Appendix A
A Power of Attorney is a legal document in which an individual gives another person(s) the authority to act on his/her behalf while he/she is still alive. Powers of Attorney can take many forms and can be limited to the power to deal only with certain assets or over a certain time period or be very broad giving the attorney total power to deal with all of the individual's property. The granting and use of Powers of Attorney is regulated by provincial laws that are not uniform across Canada.
It depends. An individual may become permanently or temporarily disabled or incapacitated, may be unable to conduct his or her financial affairs and may not have the mental capacity to give a power of attorney. If there is no power of attorney already in place authorizing someone to deal with the person's property in these circumstances, a relative or friend may have to undergo the potentially time-consuming and costly process of obtaining court supervision of the person's affairs. In these circumstances, hindsight may demonstrate that it would have been preferable if the individual had given Power of Attorney to one or more competent and trustworthy individuals, to act on his/her behalf. However, some individuals would not feel comfortable giving even a limited Power of Attorney to someone else and may prefer that someone has to seek court authority to administer their affairs in the event of their incapacity. Where the Power of Attorney alone will not meet the client's needs, it may be used in conjunction with an inter vivos, revocable, standby trust (see Question 13).
That's one of the hardest questions to answer. Your attorneys should be trustworthy, competent, objective, and well-versed in your financial affairs. To reduce concerns about possible abuse of power, the Power of Attorney can name multiple individuals and require them to act jointly (although this can be cumbersome and requires unanimity). If consensus among these individuals can be arrived at, that may be the ideal solution. However, if there are grave concerns about who can act prudently on the client's behalf, the client may want to consider another alternative - using a "standby" trust and a Power of Attorney (see Question 13).
Yes. A Power of Attorney may be "general" in nature and encompass all of the acts the client would otherwise perform on his or her own behalf. A Power of Attorney could instead be limited in scope or duration. For example, the Power of Attorney could limit the client's attorney to the conduct of the client's banking business or the sale of a specific piece of real estate or transactions on certain securities.
Generally the Power of Attorney takes effect on the date it is signed. However, a Power of Attorney could specify a different effective date. If the Power of Attorney is limited to take effect when you are physically disabled or mentally incapacitated, the definition of disability and incapacity are important.
If the Power of Attorney was established for a specific duration, the Power of Attorney stops when that period lapses. If there was no specific duration, then the Power of Attorney stops when the client dies or when the client revokes it in writing. Note: Notice of revocation must be given to third parties, otherwise the client will be bound by the attorney's actions after revocation.
It depends. The inter vivos trust indenture can be used with or can replace the Power of Attorney so long as the trust indenture details how the client wants his or her financial affairs managed in case of incapacitation.
Investors Group representatives should not act as an attorney for a client, unless the client is a close relative. As a representative, you want to avoid any situations that may give rise to questioning of your financial self-interest in client affairs. You may not be able to retain any commissions earned on transactions you carry out as attorney for a client. See the article entitled "Conflict of Interest Policy for Sales Representatives of Investors Group" from the December 8, 1995 Sales Bulletin, which is attached as Appendix D to Section 11.
Yes, it is possible for a client to name an Investors Representative under a Power of Attorney, but the representative can always refuse to act or resign. A client should first discuss the issue with any person who is expected to act as the attorney.
The Substitute Decisions Act came into effect in April 1995. It affects a Power of Attorney granted by a resident of Ontario.
Under this law, a Power of Attorney which attempts to provide that it will be effective during any subsequent incapacity of the grantor (the person giving the Power of Attorney) must meet special criteria. In particular, it must be witnessed by two individuals, neither of whom can be the attorney or the attorney's spouse or partner, the grantor's spouse or partner, a child of the grantor or a person who is less than 18 years of age.
In its original form, the Substitute Decisions Act provided that the Public Trustee became the legal guardian of an incapacitate person and would remain so until an attorney appointed under a continuing power of attorney persuaded the authorities that he or she should be authorized at act as attorney. Changes were made to the Substitute Decisions Act, effective March 29, 1996, removing the automatic appointment of the Public Trustee as legal guardian of an incompetent person. Under the amended legislation the appointment of the Public Trustee is made only as a last resort and only if an attorney has not been authorized to manage the individual's property under a continuing power of attorney.
