A power of attorney is a legal document. It gives someone else — in certain defined situations — the legal ability to act and make decisions for you. In Ontario, the only action they can’t take is making a will on your behalf.
The person you appoint to act for you is called an attorney, but they do not have to be a lawyer. In many cases, the person is a family member or close friend. It’s a good idea to put a power of attorney in place while you are healthy, on your own terms, before any issues arise that could affect your ability to act for yourself. Talk to your family and your financial advisor about your plans so you’ll be prepared.
On this page you’ll find
What is a power of attorney?
A power of attorney (often referred to as POA) is a legal document that gives someone else the right to make decisions on your behalf. For example, illness or disability may prevent you from being able to manage your affairs yourself. The person does not have to be a lawyer to be your attorney. It could be a friend, a lawyer, or a trust company.
A power of attorney gives authority to another person to act in your interest. You choose the criteria that would trigger that transition under the terms of your POA. Making a power of attorney is voluntary.
Read this Ontario government guide for more detailed information about powers of attorney.
Ontario also has videos that explain powers of attorney.
What are the types of power of attorney?
In Ontario, there are various types of powers of attorney you can give someone. Each type can address a different estate planning need.
1. Non-continuing power of attorney for property
A non-continuing power of attorney is used in specific situations for a specific length of time. For example, if you’re out of the country. You outline the specific tasks your attorney is allowed to do on your behalf, and for how long.
A non-continuing power of attorney is automatically revoked if you become mentally incapacitated. It’s not a substitute for a continuing power of attorney. You should consider making sure you have a continuing power of attorney in place as well.
2. Continuing power of attorney for property
A continuing power of attorney for property authorizes another person to act on your behalf in financial matters. The document continues to be valid when you no longer have mental capacity. This is why it is called “continuing” power of attorney.
It can be effective immediately when it’s signed. Or there can be a provision or triggering event in the document directing that it comes into effect on a specific date or event. Very often the event is mental incapacity.
If you are unable to act on your own behalf, your attorney will be able to manage your financial affairs. The person can:
- Pay your bills.
- Apply for benefits you may be entitled to because of your disability.
- Collect pension and other income you’re entitled to.
- Monitor your investment portfolio and ensure your assets are otherwise protected.
There are issues you should consider when making a power of attorney for property which include:
- What will trigger the power of attorney to come into effect. And what proof will the attorney have to present to show that the power of attorney is effective and that they have authority to act.
- Whether the power of attorney is limited or grants broad authority for all financial matters.
3. Power of attorney for personal care
A power of attorney for personal care lets someone else make healthcare decisions on your behalf if you become incapacitated.
These healthcare decisions can be difficult. They involve your quality of care and possibly decisions about the use of life support in your care. Be sure you choose an attorney who is prepared to handle the emotional toll these responsibilities may take.
For decisions about medical treatment or admission to a long-term care facility, a health professional can be involved. They determine if you are incapable of making these decisions on your own before your attorney can act.
Power of attorney for personal care must be at least 16 years old. You cannot appoint anyone you pay for your health care, including therapy, home care, or for your living arrangements (for example, your landlord), unless they are a spouse or relative.
Why should you have a power of attorney?
Having a power of attorney can be a good thing to bring you and your family peace of mind. A power of attorney can be useful in several different situations, including if:
- You’re out of the country for an extended period and need someone to do your banking, pay your taxes and manage your other affairs only while you’re away.
- You are in an unexpected accident and need someone to manage your financial affairs while you are not capable of doing so.
- You are suffering from cognitive decline and are no longer able to make investment decisions for yourself.
What happens if you don’t have a power of attorney?
It’s not always possible to predict when or why you would need a power of attorney. An unexpected event could happen, like an accident, that leaves you incapacitated, either temporarily or permanently. But it’s useful to think of why you should have a power of attorney based on what might happen if you don’t.
Consider what could happen if you become incapable of acting on your own behalf and don’t have a power of attorney. A family member or close friend, aged 18 or older, will need to apply to the court to become your “guardian of property” which is a time-consuming and expensive process. The person who becomes your guardian of property may, or may not, be who you would have chosen to be your power of attorney.
