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Powers of Attorney for Property and Personal Care are just as important to your estate plan as your Will.  A Power of Attorney for Personal Care is a written document in which you appoint one or more people to make decisions with respect to your personal care should you be incapable to make these decisions yourself. Comparably, a Power of Attorney for Property is a document in which you appoint one or more people to make decisions with respect to your assets should you be incapable of managing your property yourself. In this blog I’m going to break down a few different types of Powers of Attorney for Property and why the distinctions among them matter.

It should be noted that a Power of Attorney refers to the document itself. An attorney for property is a person appointed to make property decisions on behalf of the grantor. A grantor is a person that gives the Power of Attorney (i.e. the person signing the document appointing the attorney).

Limited Power of Attorney for Property

This Power of Attorney is signed by a grantor for a specific purpose or time period (or both). For example, a grantor may want to appoint someone with specialized business knowledge to make decisions with respect to his or her corporation and another to make decisions with respect to the balance of his or her assets. The Power of Attorney that only governs the business assets is a Limited Power of Attorney. This type of Power of Attorney may also be signed where a grantor is going to be out of the country or otherwise unavailable when his or her authorization will be required for a specific transaction. In this case, the grantor could appoint someone for the limited purpose of signing off on this transaction on the grantor’s behalf in his or her absence.

Another common example of a Limited Power of Attorney is one that a financial institution may ask a client to sign appointing another individual to deal with a specific bank account on his or her behalf.

General Power of Attorney for Property

This type of Power of Attorney allows the attorney to do anything on behalf of the grantor, except make a Will (subject to any limitations or restrictions specified in the document). If the grantor becomes incapable, however, a General Power of Attorney will typically not be valid unless otherwise stated in the document.

Springing Power of Attorney for Property

Like a General Power of Attorney, subject to any limitations or restrictions specified in the document, a Springing Power of Attorney allows the attorney to do anything on behalf of the grantor, except make a Will. A distinguishing factor of this type of Power of Attorney is that the document is of no force or effect until a condition set out in the document is satisfied. For example, Springing Powers of Attorney often stipulate that the document only comes into effect after two medical doctors have confirmed in writing that the grantor is incapable of making his or her own decisions with respect to his or her property. In other words, the document “springs” into effect upon the stipulated condition being satisfied.

Springing Powers of Attorney for Property are often not recommended for several reasons. First, it may prove difficult to find two doctors who will sign off on the grantor’s incapacity for the purpose of managing his or her property. Not all doctors are experts regarding the laws set out in the Substitute Decisions Act and Health Care Consent Act, and thus may not want to risk incurring liability for signing a document that would require this type of knowledge. Second, a Springing Power of Attorney generally requires a doctor to confirm that a grantor does not have the mental capacity to manage his or her property. A grantor may have the mental capacity to manage his or her affairs but nonetheless require an attorney of property to assist them with the day to day management of his or her assets because of physical impairments. Accordingly, a Springing Power of Attorney that only takes effect upon two doctors confirming a grantor is mentally incapable of managing his or her assets would not allow for this scenario.

Continuing Power of Attorney for Property

This Power of Attorney takes effect as soon as it is signed by the grantor, and will continue to be effective if the grantor becomes incapable. Similarly to a Springing Power of Attorney and General Power of Attorney, under a Continuing Power of Attorney, an attorney for property can do anything the grantor could do if capable, except make a Will (again, subject to any other exceptions set out in the document).

As this document is effective as soon as it is signed, no third party relying on it requires any proof of the attorney’s authority to act to allow the attorney for property to act on the grantor’s behalf. This is valuable in the sense that it does not pose the above-noted barriers that a Springing Power of Attorney does, and unlike a General Power of Attorney, it allows the attorney to make decisions on behalf of the grantor during any period of incapacity. It is extremely important to have an attorney that can act for a grantor during his or her incapacity, as alternatively, someone will need to apply to Court to be appointed the incapable person’s guardian – this carries considerable delays and costs among other disadvantages. At the same time, given the breadth of power typically provided to an attorney in this document, it is important that the grantor names an attorney (and alternates) that the grantor trusts.

A Note on Multiple Powers of Attorney for Property

A grantor can have more than one Power of Attorney for Property in effect at one time. For example, this may be recommended where a grantor has property in multiple jurisdictions, as third parties in each respective jurisdiction may not recognize a Power of Attorney executed in a foreign jurisdiction. As the signing of a new Power of Attorney for Property will typically revoke any prior Powers of Attorney for Property, it is important that where a grantor intends to have more than one Power of Attorney for Property it is clear that these Powers of Attorney do not revoke each other. This should be specifically set out in each Power of Attorney for Property. This also applies in the context of Powers of Attorney signed with financial institutions allowing an attorney to act on a grantor’s behalf with respect to a particular account. Such a Power of Attorney should be reviewed by the grantor’s lawyer prior to signing to confirm that it will not unintentionally revoke any other Powers of Attorney for Property in place for the grantor.

If you do not have a Power of Attorney for Property or have questions about your current Power of Attorney for Property, the estate lawyers at Mills & Mills LLP can assist. To learn more about how we may be able to assist you please reach out to us online or by telephone at (416) 863-0125.

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