Estate Litigation Blog

Powers of Attorney - Common Myths


by Mitchell Rattner, Published: March 16, 2018

Tags: estate litigation,  estate planning,  power of attorney,  wills and estates

Last November was the Ontario Bar Association's "Make a Will Month", and I spoke at Barbara Frum Library about the benefits of having a will. While a will is an important and effective tool for directing how your property is to be distributed following your death, powers of attorney enable you to authorize someone else to act on your behalf with respect to managing your property and/or making decisions concerning your health and personal care.

I recently read an article that contained inaccurate information about powers of attorney, and decided to clarify a few common myths.

 

Myth: My power of attorney is only effective if and when I become incapable.

Fact:  Powers of Attorney for Personal Care are only effective if you are incapable. Provided you are 16 years of age or older, you are presumed capable of giving or refusing consent in respect of your health care. As long as you remain capable, you are the only one who can give or refuse consent to matters concerning your own health care. Powers of Attorney for Property are more complicated. You can make a power of attorney that only becomes effective upon your incapacity (as determined by a mechanism set out in the power of attorney). You can make a power of attorney that is effective from the moment it is signed and remains effective during any subsequent incapacity. You can make a power of attorney wth respect to all of your property, or only for a limited purpose. Commonly, powers of attorney are drafted so as to be effective from the moment of signing, and are stored at the office of the drafting lawyer, subject to a direction from client as to when the power of attorney is to be released. 

 

Myth: My elderly parent is starting to become forgetful. Therefore, I should start acting as attorney for property and personal care.

Fact: The definition of 'incapacity' is set out in the Substitute Decisions Act, as follows. A person is incapable of managing property if the person is not able to understand information that is relevant to making a decision in the management of his or her property, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision. A person is incapable of personal care if the person is not able to understand information that is relevant to making a decision concerning his or her own health care, nutrition, shelter, clothing, hygiene or safety, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision. The decision of whether to begin acting as attorney should take into account your parent's overall wellbeing. If your parent is willing, perhaps they would agree to his/her doctor performing a capacity assessment. 

 

Myth: My attorney for property can change my will.

Fact: A power of attorney may authorize the personal named as attorney to do anything on behalf of the grantor (the person who gives the power of attorney), except make/revoke a will, a codicil to a will, or a beneficiary designation with a financial institution. 

 

Myth: When I become incapable of managing my property, my children will be able to do my banking for me. Therefore, I don't need a power of attorney.

Fact: If your child walks into your bank, advises the bank representative that you are incapable, and tries to access your accounts without a power of attorney, the bank representative should not grant access to your child. The bank should have the same response whether the person seeking access is your child, spouse, friend, business partner, or a complete stranger. However, with an original properly-executed power of attorney for property, the bank should grant access to the named attorney. Alternatively, if bank accounts are put into joint ownership with a child, the child will have access to and control over the account, without the need for the child to have power of attorney. However, this arrangement carries with it several legal and practical concerns, which are beyond the scope of this blog entry. In the circumstance that you do not made a power of attorney, and you become incapable, it may become necessary for a close family member or friend to bring a Court Application to be appointed as your guardian for property. This process may be expensive, and you - if found by the Court to be incapable - would lose the right to unilaterally decide who is to manage your property (though, the wishes of a person found to be incapable may still be taken into account). 

 

Retaining a lawyer to assist you in preparing your estate planning will signifiicantly help to minimize the future likelihood of confusion, disputes, and possibly litigation among your loved ones, at a time when you may be incapable, or after you have passed away.     

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