Power of Attorney in Canada: What Is It, Why You Need One

09 Jun Power of Attorney in Canada: What Is It, Why You Need One

A power of attorney in Canada is a legal arrangement that allows you to appoint a person you trust to make financial or health care decisions on your behalf. This person is referred to as “the attorney” on the power of attorney document or form, but they don’t have to be an actual lawyer. Power of attorney agreements are crucial in ensuring that a person’s affairs are managed effectively when they cannot do so for themselves.

Two Types of Power of Attorney in Ontario

1. Power of Attorney for Property 

This type of power of attorney grants the attorney the authority to make financial decisions on your behalf, either when you are still mentally capable of managing your affairs (known as “general power of attorney”) or when you are no longer capable (“enduring or continuing power of attorney”).

Unless you limit your attorney’s authority, they can do almost everything you can do with your finances and property, including doing your banking, signing cheques, and buying or selling real estate in your name. They cannot make or change your will, change a beneficiary on a life insurance plan, or give power of attorney to someone else.

It’s important to know that unless you state otherwise, your attorney for property can start making decisions about your financial affairs immediately, so you may want to include a statement on your Power of Attorney Ontario Form (or “power of attorney document”) that says your attorney can only make decisions if you become incapacitated. Learn more about powers of attorney for property.

2. Power of Attorney for Personal Care

This type of power of attorney empowers your attorney to make healthcare and personal care decisions for you, such as medical treatments, living arrangements, and end-of-life decisions. Depending on where you live in Canada, power of attorney for personal care documents may be referred to as powers of attorney, personal or health directives, representation agreements, or mandates.

Power of Attorney Ontario Duties

In Ontario, your appointed power of attorney assumes the responsibility of making important decisions when you become mentally or physically incapable of doing so and ensuring that your affairs are managed smoothly and in accordance with your wishes. As a power of attorney in Ontario, duties may include managing finances, property, or personal care. 

These duties must be carried out diligently, honestly, and in your best interests. The attorney must keep accurate records, maintain confidentiality, and make decisions consistent with your wishes and values. They may be required by law to account for and explain how they are managing it.

Choosing the Right Attorney 

We cannot overstate the importance of choosing an attorney you trust implicitly, who understands your values and wishes, who is capable of making decisions in your best interest, and who is comfortable acting on your behalf — such as a family member, spouse, or close friend.

You should never feel pressured to make someone your attorney. If you are uncomfortable choosing an attorney, an estate lawyer can help you explore your options or act as your attorney.

Importance of Having a Power of Attorney

The primary advantages of having a power of attorney are practicality, flexibility, and convenience. A valid power of attorney:

• Ensures your affairs will be managed by someone you trust if you become impaired.
• It makes it clear who will be responsible for your finances and assets if you cannot do so, even temporarily.
• It makes it possible for someone you trust to make timely decisions and act quickly, ensuring your financial and personal affairs are well taken care of.
• Allows you to be as general or specific as you need — your Power of Attorney Ontario Form can be tailored to include limitations, conditions, or guidance for your attorney to follow.

Remember, if you lose your mental capacity and do not have a valid power of attorney, someone will need to get authority from the court to manage your money and property. This can be time-consuming and expensive, cause conflicts and infighting among family members, and impose undue stress and hardship on your loved ones. 

Power of Attorney Risks & Pitfalls

While the advantages of having a power of attorney in Canada certainly outweigh the risks, it’s important to know the risks so you can make choices to avoid them. Common risks include:

• Choosing the wrong attorney: If the attorney you choose is not trustworthy, this can lead to the mismanagement of your money or property, improper use of your money, or financial decisions that are not in your best interest.
• Being too specific or not specific enough on your Power of Attorney Ontario Form:
  • Not enough information or limitations in the document could lead to your finances being managed in a way you don’t agree with.
  • Your attorney must manage your affairs in the way that you direct in the document, so strict limitations may “tie their hands”, so to speak, and make it difficult to make the best possible decision.
• Appointing more than one attorney to act jointly: While having two or more attorneys can reduce the risk of fraud or mismanagement, disagreements between your attorneys could cause conflicts and lead to delays (with important consequences).
• Not keeping your power of attorney document up-to-date: If not reviewed regularly, your completed Power of Attorney Ontario Form might not meet your current needs. For example, your attorney may no longer be available, or you may end up with “competing” powers of attorney.

It’s important to remember that failing to establish power of attorney is itself a risk, as this can result in the court appointing a substitute decision-maker who may be unfamiliar with your values and wishes. 

Bottom line

While there are risks associated with power of attorney, there are also solutions built into the law to protect you. An experienced estate lawyer can help you prepare your will and power of attorney so you can protect yourself and your family from unnecessary stress and hardship. Contact the estate law specialists at Stewart Esten Law today.