What Are Powers of Attorney?
Authored by Jack Fallon
While Wills govern what happens after your death, Power of Attorney documents (or “POAs”) affect what happens during your life. Specifically, POAs grant authority to another person (an “attorney”) to make decisions on your behalf.
The Substitute Decisions Act (1992, S.O. 1992, c. 30) uses the term “attorney” to refer to a person who can make decisions on behalf of another person. This term can be confusing – particularly as many lawyers outside of Canada are also called “attorneys” – so we prefer to use the term “substitute decision maker” or “SDM” instead.
POAs can be executed in respect of property, and in respect of personal care. For each of these types of POA documents, a grantor can name one or more people (or a trust company or professional trustee, for a POA for property) to be their substitute decision maker(s). Once the POA document becomes effective, the substitute decision maker can step into the grantor’s shoes and make decisions as if they themselves are the grantor.
A POA can become effective on the day of signing, or upon some condition being satisfied. For example, grantors commonly choose to have their POAs become effective only after the grantor loses capacity to make decisions for themselves. The incapacity of the grantor can be determined by a certified capacity assessor or other healthcare practitioner, or by the substitute decision maker — it depends on how the grantor instructs their POA to be written.
While some people may lose decisional capacity after a traumatic event (e.g. after a serious head injury), most people tend to lose decisional capacity gradually, over time. You may be glad to know, then, that the Substitute Decisions Act requires substitute decision makers to make decisions that align with the grantor’s wishes (if known) and also to consult with supportive family and friends of the grantor, when making decisions on the grantor’s behalf.
While the authority granted under a POA is generally very broad, there are a few limitations. Substitute decision makers for property cannot make changes to the grantor’s Will, and cannot change beneficiary designations on registered investments (such as RRSPs and TFSAs). Substitute decision makers for personal care cannot consent to Medical Assistance in Dying (MAiD). If a grantor wishes, they can put other limits on their substitute decision maker as well.
POAs are, in our view, essential for all adults, because anyone can lose capacity in an instant. Once a person loses their decisional capacity, they will most likely fail to meet the required test to make or grant a POA.
If a person loses capacity and has not executed POA documents, it is still possible for someone to become a substitute decision maker for that person by applying to the court to become a guardian. A court will not lightly give someone power to make decisions for another person, so guardianships require more time and effort — and consequently more money — to obtain. Guardianship applications can also be invasive of the incapable person’s privacy, which can be stressful for the applicant and family members as well. This can all be avoided by having POAs in place.
If you or someone you care about would benefit from executing POAs, or if a guardianship application is required for someone in your life, we would be happy to give you advice tailored to your particular circumstances.