Caregivers – understanding the types of power of attorney

Caregivers – understanding the types of power of attorney

In this Elizz blog, we’re going to discuss the different types of power of attorney in Canada that caregivers should be aware of, and how knowing the difference can help caregivers look out for the interests, possessions, and welfare of the people they’re caring for.

On average, Canadians are living longer so the potential of physical and/or mental incapacity is a reality of life we all must consider at some point.

Before we continue, let’s define a couple of legal terms including:

Grantor: The person (in this case, the person you’re taking care of) who appoints an attorney and grants them the power to make decisions on their behalf regarding their personal care or property.

Attorney: The person whom the grantor has appointed to manage his or her affairs.

Power of attorney: This is a legal document giving a person or corporation (the “attorney”) the right to make decisions on a grantor’s behalf. A general power of attorney lets the attorney manage the grantor’s assets during the grantor’s lifetime. However, the general power of attorney is terminated upon the grantor’s loss of mental capacity or death.

Will: This is a legal document that is prepared by a person during their lifetime to take effect upon their death to direct how their various assets and possessions will be dispersed or disposed.

On average, Canadians are living longer so the potential of physical and/or mental incapacity is a reality of life we all must consider at some point.

Recognizing this possibility, all Canadian provinces enacted legislation allowing attorneys to manage the grantor’s affairs even after their mental capacity has been diminished. This is called Continuing Power of Attorney (or Enduring Powers of Attorney), and is a separate legal document from the general power of attorney.

There are two kinds of Continuing Powers of Attorney:

  1. Power of Attorney for Personal Care
  2. Power of Attorney for Property

Power of Attorney for Personal Care

This authorizes the attorney to make decisions regarding the personal care of the grantor. These decisions could relate to the grantor’s personal hygiene, nutrition, home, and clothing. A power of attorney for personal care only comes into effect once the grantor becomes incapacitated. 

This may sound like an advanced care plan, which you may have read about on Elizz (for example: How to develop an advanced care plan and Thinking ahead – start an advance care planning discussion). This is a great process to start while the person you’re taking care of can still tell you their wishes about the type of care they want to receive (or not receive) when they can no longer make the decisions on their own.

Unlike a power of attorney for personal care, an advanced care plan isn’t a legal document and is considered to be more than just a list of wishes for end-of-life care. Rather, it’s a series of conversations a person has with family members and other loved ones, friends, and their health care team to ensure that everyone is on the same page in terms of the person’s treatment plan. 

Power of Attorney for Property

The attorney is granted authority to make decisions of a financial nature for the grantor. Unlike a general power of attorney and power of attorney for personal care, the power of attorney for property can be enacted before the grantor is incapacitated, and continues after the grantor is cognitively diminished or impaired.  

A power of attorney for property can be:

  • General, giving the attorney wide powers to deal with all the grantor’s assets
  • Or limited in terms of time or purpose (For example, if the person you’re taking care of likes to spend their winters in warmer climates, he or she can appoint an attorney to manage their property while they’re away.)

It may sound like the attorney has unlimited access and authority over the grantor’s personal care and property but there are limitations.

When it comes to estate planning, the attorney is not allowed to create, make changes to, or revoke a will on behalf of the grantor. This restriction around the creating of wills also applies to making or changing the beneficiary on an RSP, a RIF, a pension plan, or an insurance policy.   

An attorney has a fiduciary duty towards the grantor. This means not allowing their own interests to conflict with those of the grantor. Therefore, the person in your care must appoint an attorney in whom they can trust implicitly to act in their best interest.

If appointing a member of the family will cause conflict with within the family, consider appointing a trust company to keep the peace.

If the person that you care for owns properties in different jurisdictions, make sure to find out whether a continuing power of attorney issued in one location is still valid in another.

For example, a retiree living in Ontario but also owns a vacation home in Florida, must ensure that Florida state laws are broad enough to recognize a power of attorney that was executed in Ontario, and whether or not financial institutions are willing to recognize this document.

If it turns out that the person in your care requires more than one power of attorney to deal with multiple properties, make sure that they’re not inadvertently cancelling out the first power of attorney when the second one is executed.

Each Canadian province has different laws regarding executing multiple powers of attorney so be sure to know the legislation in your area.

For example, Ontario law stipulates that a continuing power of attorney is cancelled when the grantor executes a new one, unless the grantor specifies that they are executing multiple continuing powers of attorney.

Some financial institutions will ask you to execute their standard form power of attorney. The above consideration still applies when you sign a bank form power of attorney. You may be inadvertently revoking your existing general power of attorney, leaving you with the bank one, which only covers assets held by the bank and not your other assets. 

Each Canadian province has its own laws around executing powers of attorney so be sure to do further research or consult a lawyer specializing in trusts and estate planning.

 

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