Personal Care has its authority in the Substitute Decisions Act. This power of attorney appoints someone to make decisions for personal care in the event the donor become incapacitated to the point of being unable to do so for his or her self. This power of attorney comes into affect only in the event of the donor’s incapacity. Because matters of personal health care are so much different from those of financial affairs, the donor might appoint an individual other than the one named as attorney for property.

Also known as a health care proxy or health care directive, these documents may be general in nature or specifically indicate personal wishes regarding the type of medical treatment the donor does or does not wish to receive, and can provide directions regarding matters such as the use of pain killers, resuscitation, organ donation and the possible continuance or withholding of life support measures in critical care situations. A power of attorney for personal care can avoid delays in emergency treatment situations and ensure that one’s wishes regarding the nature and extent of medical care are not overruled by well-meaning family members.

Currently, the provinces of Ontario, Alberta, Manitoba, Quebec, New Brunswick, Newfoundland and Nova Scotia have legislation permitting personal care powers of attorney.

Why Have A Power Of Attorney?

Periodic Absences: If one foresees a period of time in which they may be unavailable to attend to the management of their affairs, due to travel, for example, a power of attorney will ensure that a trusted individual is available to make decisions and attend to financial obligations in one’s stead. An authorized attorney should be properly instructed regarding one’s current business matters and understanding of family relationships, obligations and dependents.

Future Incapacity: The purpose of a continuing or enduring power of attorney is to provide for the management of one’s financial affairs in the possible event of personal incapacity. These situations can arise as the result of accidental injury or disease - physical or mental - age-related or otherwise. In the absence of an authorized attorney, it may be necessary to apply to the courts for the appointment of a Public Guardian or Trustee to attend to one’s affairs, a process that may take weeks or months to complete. In these cases decisions regarding one’s affairs will be made by a stranger, without consideration for what the donor’s preferences might be. Creating a continuing power of attorney gives one the opportunity to determine who will manage their affairs, and provide some specificity on how it should be done.

Who can Serve As An Attorney?

An appointed attorney can be any mentally competent person or a trust company. The attorney has a fiduciary duty to act in the best interests of the donor and his or her estate beneficiaries. A spouse is often appointed as an attorney, being someone deemed trustworthy and knowledgeable of the donor’s wishes regarding matters of property. Given that spouses often travel together, are away from home at the same time and may be involved together in serious accidents, an alternate attorney in addition to a spouse is often appointed.

The selection of attorney may depend on the nature and complexity of one’s financial affairs. Preference may be given therefore to notaries, lawyers, accountants, trust companies or other individuals of professional background. Keep in mind that someone named in a power of attorney is free to seek expert advice as they deem appropriate. If you decide that a trust company is an appropriate choice, it is necessary to speak with a trust company representative as it may have internal rules that must be complied with if it is to accept the appointment.

If more than one attorney is appointed, the powers of attorney document must say whether the attorneys need act together in all decisions (i.e. jointly) or if they may act both together and separately (jointly and severally). In the former case, one might feel that unanimity of consent will ensure that property is less likely to be mismanaged, even though there may be delays in action as a result of the necessity of having agreement between two (or more) attorneys. Otherwise, some measures might be taken to facilitate decision-making when more than one attorney is involved. If attorneys are to act jointly, for example, a majority rule provision can be stipulated in the powers of attorney document. If attorneys can act jointly and severally, their duties might be divided according to the areas of respective interest or competency.

Drafting The Power Of Attorney Document

The power of attorney document should be signed by the attorney or attorneys and the donor and preferably notarized. Following are some things to think about in preparing a power of attorney document:

• A power of attorney document may be typed or hand-written. Care should be taken to ensure legibility if it is hand-written, since the interpretation of the courts might be required in carrying the intentions of the donor.

• Make sure you identify clearly your attorney (include home address) and if related to you i.e. spouse, son or daughter.

• Specify whether the power of attorney is continuing or enduring in nature, i.e. if it may be exercised in the event of legal incapacity.

• Clearly specify any limitation you intend to the powers of attorney. What is your attorney restricted from doing or acting on? Include dates you intend the powers to begin and end, if applicable. Indicate clearly what types of decisions your attorney may be limited to making.

• Do you wish to include any specific instructions for your attorney regarding the management of property or the conducting of business affairs?

• Should your attorney make loans, from your estate, to members of your family?

• State if the power of attorney is revocable, and if so under what circumstances.

• Include instructions regarding dependents and how they are to be provided for in future. Identify charities to which donations should be made or continued.

• Indicate compensation to be paid to your attorney(s).

• Identify the family physician that will determine your competency.

• It is recommended that you consult a legal advisor to assist in the preparation of your power of attorney to ensure that it is appropriate to your individual circumstances.

Example of a continuing power of attorney for property:

I, (your name) of the (city or town) of Ontario, appoint (name of who you wish to be attorney) of the (city or town) Ontario, to be my attorney for property (my “attorney”).

(optional) If my attorney cannot act, or declines to act, or resigns, or dies, or becomes incapable of acting as attorney, I substitute (name of alternate attorney).

This power of attorney may be exercised during any legal incapacity on my part.

I authorize my attorney to act on my behalf, to do anything that I can do, if capable of managing property, except make a will.

(Place here any clauses specifying conditions or restriction on the power of attorney)

I authorize my attorney to take compensation as set out in the Substitute Decisions Act, 1992.

I revoke my previous powers of attorney. (This clause if applicable)

Date:

Signatures of attorney and donor and witnesses:

This is a sample only. Those preparing a power of attorney should always review it with their legal advisor to ensure all conditions and provisions have been properly documented.

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