Key Questions to Consider Before Making a Power of Attorney for Property

By Taya Mikado 

A Power of Attorney for Property (“POA for Property”) is an important tool for anyone looking to ensure their property and financial affairs are managed according to their wishes, particularly in the event they become unable to do so themselves. Whether you’re thinking about this as part of a broader estate plan or simply planning ahead, it’s worth taking the time to consider how your POA for Property should be structured — and who you trust to act on your behalf (your substitute decision maker(s) (“SDM”)).

If you’re still becoming familiar with the concept of Power of Attorney’s, Jack Fallon’s earlier post, What Are Powers of Attorney?, offers a helpful introduction. Here, we’ll take a closer look at the next step: what to consider before making a POA for Property. Specifically, I have provided eight (8) questions you may want to consider ahead of meeting with your lawyer to draft a POA for Property:

1. What Kind of POA for Property Do You Need?

There are several types of POAs for Property, each with distinct characteristics and purposes. Three common types of POAs for Property are: 

• A General Power of Attorney for Property: This POA for Property grants someone the authority to manage your property and financial affairs while you are mentally capable of managing them yourself. It is broad in scope, allowing your appointed SDM (known in legal terms as your “attorney”) to make decisions relating to your property and on your behalf. However, it automatically terminates if you become mentally incapable of managing your own financial affairs.
• A Limited or Specific Power of Attorney: This POA for Property is a type of General POA for Property which grants authority for specific tasks or time periods. For example, you might authorize someone to sign documents related to a particular real estate transaction while you are in another country or authorize them to act for a limited period of time for financial tasks/decisions. The authority granted is limited to the specified task, or limited time, and usually does not extend beyond it.
• A Continuing Power of Attorney for Property: This is the most common type of POA for Property. This POA for Property can “continue” to be effective if you become mentally incapable of managing your property and financial affairs. It is designed to ensure that your financial affairs can continue to be managed without interruption if you become incapable of managing them yourself. For a POA for Property to be “continuing,” it must explicitly state that it remains valid despite any future mental incapacity. This POA for Property is particularly important for estate planning and is the focus of this article. 

When creating a POA for Property, it is essential to clearly understand the type and scope of authority being granted to ensure it meets your needs and remains effective under the intended circumstances.

2. When Should the POA for Property Take Effect?

Your POA for Property can be drafted to take effect at different times, for instance, your POA for Property can become effective immediately (once it’s signed and witnessed properly), or if you become mentally incapable of managing your property and financial affairs.

If you choose for it to take effect immediately, your appointed SDM can begin acting on your behalf as soon as the document is properly signed and witnessed. As a result, they could go to your bank and access your accounts right away.

Alternatively, you may prefer for the POA for Property to take effect only if and when you’re no longer capable of making decisions for yourself. In that case, it’s important to clearly outline how your incapacity should be determined. You may wish to consider how you want to instruct that your incapacity be determined, this could include:

• Requiring a written assessment or letter from a licensed healthcare professional;
• Allowing your SDM to decide if they believe you’re incapable of managing your property and financial affairs, provided that they have reasonable evidentiary grounds to support their belief. Reasonable grounds may include if you are no longer able to recollect what your assets are, cannot perform basic mathematical calculations, or unable to deal with your day-to-day banking activities; and/or
• Or specifying another method that aligns with your comfort and preferences.

It’s essential to discuss your choices with your lawyer to ensure your POA for Property reflects your intentions and goals.

3. Who Should You Appoint as Your Substitute Decision Maker (Attorney)?

Choosing the right SDM is perhaps the most important decision. Your SDM will have broad authority to manage your property and financial affairs, so it is essential to select someone you trust above all else. Some of the other traits you may consider important for your SDM(s) are: 

• Someone who gets along with your family, and able to consult with them on decisions (if you would like them to do so); 
• Someone reliable – for example, who will ensure your bills are paid on time;
• Someone who is comfortable managing finances and capable of maintaining accurate bookkeeping;
• Someone who lives nearby or is able to easily visit you (logistically it can be helpful);
• And ideally, someone who gets along with the person you’ve appointed for your personal care, if they’re different people.

It may be worth asking yourself: Would I trust this person with access to all of my finances today?

4. Do You Own a Business?

If you run a business, own shares in a corporation, or have investment properties, your POA for Property might need to deal with those assets separately. In such cases, it might be wise to consider appointing different SDMs for your personal and business affairs.

Additionally, you may also want to consider whether your SDM will need the authority to vote your shares, deal with partnership interests, or manage a company. This can become complex, especially if your shareholder agreements or contracts limit what a SDM can do, so bring those documents to your lawyer when you’re meeting about your POA for Property.

The key here is to avoid surprises down the road — for you, your SDM, or your business partners.

5.Do You Support Anyone Financially?

Under Ontario law, you need to consider anyone you support or owe obligations to — such as a spouse, children, or anyone else who may rely on you financially, even occasionally.

Let your lawyer know if you:

• Provide regular or occasional financial help to anyone;
• Pay child or spousal support under a separation agreement; and/or
• Have promised or intended to support someone long-term.

Your SDM may need guidance in continuing these commitments on your behalf.

6. What About Gifts and Donations?

If you regularly give birthday gifts to grandkids or donate to charities, you might want those patterns to continue. To ensure your wishes regarding gifts and donations are carried out it’s best to include these directions in your POA for Property because Ontario’s Substitute Decisions Act, 1992 (the “SDA”) limits your SDM’s authority to make gifts on your behalf. 

7. Should Your Substitute Decision Maker (Attorney) Report to Anyone?

At law, SDMs are required to keep detailed records and consult with your supportive family and friends on decisions. But if you’d like a more oversight — say, to keep family or specific individuals informed — you can go a step further. You can:

• Require your SDM to provide informal updates to someone you trust; and/or
• Request that they consult with specific people before making big decisions.

8. Will Your SDM (Attorney) Be Compensated?

By default, SDMs in Ontario are entitled to compensation unless your POA for Property document states otherwise. The fee scale for compensation is provided for in s.40(1) of the SDA and set out in Ontario Regulation 26/95, section 1:

• 3% on capital and income receipts;
• 3% on capital and income disbursements; and
• 3/5 of 1% of the annual average value of the assets under administration as a ‘care and management fee.’ 

You may choose to stick with this, adjust it, or waive compensation entirely. 

Final Thoughts

Creating a POA for Property is an important step with significant and lasting implications. By considering these key questions in advance and preparing any responses or follow-up questions for your lawyer, you can help ensure that your intentions are clearly understood and that your financial interests are properly safeguarded.

At NIKA LAW LLP, we regularly work with clients on Powers of Attorney and estate planning. If you have questions or unique circumstances, we’re happy to walk you through your options. Book a complimentary consultation with one of our associates and see if we’re the right fit for your needs.