It’s a good idea to put a power of attorney in place while you are healthy, on your own terms, before any issues that could affect your ability to act for yourself arise.
Learn more on how to choose the right person to act as your attorney.
What payment is involved in power of attorney?
Payment for your power of attorney depends on the type of power of attorney you have.
A continuing power of attorney for property has a statutory right to be paid. If the power of attorney document does not address payment, your attorney is entitled to:
- 3% of money received by the attorney.
- 3% of money paid out by the attorney on your behalf.
- 3/5 of 1% of the average annual value of the assets covered under your power of attorney.
You can specify a different payment amount by writing it in the legal document. Remember to include a specific payment amount in the power of attorney document. Otherwise they will have a right to the default payment entitlement.
Under a non-continuing power of attorney for property or a power of attorney for personal care there is no statutory right to be paid. However, you can include payment terms in your power of attorney documents if you want to pay them for their services. Your attorney can also apply to a court to ask for payment for their services.
The Ontario government provides standard power of attorney forms, but you may want to have a lawyer draft a power of attorney that specifically meets your needs and circumstances. At the very least, consult a lawyer before signing a power of attorney. They will ensure the document clearly states the conditions under which it takes effect.
How do you choose a power of attorney?
The most important decision you will make when preparing a power of attorney is who to appoint as your attorney. Here are four tips for choosing a power of attorney:
1. Choose someone you know well
They should be someone who you’re reasonably sure will carry out your wishes and manage your affairs properly. A family member or close friend may be a good choice because of your close connection with them.
2. Consider whether they are right for the role
Before appointing someone, make sure you are confident that they are:
- Willing to take on the role.
- Financially literate and responsible with money.
- Someone who will act in your best interests.
- Someone with the time to dedicate to the role.
If you have any doubts about the motive or abilities of the person, this is a sign they should not be chosen as a power of attorney.
3. Make sure they meet the requirements
Continuing power of attorney for property can be anyone who is age 18 or older.
4. Consider appointing more than one attorney
It may be appropriate to appoint joint attorneys. Particularly if you are choosing between your children and the choice is likely to be contentious. Or if you think having the oversight of a second person would be advantageous. They can all make decisions jointly on your behalf, or you can give them specific roles.
The appointment can be joint in that they both have to agree on a decision. Or it can be joint and allow them to make decisions together or each on their own.
The disadvantage of a joint power of attorney is sometimes there can be delays or deadlocks if the two individuals are not in agreement.
5. Appoint a backup
You can have one primary person and appoint others as backups if your first choice is unavailable or unable to act on your behalf.
A LAWYER OR TRUSTEE CAN ALSO BE YOUR ATTORNEY
Consider making your lawyer or a trust company your attorney or one of your joint attorneys. Their expertise and impartiality could be helpful in managing some or all of your affairs.
How can you change your power of attorney?
You can change or revoke a power of attorney, if you are 16 years of age or older and are mentally capable.
Some reasons you may wish to change a power of attorney could include:
- The person you designated died.
- You or the person you designated moved away.
- You are no longer confident the person you designated is right for the role.
In Ontario, you can cancel or revoke a power of attorney by either:
- Making a written statement called a ‘revocation’ or a Notice of Revocation. There is no special form you need to use. Or,
- Working with a lawyer who can help you prepare the statement and ensure it follows the law.
The statement needs to be dated. It must also be signed, and witnessed by two people, one of whom is a lawyer or paralegal.
It’s a good idea to review your power of attorney every few years, to ensure you have chosen the right person for your needs. Make time for it as part of your financial and legal planning.
A power of attorney is a powerful legal document. It gives someone else the legal ability to act and make decisions for you. A power of attorney can help manage your affairs if you leave the country for an extended period or if you become incapacitated. When choosing a power of attorney for property as part of your estate plan, remember:
- Make sure you discuss the role with them, so they know your wishes and what is involved.
- Select someone you know well as your attorney. Make sure they meet age requirements.
- Consider choosing more than one attorney and name a backup.
- You can choose a lawyer or trustee to be your attorney.