A general power of attorney (POA) for assets in Ontario grants someone (referred to as the “attorney” or “agent”) the authority to make decisions and manage your financial and property matters on your behalf.
While a POA can be a useful legal tool, it’s important to be aware of the potential risks involved. Here are some of the risks associated with a general power of attorney for assets:
- Abuse of authority: Granting a general power of attorney means giving someone else significant control over your finances and assets. There is a risk that the appointed attorney may abuse their authority by using your assets for their personal gain, making unauthorized transactions, or mismanaging your finances.
- Lack of accountability: Without proper oversight or accountability measures, the appointed attorney may not act in your best interests. They may make decisions that are contrary to your wishes or fail to fulfill their fiduciary duty to act in your best interest.
- Financial exploitation: Elders and vulnerable individuals are particularly at risk of financial exploitation. If you grant a general power of attorney to someone who takes advantage of your trust or manipulates your assets for their benefit, it can lead to significant financial losses.
- Loss of control: By granting a general power of attorney, you relinquish control over your financial and property matters. The appointed attorney can make decisions without seeking your input, potentially leading to outcomes that do not align with your wishes or preferences.
- Incapacity concerns: If you become mentally or physically incapacitated, the appointed attorney gains immediate authority to handle your affairs. While this is the intended purpose of a power of attorney, there is a risk that the attorney may not act in your best interests or make decisions that are in line with your values and preferences. If you are incapable of revoking the POA, then, it’s effectively in force for the rest of your lifetime.
- Legal complexities: Managing someone else’s finances and assets can be legally complex, and an attorney may lack the necessary knowledge or expertise to handle certain financial matters. This can result in errors, financial losses, or legal complications.
To mitigate these risks, it’s essential to carefully consider the choice of attorney, ensure they are trustworthy and competent, and clearly outline your expectations and limitations in the power of attorney document. Regular communication, periodic reviews, and seeking legal advice can also help protect against potential risks and abuse of authority.
Brian Madigan LL.B., Broker