It's important for Canadians to include plans for a power of attorney in their future and financial planning. In today's guest blog from RBC Wealth Management, Royal Trust, learn more about choosing the right attorney for property, as well as what to do if you are chosen as one.
Did you know that who you choose to be your attorney(s) for property and for personal care is just as important as the decision to create these important documents? To protect yourself, your property and the people you care for, who you choose to act as your attorney under a power of attorney requires a lot of thought and careful consideration.
A note on terminology: The document is called a “power of attorney for property” or “power of attorney for personal care.” The individual (or trust company) appointed to act on your behalf is called the “attorney.” Depending on the province/territory, terminology may vary somewhat. A power of attorney document for property that can be used during the donor’s incapacity may be referred to as a “continuing” or “enduring” power of attorney and a power of attorney for personal care may be called a Representation Agreement or Personal Directive. In Quebec, the document it is referred to as a “protection mandate” and the person appointed to act on your behalf as the mandatary. Please check with your jurisdiction’s legislation for the appropriate term.
Part of that consideration is knowing what your options are when choosing an attorney, being aware of what your attorney can do, or what you can do if you’re acting as one.
While you’re encouraged to prepare powers of attorney for both property and personal care, the following focuses on power of attorney for property.
What are my choices?
In general, you have two options when choosing an attorney for property: An individual, and/or a trust company. (Remember: Trust companies can’t be appointed for personal care.) And, you can choose to appoint a single attorney, co-attorneys and/or alternate attorneys.
When selecting an attorney, keep these things in mind:
- If you appoint a single individual, be sure to name a back-up in the event they’re unable, unwilling or become unwilling or unable to act.
- If you appoint co-attorneys, you may be able to have them act jointly or jointly and severally.
- Jointly offers you greater protection as all decisions and actions must be made unanimously.
- Jointly and severally provides greater flexibility in that either or both attorneys may act.
- When appointing co-attorneys, select individuals who are likely to get along and agree on what your best interests are.
- When a trust company is appointed as a co-attorney with an individual, the trust company will generally insist on a joint appointment.
What qualities should my attorney possess?
A power of attorney for property is a powerful document. It empowers your attorney to do almost anything you could do with your property. Because of this, it’s unfortunately not uncommon to hear of abuses (like theft).
That’s why it’s important to choose someone who you trust to be scrupulously honest and will act in your best interests. Remember that, unlike your Will, you will be around to experience the consequences of any malfeasance on the part of your attorney.
Your attorney for property should:
- Live close by;
- Possess good judgement;
- Have the time and the inclination to act on your behalf;
- Have financial acumen, as many important financial decisions may need to be made on your behalf; and
- Have intimate knowledge of your personal situation so they can do what’s best for you.
While you do not need someone’s permission to appoint them—and they’re not obligated to accept—it’s a good idea to have a chat before to ensure that they are willing and prepared to act on your behalf. Your chosen person also needs be aware that this could be a multi-year commitment, and it may be difficult for them to retire from the role once they begin.
Your authority as an attorney for property
Knowing the responsibilities of an attorney should help guide you in choosing the appropriate person(s) or trust company for the role. Should you yourself be called upon to act as an attorney for someone you know, it’s critical that you know your duties and responsibilities so you can act in their best interest and in accordance with the law.
In the common law provinces (i.e., outside of Quebec), the duties and responsibilities of an attorney can be found in legislation and case law.* Subject to any restrictions, an attorney has broad authority; they can do pretty much anything you can with your property except make a Will.
Your duties and responsibilities when appointed
While many attorneys are aware of this broad authority, they may be less familiar with the duties and responsibilities inherent in the role.
For example, in Ontario, an attorney for property is expected to:
- Act with honesty, integrity and in good faith for your benefit.
- Explain to you what their powers as an attorney are.
- Encourage you to participate to the best of your ability in all decisions.
- Foster personal contact between you and supportive family and friends.
- Consult from time-to-time with supportive family and friends and anyone giving personal care to you.
- Put your financial needs first, followed by the needs of any dependent.
- Keep accounts of all transactions.
A similar set of duties applies in all provinces. If you, acting as an attorney, or your attorney, fail to honour the applicable responsibilities, it may constitute a breach of duty.
The bottom line
Your attorney should understand the duties and responsibilities inherent in the role. They (or you, if you’re acting as one) should have the required expertise to fulfill the role or be prepared to hire experts as required.
For example, to ensure proper records and accounts are maintained, your income tax filings are kept up-to-date and/or your assets are appropriately invested, your attorney may wish to consider hiring a lawyer, accountant, investment advisor and/or trust company to assist them.
The role of attorney for property comes with significant power and serious obligations. Your choice of attorney and the agreement to accept the role of attorney are important decisions that should not be made lightly. Taking the time to make an informed choice, and carefully weighing the decision to accept the role if appointed, can help protect you, your property and the people you care for.
For more information on legal and financial planning, see our page on planning for the future.
*For example: in Ontario, the legislation governing powers of attorney for both property and personal care is called the Substitute Decisions Act, 1992 (SDA). The SDA sets out such matters as who has capacity to give a power of attorney; who may act as an attorney; how an attorney may resign; the powers of an attorney; and, compensation for acting as attorney. It also sets out the general duties of an attorney and the expected standard of care.
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