money Archives

Power of Attorney for Property

Posted on January 13, 2020March 22, 2023 By Joanna Pegum

A Power of Attorney for property (POAP) is a legal document that allows an individual (called the “grantor”) to appoint someone (called the “attorney”) to act on their behalf to make decisions about legal and financial affairs.

This article provides an overview of the law in provinces and territories other than Quebec (for information regarding incapacity planning in Québec, please see the article “Incapacity Planning in Québec”). Since each province and territory has separate legislation governing the creation of a POAP, appropriate legal advice should be sought in the relevant province.

Types of Powers of Attorney for Property

A POAP may be a general POAP, which allows the attorney to deal with all decisions regarding finances and property, or it may be a limited POAP, which allows the attorney to make decisions for a specific purpose or time (for example, to complete a particular transaction).

An ‘enduring’ or ‘continuing’ POAP remains in effect once the donor loses capacity. If the POAP is not specifically designated as enduring or continuing, it ceases to be effective when the donor loses capacity to manage property.

Normally, a POAP takes effect when it is signed. A ‘springing’ POAP only takes effect after a certain event or trigger (such as if the donor becoming incapable of making decisions).

Who can I name as my attorney?

When choosing an attorney, consider whether the person named is someone who can be trusted with handling money. They should be able to understand the affairs of the grantor, and be able to pick up managing them at whatever stage. An attorney must be 18 years of age or older. Some provinces have additional requirements, such as conditions that the attorney cannot be mentally incompetent, or bankrupt.

More than one person can be named as an attorney under a POAP. If multiple attorneys are named, the POAP should be clear as to whether attorneys must act together (jointly) or may act independently (jointly and severally). If there are more than two named attorneys, a POAP should be clear as to whether a majority of them may act.

While it is generally possible to appoint an attorney from another jurisdiction from a legal perspective, many practical and other issues may arise. For example, residents of the USA may not be permitted to give trading instructions on the investment account of a Canadian resident in certain situations. It is important to consult with a TEP prior to designating an attorney or attorney(s) to ensure that they are appropriate for this role.

Creating an Enduring or Continuing Power of Attorney for Property

Anyone who is 18 years of age or older and who has the necessary level of mental capacity can create an enduring or continuing POAP. Mental capacity, in this situation, requires that a grantor:

Knows what property they have and its approximate value;

– Is aware of their obligations to people (if any) who depend on them financially;

– Understands what they are giving an attorney the authority to do;

– Understands that the attorney is required to account for the decisions they make about the grantor’s property;

– Understands that, as long as they have mental capacity, they can revoke (cancel) the POAP;

– Understands that if the attorney does not manage the grantor’s financial assets properly, their value may decrease; and

Understands that there is always a chance of the attorney misusing their authority.

To create a valid enduring or continuing POAP, the document must:

– Be called an ‘Enduring’ or ‘Continuing’ Power of Attorney for Property (as appropriate) or say explicitly that it allows an attorney to continue acting if the grantor becomes mentally incapable;

– Name one or more persons to act as an attorney for property;

– Be signed and dated by the grantor; and

– Be signed by two valid witnesses who witness the document (in some provinces, it may be possible to have only one witness where that witness is a lawyer or notary public).

In certain jurisdictions, additional witnessing requirements may be in effect. For example, in British Columbia it is generally required that the attorneys execute certain documents acknowledging that they are aware of the POAP and consent to act.

Once the POAP is executed, it should be stored in a safe place where the attorney can access it quickly if needed. A POAP can also be stored with a trusted third party (such as the drafting lawyer), with specific instructions regarding when to release it.

When does a POAP take effect?

An enduring or continuing POAP takes effect immediately upon being signed and witnessed, unless the document states otherwise (i.e., unless it is a springing POAP). If the POAP is to take effect only after the grantor has become mentally incapable of managing their finances, the document must be clear about that limitation.

When does my Enduring or Continuing POAP end?

An enduring or continuing POAP ends when:

– The named attorney(s) die or become mentally incapable;

– A Court appoints a Guardian of the Property for the grantor;

– The grantor signs a new POAP while still mentally capable (this is not the automatic result of signing a new POAP in all provinces. Accordingly, the new POAP should be clear with respect to whether or not it is intended to revoke existing POAPs);

– The POAP is revoked while the grantor is still mentally capable; or

– The grantor dies (on the death of the grantor, attorneys will no longer be able to deal with bank accounts or other assets).

Will my POAP be recognized abroad?

A Canadian POAP may be valid in foreign jurisdictions, although third parties in other countries will likely require a court order to validate the POAP. To avoid any delay or minimize any concerns associated with the validity of a Canadian POAP while abroad, individuals are generally encouraged to execute Powers of Attorney in each foreign jurisdiction where property or money is situated.

In the event that arrangements have not been made to create a Power of Attorney in the foreign jurisdiction, a Canadian POAP may be acceptable. Some jurisdictions have specific wording and signing requirements for foreign POAPs to be valid. Anyone affected by this situation should seek advice from legal professionals in those jurisdictions. A TEP can direct inquiries to trusted advisors in their international TEP network.

What if I don’t have an Enduring or Continuing POAP?

A guardian (or trustee) may be appointed by the Court for individuals who become mentally incapable of managing property without a valid enduring or continuing POAP. A family member or friend may apply to a Court to be given permission to manage the individual’s assets. If family or friends do not want to be burdened with this role, they may ask a trust company to apply to the Court to be a statutory guardian. If no one else has been appointed, the Public Guardian and Trustee of the jurisdiction of residence may take on this role.

