The preparation of a Power of Attorney is both relatively straightforward and inexpensive. It does, however, require planning on the part of the “donor”, both with respect to the powers to be granted and the person to whom the powers are to be given. Professional assistance in the preparation and signing of a Power of Attorney is always recommended.
A Power of Attorney is a document that enables you to appoint another person to make decisions on your behalf in certain circumstances. There are two types of Powers of Attorney – one that deals with property (real estate, investments, bank accounts, etc.) and one that deals with personal care matters (medical treatment, shelter, nutrition, hygiene, etc). These documents are called, respectively, Power of Attorney for Property and Power of Attorney for Personal Care. They are sometimes also referred to as a Power of Attorney for Financial Matters or Continuing Power of Attorney, and Living Wills or Health Care Directives.
A Power of Attorney is used during a person’s lifetime. Once a person has died, any Power of Attorney which he/she has granted is void, and all matters regarding the deceased’s estate are then subject to the terms of the deceased’s Will.
The person named to act on behalf of another under a Power of Attorney is called an “attorney”, the meaning of that term being akin to “representative” or “decision maker”. When choosing an attorney, a number of factors should be taken into account. Do you trust the person implicitly? Is the person willing to take on this task? Would they be available if called upon to act? Are they close enough geographically? (Anyone out of province may be required to post a bond equivalent to the value of your assets.) Do they have the level of sophistication necessary to handle your various financial matters? Will they expect to be compensated? How many attorneys do you want to name? Do you have an alternate to your first choice? Do you want the Power of Attorney to be effective from the moment it is signed, or only upon incapacity?
A trust company can also be appointed to act under a Power of Attorney. However, trust companies require that the grantor of the Power of Attorney first meet a financial threshold. Trust companies charge fees for acting under a Power of Attorney, as can anyone, and such fees are calculated based upon the value of your estate and the management which they provide.
An attorney who charges fees is held, in law, to a higher standard of care than those who do not receive compensation. The compensated attorney must exercise the degree of care, diligence and skill that is required of a person in the business of managing the property of others while an uncompensated attorney is held to the lesser standard of care of a person of ordinary prudence conducting his or her own affairs.
Attorneys are subject to certain restrictions and obligations which are imposed, both under the common law and under statute pursuant to the Substitute Decisions Act (Ontario). An attorney must not allow his or her own personal interests to conflict with those of the donor and an attorney cannot, among other things, make a gift or dispose of the donor’s property for the benefit of anyone but the donor. The Attorney also cannot delegate his or her authority under the Power of Attorney to perform acts which are personal to the donor (such as swearing an affidavit).
The need for Powers of Attorney will only increase over time as the “boomer” generation ages. The prudent thing is to make arrangements now, while still healthy, for someone to manage both our financial and our health care matters, should we ever become unable to do so ourselves. A family faced with having to assist an incapacitated family member, without a valid Power of Attorney, will face significant delays and expense in providing proper care and assistance. With the advice of experienced professionals, Powers of Attorney can be easily prepared in order to plan for your future care.