While sometimes ignored or drafted as an afterthought to a Last Will and Testament, Powers of Attorney and related Living Will directives are an important part of any estate planning structure. Properly drafted documents ensure that your wishes are respected in the event that you are no longer able to voice those wishes. Below are a few considerations to keep in mind about Powers of Attorney and Living Wills:

1. What is a Power of Attorney and What is a Living Will?

It is important to understand that Wills, Powers of Attorney, and Living Wills are separate documents. For example, wishes for the attorney named under the Power of Attorney do not go in the Will, and bequests to individuals after death do not go in the Power of Attorney documents. The Power of Attorney for Property deals with decisions that need to be made about an individual’s property (including bank accounts, real estate, investment accounts, etc.) and the Power of Attorney for Personal Care deals with decisions that need to be made about an individual’s health care and personal care needs (such as nutrition, shelter, hygiene, etc). A Living Will normally includes instructions about end of life care (for example: no life support in the event that there is no hope for recovery).

In addition, you have to be eighteen to execute a Will or Power of Attorney for Property, but only sixteen to execute a Power of Attorney for Personal Care and related instructions.

2. What is an attorney?

There is sometimes confusion over the meaning of the word "attorney", likely due to the influence of American T.V. shows in Canada. Clients look (usually, rightfully) aghast at the idea of having the lawyer sitting across the table making important property and personal care decisions for them.  However, to clarify, an attorney under the Power of Attorney for Property or for Personal Care is the individual (or individuals) that you have named to make decisions on your behalf. "Attorney" does not mean the lawyer that is drafting the document. Unless you name your lawyer as your attorney for property or for personal care, the lawyer will not be making decisions for you.

 3. When can the documents be used?

There are also misconceptions about the effective date of the Powers of Attorney. The short answer to “when can the documents be used?” is “it depends”. The lawyer drafting the document should discuss with you what your intentions are and then modify the effective date accordingly.  Otherwise, if not specified, under Ontario law, the Power of Attorney documents come into effect immediately after execution. This means that the Power of Attorney document can be used even if the individual executing it (called the grantor) is mentally sound. In addition, if the Power of Attorney does not specify that it continues to be effective in the event that the grantor becomes incapacitated (called a "continuing power of attorney"), the document ceases to have effect when the grantor becomes incapable.  This is problematic since the incapable grantor would not be able to appoint another attorney to act on his or her behalf.

The Power of Attorney can also specify that the document does not come into effect until a certain event occurs (for example, the incapacity of the grantor). Unfortunately, the term "incapacity" by itself has little practical meaning. Under the Substitute Decisions Act of Ontario, which governs the use of Power of Attorney documents, the definition for "incapacity" is relatively broad. For example, a person is deemed incapable of managing property if "the person is not able to understand information that is relevant to making a decision in the management of his or her property, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision" and is deemed incapable of making personal care decisions "if the person is not able to understand information that is relevant to making a decision concerning his or her own health care, nutrition, shelter, clothing, hygiene or safety, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision".  In the absence of specific instructions in the Power of Attorney document, the Substitute Decisions Act does not provide a method to determine whether a person has become incapable, other than by way of formal capacity assessment (which carries with it its own complications). Therefore, it is important, if the intent is that the Power of Attorney only be used if you become incapable, that you clearly provide what is meant by "incapacity" and how that incapacity should be determined.

4. What can the attorney do on my behalf?

The scope of the attorney’s powers depends on what has been drafted into the document. Normally, the attorney under the Power of Attorney for Property is able to do anything with the grantor’s property that the grantor is able to do, except make a Will.

Many clients are understandably anxious about giving another person such broad powers. However, it is important to consider that the attorney is bound by law to act in the grantor’s best interest and in accordance with any wishes or instructions left by the grantor (the “Living Will”). Also, if the attorney does not have the authority to make a certain decision, the law may confer that authority on the next-of-kin or the Public Guardian and Trustee (a branch of the Ontario government that, among other duties, is tasked with protecting mentally incapable people). It is the absence of any clear instructions (whether contained in the Powers of Attorney or other Living Will directives), that causes much of the litigation that you hear about in the media, especially if the next-of-kin are not on the best terms with each other.

Your professional advisor will work with you to craft the Power of Attorney documents that meet your specific needs. A Power of Attorney is a powerful tool for an individual because, if drafted properly, can allow that person to have a measure of control over future property and personal care decisions. By appointing an attorney that you trust and by specifying the types of decisions that you want made, you can ensure that your wishes, if you cannot voice them personally, will be followed.

Susanne Greisbach is an Associate with BrazeauSeller.LLP.  She practices in the areas of Wills, Estates and Tax Law.  To contact Susanne, please go to www.brazeauseller.com or email Susanne at [email protected].