For further information or help preparing a POAP, please consult a TEP.

What is a Power of Attorney?

Posted on January 13, 2020March 25, 2020 By Joanna Pegum

A Power of Attorney (or “POA”) is a legal document by which an individual gives someone they trust (the “attorney”) the right to make decisions on their behalf if they are no longer capable of looking after their own matters. This authority may be general in nature or limited to specific actions and situations.

This article focuses on the general options available for creating a POA in Canada for provinces other than Québec. For information regarding Québec, please see the article “Incapacity Planning in Québec”. The specific rules for each province vary; please contact a TEP to discuss the rules in your province of residence.

Why have a Power of Attorney?

In personal and estate planning, a POA is generally executed when contemplating the possibility of future physical and/or mental incapacity that renders the grantor incapable of making his or her own decisions. While creating a POA is voluntary in that there is no law mandating that everyone must create one, all individuals over the age of 18 who are competent to grant a POA should consider executing one. In the event of unexpected incapacity, a POA will ensure that a person’s wishes are respected, and that carrying these wishes out is easier and less expensive for their families.

Types of Power of Attorney

Generally, there are two main types of POAs:

A continuing or enduring Power of Attorney for Property (POAP) covers financial affairs, such as managing investments, granting gifts, or borrowing money. For more information, see “I have been given Power of Attorney. What does that mean?”
A Power of Attorney for Personal Care (POAPC) (also known as a “Personal Directive”) covers personal decisions, such as housing and health care. For more information, see “I have been given Power of Attorney. What does that mean?”

How to properly execute a Power of Attorney

The law does not require the use of a lawyer’s services to create a POA. However, individuals with even modestly complicated affairs are generally advised to consult a lawyer to ensure that the POA is neither too broad nor too specific, and that the document is executed properly. A POA can be created in a few different ways:

A lawyer can draft a POA; or
A grantor can use online forms provided by reputable sources (such as forms made available by the Attorneys General for the applicable province).

Generally, a valid POA must:

Name the person the grantor has chosen to act on their behalf;
Be signed and dated by the grantor; and
Be signed and dated by two witnesses who saw the grantor signing the document.

The witnesses to a POA typically cannot include:

A grantor’s spouse, partner, child or someone treated by the grantor’s child;
The person the grantor is naming as attorney or the spouse of that person;
Anyone under 18 years of age; or
Anyone who is incapable of making their own property or personal care decisions.

Generally, there is also no requirement that these documents be registered. However, it is important to ensure that the people who need to know about the document – especially the attorney(s) – have a copy of the POA or know where to get one if needed.

What happens if there is no Power of Attorney?

In the event that an individual who does not have a valid POA is or becomes incapacitated, a family member has the right to make health care decisions or apply to become the “guardian” of their person and/or property (the person occupying this role is also known as a “trustee” or a “committee”, depending on the jurisdiction). In certain cases, someone else, such as a close friend, could apply to act for the individual in these matters. The only time the provincial government, through the office of a Public Guardian and Trustee, will act, is in situations where there is no suitable person able or willing to act on behalf of the incapacitated person.

For further information or assistance in preparing a POA please consult a TEP.

Things to Consider when Making a Will

Posted on January 12, 2020April 17, 2023 By admin

The thought of making and planning the distribution of your estate can be daunting. It can be difficult to grasp where to start or who to ask for advice. This following considerations should be taken into account when planning for and preparing a Will.

Appointing a Guardian for your Minor Child

When one parent dies, the other parent typically gets legal custody of any minor children. However, if one parent is unfit to care for the child, or if both parents die, the deceased’s family and the Courts will look to the Will to determine who should become a child’s guardian. If there is no guardian named in a Will, or if the named guardian is unwilling or incapable of acting as a guardian, the Courts will make a decision on behalf of the deceased individuals.

To avoid complications, it is wise to name guardians and alternate guardians for your minor children in your Will. It is also important to speak with potential guardians prior to appointing them, in order to ensure that they are willing and able to assume this responsibility.

Choosing the Beneficiaries of your Will

The individuals named in a Will are called “beneficiaries.” The most common types of beneficiaries are family, close friends and charities. A Will outlines the inheritance to be received by each beneficiary after a person’s death.

Value your Assets

In making a Will, it is helpful to consider and list all known assets. If there are significant assets, such as a house, property or motor vehicle, it is important to identify whether the asset is owned independently or in conjunction with someone else. With respect to real property, there are two ways in which property can be co-owned: (i) a joint tenancy, or (ii) a tenancy in common. The nature of the property ownership will impact whether or not the testator’s share of the property can be included in the Will and gifted to a beneficiary.

Specific Gifts

Many people include specifics gifts of items with sentimental value in their Wills so they can ensure that these items are given to a specific person. Even if there is little to no monetary value in the object, sometimes a small personal item will be the one which is most crucial to a beneficiary. Specific gifts may include jewelry, artwork or other family heirlooms.

Appointing an Executor

It is important to consider who should be appointed as the executor of an estate when an individual passes away. The executor is an individual who carries out the instructions in the Will and administers the estate, including paying any taxes and debts, and distributing the property in accordance with the Will. Choosing an executor is an important decision. The named individual should be trusted to carry out the testator’s wishes and instructions honestly. They should be organized and understand their responsibilities as an executor.

For further information or assistance in drafting a Will, please consult a TEP.