This pandemic has highlighted the importance of having a good estate plan, which includes not only a Will, but well-drafted Powers of Attorney (POAs).
Wills address what should happen after death, whereas POAs, which are written documents, deal with who you want to make decisions on your behalf during your lifetime. In Ontario, we have two types of Powers of Attorney: Power of Attorney for Property and Power of Attorney for Personal Care.
POAs are important in case you suffer a medical emergency or illness (e.g. a stroke or COVID-19) or if you develop cognitive impairment (such as dementia) and lose mental capacity. POAs can only be used while the Grantor (the person giving the Power of Attorney) is alive.
Very critically, if you do not have POAs in place and you become mentally incapable, a person (potentially a spouse, a child or a sibling) may need to apply for guardianship in order to be able to make decisions on your behalf. Guardianship often involves going to court and can be very expensive. Plus your guardian may end up being someone you wouldn’t have wanted making decisions for you!
It is important to note that no one – not even your spouse – has an automatic right to manage your property on your behalf if you become mentally incapable. This authority can only be given under a valid POA for Property or via the guardianship process.
All Attorneys must act diligently on the Grantor’s behalf, with honesty and integrity. All Attorneys must act reasonably, in good faith, and in the Grantor’s best interests. An Attorney for Property must also keep detailed accounts demonstrating exactly what he or she has done with the Grantor’s property.
It is possible to appoint multiple persons as your Attorneys (e.g. two or more of your children), either “jointly” or “jointly and severally.” Often clients appoint at least one primary Attorney and at least one alternate, just in case the primary Attorney becomes unable or unwilling to act for whatever reason.
Prior to 2020, it was not uncommon for Grantors to appoint Attorneys who live in different cities, provinces and even countries. However, if a named Attorney is unable to physically attend where you are living or to meet with his or her co-Attorney – for example, due to pandemic travel restrictions or health concerns – then real problems could arise. Not everything can be done by phone or video, particularly if the validity of the POA or the Attorney’s identity cannot readily be confirmed. You should re-evaluate who you have appointed as your Attorneys for Property and as your Attorneys for Personal Care in light of the current situation. Could your proposed Attorney actually come and help you at present, if required? It should also be noted that appointing someone who lives in another country, particularly in the United States, can create tax and other issues (e.g. your financial advisor may be unable to take instructions relating to marketable securities from a U.S. person).
If you have not reviewed your POAs lately, we encourage you to do so. Please contact one of our Wills & Estates lawyers to update your estate plan today.