Written by Sheryl Smolkin
Wednesday, January 3rd, 2018
When my mother revised her will several years ago, she gave Power of Attorney (POA) for both health and property to my sister and me. More recently, her dementia progressed to the point where we've had to take over her financial affairs. But it wasn't as simple as presenting the POAs.
One financial institution required a certified copy of the document, plus proof of lack of capacity from her doctor. Also, I was already a joint owner of Mom's chequing account, but when I attempted to add my sister to the account to simplify paying her bills, I was told I couldn't do this on my own. All three of us had to go to the bank to accomplish this.
What's Power of Attorney, and How Can It Be Used?
"A POA is a document you can sign while you are still well and competent to appoint someone to act instead of you in regards to your property or personal care if you become incapable," explains Jane Martin, an estates lawyer and partner at the Toronto law firm Dickson Appell. "But a POA typically cannot redo your will or change your beneficiary designations on life insurance designations or registered funds. A POA also expires on your death and the executor of the estate takes over."
POAs can also be more limited. For example, Martin says, "If you will be out of the country when the sale of your home closes, you may choose to authorize someone else to execute the necessary documents on your behalf." She also notes that POAs for property may be entitled to compensation based on a percentage of assets under control, as prescribed in provincial legislation or regulations.
POA Laws Vary
While the laws regarding POA vary from province to province, she continues, "There are common principles governing how someone should conduct themselves when they are managing someone else's affairs. Furthermore, subject to local practice, a POA that satisfies the laws of the province in which it is made should be valid in other parts of the country."
If you become incapable of conducting your own affairs, even without a POA, close family members (i.e. spouse, parents, adult children) may be permitted to make and communicate healthcare decisions. But if there isn't a plan in place, an expensive and time-consuming court application for permission to step in and manage your finances and/or personal care may be required.
POAs When Wills Are Made
When you make a will, your lawyer will generally ask you whether you also want to sign Powers of Attorney. That's because you're already itemizing all of your assets for the purposes of drawing up your will, and it's less expensive to have both documents prepared at the same time. Also, the lawyer is in a good position to judge your competence to execute these documents.
Risk of Fraud
From a strictly legal perspective, presenting a POA should be sufficient to allow your designated Attorney to conduct business on your behalf, but Martin is not surprised that each of the financial institutions I dealt with had a more rigorous, unique set of procedures.
"This inconsistency is really common because fraud is more prevalent than ever, and banks are trying to figure out the best way to both protect their clients and control their risk," she says. "Therefore the requirements for accepting POAs can vary from bank to bank and even from branch to branch."