POWER OF ATTORNEY AND LIVING WILLS

Power of attorney basics

A power of attorney gives someone else the right to legally act on your behalf. 

A power of attorney is a legal document that gives someone else – in certain defined situations – the ability to take action and make decisions on your behalf. The only action they can’t take is making a will on your behalf.

3 types of power of attorney

In Ontario, there are 3 different types of powers of attorney you can give someone:

  • A non-continuing power of attorney for property
  • A continuing power of attorney for property
  • A power of attorney for personal care

Why you should have a power of attorney

A power of attorney is useful when:

  • You’re going out of the country for an extended period and need someone to do your banking, pay your taxes and manage your other affairs while you’re away.
  • You become mentally or physically disabled and need someone to carry out tasks that you’re mentally or physically unable to do.

The person you appoint to act for you is called an attorney, but they do not have to be a lawyer. Most often, the person is a family member or close friend. Learn more about choosing an attorney. 

If you don’t have a power of attorney  

If you become incapable of acting on your own behalf and don’t have a power of attorney, a family member or close friend age 18 or older can apply to the court to become your “guardian of property”. A lawyer can help them with the application process. The application is reviewed by the court to determine whether your proposed guardian is trustworthy, cares about your welfare and is likely to manage your finances responsibly.

A guardian of property has the same duties and powers as an attorney under a power of attorney. The disadvantage is that the person who applies to be a guardian of your property may not be the person you would have chosen. In addition, courts often require the guardian to obtain a bond of indemnity from a bonding company before the guardianship can be finalized. This can be an onerous process. 

Naming a substitute attorney  

You can name a substitute attorney when making a Power of Attorney in case the person you choose is unable to act as your attorney. 

For example, you can name your spouse as your main attorney, but also name another person as a backup in case something happens to your spouse. 

Types of power of attorney

There are 3 types of power of attorney – each addresses a different estate planning need. ?

In Ontario, there are 3 different types of powers of attorney you can give someone:

  • A non-continuing power of attorney for property
  • A continuing power of attorney for property
  • A power of attorney for personal care

Non-continuing power of attorney for property  

This is used in specific situations for a specific length of time (for example, when you’re out of the country). You outline the specific tasks your attorney is allowed to do on your behalf, and for how long. 

A non-continuing power of attorney is automatically revoked if you become mentally incapacitated, so it’s not a substitute for a continuing power of attorney. Make sure you have a continuing power of attorney in place as well. 

Continuing power of attorney for property  

This authorizes another person to act on your behalf in financial matters if you become mentally or physically incompetent. If you are unable to act on your own behalf, your attorney can:

  • pay your bills,
  • apply for benefits you may be entitled to as a result of your disability,
  • collect pension and other income you’re entitled to,
  • monitor your investment portfolio, and
  • ensure your assets are otherwise protected. 

    You can make the power of attorney as specific as you want. Just make sure it’s broad enough for your attorney to carry out your wishes and manage your affairs effectively. This usually means giving fairly broad powers to manage your financial affairs in case of incapacity.

Power of attorney for personal care  

This lets someone else make health-care decisions on your behalf if you become incapacitated. 

These health-care decisions can be difficult, involving your quality of care and possibly your continued life support. Be sure you choose an attorney who is prepared to handle the emotional toll that these responsibilities may take. 

If the decision is about medical treatment or admission to a long-term care facility, a health professional must determine that you are incapable of these decisions before your attorney can act. 

Make a living will part of your power of attorney

As part of a power of attorney for personal care, many people include what’s known as a living will. This is a statement of wishes about what they want and don’t want their doctors to do if they are not able to express their own wishes about end-of-life health care. 

For example, many people write that they don’t want to be kept alive on life support if there is no hope they’ll recover from a bad accident or illness. Many people also state their wishes about organ donation. 

The benefit of including such a statement is that your loved ones will know what to do in a medical crisis – and they won’t have to wonder later if they did the right thing. This can be a big help to your family at a very difficult time. 

Entitlement to payment

Your attorney under a continuing power of attorney for property has a statutory right to be paid. If the power of attorney document does not address payment, your attorney will be entitled to:

  • 3% of money received by the attorney,
  • 3% of money paid out by the attorney on your behalf, and
  • 3/5 of 1% of the average annual value of the assets covered under your power of attorney.

    You can specify a different payment amount by writing it in the document. You may also not want to pay your attorney anything – such as when a close family member takes on the role without expectation of payment. Be sure to include this in the document, as they will have a right to payment otherwise. 

    Your attorney under a non-continuing power of attorney for property or a power of attorney for personal care has no statutory right to be paid. However, you can include payment terms in your power of attorney documents if you want to pay them for their services. Your attorney can also apply to a court to ask for payment for their services.

Get an legal advice

The Ontario government provides standard power of attorney forms, but you may want to have a lawyer draft a power of attorney that specifically meets your needs and circumstances. 

At the very least, consult a lawyer before signing a power of attorney. They will ensure the document clearly states the conditions under which it takes effect. 

Choosing who will act for you?

The most important decision you will make when preparing a power of attorney is who to appoint as your attorney. 

4 tips for choosing an attorney

  1. Choose someone you know well
    They should be someone who you’re reasonably sure will carry out your wishes and manage your affairs properly. A family member or close friend may be a good choice because of your close connection with them. 
  2.  Make sure they meet the requirements
    Continuing power of attorney for property – can be anyone who is age 18 or older. 

    Power of attorney for personal care – must be at least 16 years old. You cannot appoint anyone you pay for your health care, including therapy, home care, or for your living arrangements (for example, your landlord), unless they are a spouse or relative. 
  3. Consider appointing more than 1 attorney

    It may be appropriate to appoint joint attorneys, particularly if you are choosing between your children and the choice is likely to be contentious. They can all make decisions jointly on your behalf, or you can give them specific roles. For example, for a power of attorney for personal care, one person could make health-care decisions and another might look after living arrangements for you. 
  4. Appoint a backup

    You can have 1 primary person and appoint others as backups if your first choice is unavailable or unable to act on your behalf. 

A lawyer or trustee can also be your attorney

Consider making your lawyer or a trust company your attorney or one of your joint attorneys. Their expertise could be helpful in managing some or all of your affairs.