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What is a power of attorney (POA) and when would I need one?
A power of attorney (POA) is a legal document that gives someone you trust the authority to make financial or healthcare decisions for you while you are still alive when you're not capable. If you get sick or if your mental abilities decline, you should plan ahead and ensure that someone you trust can make decisions on your behalf.
When it comes to estate planning, most people are familiar with wills, which are used to distribute property and assets after they die, but not everyone is familiar with the purpose of a legal POA. With the prevalence of diseases like Dementia and Alzheimer's affecting a big portion of Canada’s aging population, and other illnesses that can leave you with significant cognitive impairment, it’s important to think about who would take care of your day-to-day decisions when you can't.
A POA manages on your (the guarantor’s) behalf things like:
- property supervision, or selling
- medical consent and medical treatment options
- paying bills
- collecting debt/benefits and filing for benefits
- filing taxes
- living arrangements, clothing, food, and general upkeep
- transportation and safety
Naming someone as your power of attorney does not mean you lose the power to make your own decisions. It means you are entrusting someone to make these decisions with you and eventually for you when you are no longer capable of doing things independently. You can determine a date of “activation” if you want to have the person take over right away, or you can set limitations before the document becomes active to your appointed attorney.
Choosing a POA(s) is a voluntary decision and it’s critical to choose wisely who will act for you. All provinces across Canada have set laws that allow you to appoint someone as a power of attorney.
There are two types of power of attorney:
- POA for Personal Care for yourself
- POA for Property for your assets
You can have one designated power of attorney for both, or separate attorneys for each case. You can also have multiple POAs share the responsibilities where you want several entrusted people to act on your behalf. For example, you might designate a spouse and your children in a:
- Joint POA - everyone has equal power and decisions cannot be finalized without the authority of all designated POA members.
- Joint and Several POA - decisions are still made as a group but one person can act as the lead authority to make day-to-day decisions. For bigger transactions like the sale of a property, you would still need all members to sign off on approvals.
Power of Attorney for Personal Care
You would designate a POA of Personal Care (POAPC) anticipating a decline in health if you develop a chronic illness or in the event of an accident that would leave you incapacitated. To make a POAPC you must be:
- of sound mind and have the full mental capacity to give someone the legal authority to act on your behalf
- 16 yrs of age or older
- able to understand the role of a POAPC
Your appointed POAPC would make medical consent decisions on your behalf as well as broader decisions around routine personal care like:
- Treatment decisions based on your prior expressed wishes, or choosing the least restrictive and intrusive course of action to help you maintain your independence.
- Involving you in all decision-making while you are still able.
- Maintaining regular personal contact between you and your family members/friends to consult them on decisions.
- Acting in good faith to manage your day-to-day needs like housing, transportation, hiring care personnel and hygiene or providing it, food and clothing.
Power of Attorney for Property
The power of attorney for property is responsible for making financial decisions on your behalf. This can apply to all properties or specific ones. For example, if you own property in another province you can name someone there as a POA specifically to manage that property. Property covers anything that a person owns.
An attorney cannot make a will on your behalf or revoke a will that you have made. The requirements to make someone a POA of property are:
- They must be 18 and over
- They must have an understanding of your property and the assets you are assigning over to manage.
They will assist you in making decisions like:
- the sale of real estate properties
- paying bills, collecting money, filing taxes
- selling or reinvestment of assets
- signing cheques
- borrowing money
- any other financial duties set out in the POA document by the grantor (you)
You don’t need a lawyer to make a POA document but it is advisable to do so. A lawyer can advise you on the best language to add to your document. POA documents can run anywhere between $100 to $300 for a basic POA, but costs vary depending on the complexity of the documents drafted. You can also get help from a legal aid clinic or Pro Bono Ontario.
You can also download the POA forms for free and do it on your own, but you will be required to have two witnesses sign the documents.
How to Choose a POA
Choosing a POA is not easy, and you want to take into consideration many factors before making this decision. Some things to consider before choosing a POA are:
- Will they have time to assist or accompany you to appointments, take calls, and or sit in on medical visits?
- Are they trustworthy and organized?
- Do you have a good history with them and do they know you well enough to understand the types of decisions that need to be made on your behalf?
- Are they responsible and do they have the diplomatic ability to deal with authorities and advocate for you?
September 29, 2022