In Ontario, a Power of Attorney for Assets is a legal document that allows an individual, referred to as the “grantor” or “donor,” to appoint someone else, known as the “attorney” or “donee,” to make financial and property-related decisions on their behalf.
The grantor grants the attorney the authority to act in their best interests and manage their assets if they become unable to do so themselves due to illness, incapacitation, or absence. Although, it may also be “in effect” if the grantor is just busy.
Here are some key points to understand about a Power of Attorney for Assets in Ontario:
- Types of Power of Attorney: In Ontario, there are two types of Power of Attorney for Assets: a Continuing Power of Attorney for Property and a Non-Continuing Power of Attorney for Property. A Continuing Power of Attorney remains in effect even if the grantor becomes mentally incapable, while a Non-Continuing Power of Attorney terminates if the grantor becomes mentally incapable.
- Grantor’s Capacity: The grantor must have the mental capacity to understand the nature and consequences of the Power of Attorney at the time of its creation. It is essential to create a Power of Attorney while the grantor is still capable of making decisions for themselves.
- Attorney’s Authority: The attorney’s authority can cover a wide range of financial matters, including managing bank accounts, paying bills, making investment decisions, selling or buying property, and managing other assets. The specific powers granted can be defined in the document, allowing the grantor to customize the scope of the attorney’s authority. For example, the authority could be defined and restricted to one property like 123 Main Street.
- Multiple Attorneys: The grantor can appoint multiple attorneys and specify if they can act jointly (requiring all attorneys to agree) or severally (allowing each attorney to act independently). The document should also outline the order of priority if one attorney is unable or unwilling to act.
- Witnessing and Signing: A Power of Attorney for Assets must be in writing and signed by the grantor in the presence of two witnesses. The witnesses must also sign the document to confirm that they witnessed the grantor’s signature. In the 1980’s only one witness was required. Those Powers of Attorney are still valid.
- Revocation and Termination: The grantor can revoke or cancel the Power of Attorney at any time as long as they have the capacity to do so. It can also be terminated upon the grantor’s death, bankruptcy, or divorce, unless specified otherwise in the document.
- Duties and Responsibilities: Attorneys have a fiduciary duty to act in the best interests of the grantor, manage their assets responsibly, and keep accurate records of all transactions made on their behalf. They must avoid any conflicts of interest and act with honesty, integrity, and diligence. Fiduciary duties at common law apply.
- Guardianship Applications: If someone becomes incapable of managing their assets and does not have a Power of Attorney in place, their family or friends may need to apply for guardianship through the court. This process can be time-consuming, expensive, and may not align with the grantor’s preferences.
Consultation with a lawyer or legal professional in Ontario to ensure that a Power of Attorney for Assets is properly created, executed, and meets all legal requirements makes good sense. Also, this will ensure that your witnesses are independent and that the lawyer confirms that you possessed the appropriate level of mental capacity at the time.
Brian Madigan LL.B., Broker