If you’re making a will in Ontario, you’ll be asked to appoint a power of attorney. Power of attorney allows someone to make personal care and financial decisions on your behalf should you become incapacitated. Of course, there are some nuances and details worth considering: what kind of assets can this person manage on your behalf? Who is eligible to be appointed power of attorney? This article will answer these questions and others so you can understand how powers of attorney work in Ontario.
What is a Power of Attorney?
A power of attorney is a legal document that allows you to appoint someone you trust to make decisions on your behalf. A power of attorney is not the same as a will, but it can be used to manage your finances, property and other assets.
In Ontario, every adult has the right to name an attorney or agents in a power of attorney document (also called a proxy) that allows them to make decisions for them if they are unable to do so themselves.
Who can be a power of attorney in Ontario?
Anyone who is 18 years of age or older can be a power of attorney in Ontario. The only exception would be if the person being appointed power of attorney has been found incapable due to mental illness or injury.
When signing a power of attorney, it is also necessary that two people witness the signature. They must sign the last page of the power of attorney with you. Not everyone is eligible to be a witness, however. For example, your spouse or your children cannot serve as witnesses. Other individuals who cannot witness your power of attorney include anyone under the age of 18, your attorney or your attorney’s spouse or partner.
Two types of powers of attorney in Ontario
There are two types of powers of attorney: personal care and property.
An attorney for personal care can decide on your health care, housing, and other personal matters. Without an attorney for personal care, your family will still be able to step in to make some decisions about your health. Other decisions will be out of their hands.
An attorney for property makes decisions about your financial affairs. If you do not have an attorney for property, your loved ones will need to go to court to ask to become your court-appointed guardian. They are not automatically able to make decisions for you.
As a last resort, the government may make decisions for you through the Office of the Public Guardian and Trustee.
What can a power of attorney do in Ontario?
A power of attorney can be very useful in Ontario, especially if you end up in a position where you’re not able to make your own decisions. For example, it allows them to:
- Make decisions about your care and medical treatment;
- Buy or sell property;
- Manage your financial affairs, including banking and investing; and
- Sign legal documents on your behalf (such as leases or contracts).
A power of attorney will also allow you to appoint an alternate proxy should it be necessary for the first person named in the document to step down from their position due to illness or death.
Can a power of attorney transfer money to themselves in Ontario?
In Ontario, there are restrictions on the types of financial transactions that a power of attorney can carry out. In general, the principal’s money or property cannot be transferred to themselves by either type of power of attorney.
Note that this restriction applies regardless of whether the principal is alive or dead at the time they sign their power of attorney document. This means that even if you have an enduring power of attorney in place and you become incapacitated, your agent won’t be able to transfer any of your assets to themself (or anyone else) once you are unable to make decisions for yourself anymore.
This also means that even if you die while having an enduring power of attorney in place, the agent is unable to purchase property using money from your estate. They also cannot sell any real estate or personal property without first getting permission from someone else holding one or more powers over the financial matters for those same assets (such as executors).
Take steps to understand what you’re signing
You should never sign a power of attorney unless you fully understand:
- The extent of the powers being given away;
- Who has been named as an agent (the person who will make all financial decisions on your behalf); and
- What happens once they become an agent (whether this happens automatically or if there are specific circumstances that have occurred).
If you are a power of attorney, remember that you have a lot of responsibilities as well. You have to do what is in the best interest of the principal. It seems like a huge responsibility, but with the right knowledge and advice from lawyers, you can handle this responsibility with ease. Just make sure that if there is anything which is not clear, consult your lawyer before making any decisions.
Consult with the Estate Lawyers at Derfel Estate Law on Power of Attorney Matters
Although one hopes the circumstances that lead to the use of a power of attorney never come to fruition, it is always good to be prepared. At Derfel Estate Law, our Toronto estate lawyers can help you protect the financial, health, and personal interests of yourself and your loved ones.
We provide strategic and compassionate advice and will take the time to thoroughly understand your specific concerns and desired outcome and will act accordingly while making sure all relevant parties are protected throughout the process. Call us at 416-847-3580 or contact us online to schedule a consultation.