.png)
As an Estate Lawyer I often emphasize the importance of preparing for the unexpected. One critical aspect of this preparation is establishing a Power of Attorney for Property. This vital tool allows you to designate someone to manage your financial affairs if you become unable to do so or just prefer the assistance. By appointing a trusted individual, you ensure that your property and assets are handled according to your wishes, whether due to incapacity or convenience.
Power of Attorney Duties and Responsibilities
The individual who creates a Power of Attorney is called the grantor. The grantor designates an individual(s), referred to as an attorney, to manage matters on their behalf. This authority is granted through a formal document, which can take effect immediately or only upon the grantor’s incapacity, depending on how it is structured.
A Power of Attorney for Property grants legal authority to a designated individual to oversee financial affairs, ensuring that bills are paid, assets are managed, and financial obligations are met. The attorney’s powers can be broad, covering tasks such as:
Paying household and personal expenses.
Managing bank accounts and investments.
Filing taxes and handling government benefits.
Buying, selling, or maintaining real estate.
Running a business.
An attorney for property is legally bound to act in the grantors best interests and follow any specific instructions outlined. They have a fiduciary duty to act diligently and honestly. They must keep accurate records of all transactions and avoid conflicts of interest.
A Power of Attorney for Property does not give authority over personal care decisions, such as medical treatment, living arrangements, or end-of-life care. Those matters fall under a separate legal document known as a Power of Attorney for Personal Care. The Power of Attorney for Property remains strictly focused on financial and asset management.
Considerations for Choosing a Power of Attorney for Property
Selecting a Power of Attorney for Property is a decision that should not be taken lightly. The individual you choose should be someone with financial literacy and a clear understanding of your wishes. Many people appoint a spouse, adult child, or a trusted friend, but it is also possible to appoint a professional such as a lawyer.
Key qualities to look for include:
Trustworthiness: This person will have significant control over your finances, so honesty is vital.
Financial Competency: Managing investments, bank accounts, and property requires a certain level of financial literacy.
Availability and Willingness: The role can be time-consuming, and your attorney must be willing to take on the responsibility. It is beneficial to have open discussions with the individuals you are considering, ensuring they understand their role and responsibilities.
Conflict Management Skills: If family dynamics are complex, appointing someone with strong conflict management skills can help prevent disputes and ensure that your financial affairs are handled smoothly.
It is advisable to name at least one backup (alternate) attorney in case the primary attorney is unable to act when needed. A contingency plan provides an added layer of security, ensuring there is always someone to step in and manage your financial affairs if required.
It is also important to note that the Power of Attorney for Property and the Power of Attorney for Personal Care will need to consult with each other from time to time which can be a point of conflict. Thus, it is important to consider how the chosen individuals will cooperate and work together. For example, your Attorney for Personal Care may want to purchase a walker or undertake renovations to make housing more accessible, but it is the Power of Attorney for Property who will make the funds available for such expenses.
Jointly or Severally Power of Attorney: What’s the Difference?
When appointing an attorney for property, you can choose to name one individual or multiple people. If multiple attorneys are appointed, they may be required to act jointly or jointly and severally:
Joint Attorneys: Must make decisions together, ensuring a system of checks and balances. However, requiring joint decision making can create practical difficulties, such as delays when signatures are needed from all attorneys.
Joint & Several Attorneys: Each attorney can act independently, which provides flexibility and efficiency. However, this arrangement also requires a high degree of trust, as one attorney could make decisions without consulting the others.
If you want to appoint more than one attorney, the choice between joint and joint and several attorneys depends on the complexity of your financial affairs, the relationships between your attorneys, and your trust in their ability to work together in your best interest.
Safeguards and Accountability
To prevent abuse of power, attorneys for property are subject to several safeguards. They must keep detailed records of all transactions and may be required to provide financial reports to beneficiaries, the grantor if capable, or even the courts in certain circumstances.
If an attorney mismanages funds or breaches their duties, legal remedies are available, including court intervention. Concerned family members or beneficiaries can request a formal financial review of the attorney’s actions through the Ontario courts. If financial abuse or mismanagement is suspected, the court has the power to order the attorney to return misappropriated funds, impose penalties, or even remove the attorney from their role.
Compensation for a Power of Attorney for Property
Under Ontario law, an attorney for property is entitled to compensation unless the Power of Attorney document states otherwise. Compensation is typically based on a percentage of the funds managed and transactions completed. The attorney may take compensation annually, monthly, or quarterly in accordance with a prescribed fee scale. The compensation is meant to recognize the time, effort, and expertise required to manage financial affairs responsibly.
If the attorney is a family member, some grantors choose to waive compensation, considering it a duty rather than a paid role. In such cases, the grantor may include specific wording in the Power of Attorney document to ensure their wishes are clear.
Professional attorneys, such as lawyers, usually charge fees for their services in accordance with industry standards. When a corporate trustee or financial institution is appointed, compensation may be set out in a separate fee agreement to reflect the complexity of managing the grantor’s estate.
If you are considering creating a Power of Attorney for Property, it is advisable to consult with an experienced Estate Lawyer. At E is for Estates we can ensure a well-drafted document is tailored to your specific needs and circumstances, providing you with peace of mind, knowing that your financial affairs will be managed with care and responsibility.
This article is intended for informational purposes only. For personalized advice tailored to your specific circumstance, please reach out to the E is for Estates team.
Erin Watson, B.A., JD
Lawyer & Notary Public
E is for Estates
Comments