A Power of Attorney executed before the Substitute Decisions Act is proclaimed, or within 6 months thereafter, which authorizes the attorney to act during any subsequent incapacity of the grantor does not have to meet the new rules.
This legislation reinforces the necessity for clients to see a lawyer in order to have a power of attorney prepared (this is good advice for all clients, not just residents of Ontario).
See Sales Information Bulletin #4813 dated July 27, 1994 for further information on the Substitute Decisions Act.
Reforms to British Columbia law regarding Powers of Attorney were introduced in 1995 and as of this printing were still not in force.
Currently, legislation in British Columbia allows an individual (the "grantor") to establish an enduring Power of Attorney, which allows the grantor to provide authority to someone to act on the grantor's behalf even in the event that the grantor subsequently becomes mentally incompetent. Under the proposed new legislation, there will be certain formalities that must be followed in order for an enduring Power of Attorney to be valid. In particular, the document will have to be made in a special form, with two witnesses signing in the presence of the person making the Power of Attorney and the person being appointed, who is called the "representative".
Also, the enduring Power of Attorney will not become effective until it has been registered with a regulatory agency - the procedure and costs for registration have not yet been established.
Under the new legislation, the person making the Power of Attorney is supposed to appoint a monitor, whose duty is to ensure that the representative carries out his or her duties under the Power of Attorney. It is possible to decline to appoint a monitor, but the Power of Attorney document must specifically state that the grantor has decided that a monitor is not necessary.
An existing Power of Attorney which was executed before the new legislation becomes effective will be accepted for registration, but only if it was actually in use before the new legislation becomes effective. This proposal is the subject of some criticism, and some advocates argue that the existing Power of Attorney should be effective even if not yet in use prior to the effective date of the new legislation. Whether this proposal will be changed is unkown.
It will also be possible under the new legislation to provide a representative under an enduring Power of Attorney with the authority to make decisions about the grantor's health care in the event the grantor is incapacitated and unable to make those decisions. Directions as to the grantor's wishes regarding health care can be included in the Power of Attorney.
The Office of the Public Trustee in British Columbia has published an information package on the new legislation, entitled Decisions for Today and Tomorrow, which can be ordered by B.C. residents by calling the Vancouver office of the Public Trustee at (604) 775-0847. The bottom line for clients is that they are well advised to see their lawyers to clarify whether changes should be made to existing Powers of Attorney to ensure that they meet the new rules, and to obtain enduring Powers of Attorney if they do not already have one.
A Power of Attorney for personal care is a document in which the grantor gives the attorney the authority to make decisions concerning the grantor's personal care (such as health care, nutrition, clothing, hygiene and safety) in the event the grantor becomes incapable of his or her own personal care. This special type of Power of Attorney is available to Ontario residents and will be available to B.C. residents under the proposed changes to the B.C. Power of Attorney legislation. The Power of Attorney for personal care may contain instructions as to how the attorney for personal care is to make decisions and may authorize the attorney to give or refuse consent to specified kinds of treatment under specified circumstances, which instructions could be in the Power of Attorney or in a separate document such as a Living Will (Living Wills are discussed in Question 23 of Section 12 of the Estate Planning Guide). The attorney for personal care is obliged to make personal care decisions in accordance with the grantor's wishes.
Note that the Power of Attorney and standby trust are not appropriate in all circumstances. This option is not generally recommended unless the client involved believes that only a trust indenture, which describes how his or her financial affairs shall be conducted in the event of incapacity, can ensure prudent management of his or her financial affairs.
In the case where a client is a suitable candidate for the revocable standby trust, here are the details on how matters would proceed:
The Power of Attorney and the standby trust indenture are both prepared prior to disability. The standby trust is settled with a gold coin or a nominal amount of money, say $1. The Power of Attorney requires the attorney to fund the trust with the client's other assets in the event of future incapacitation. Once the assets are held in the trust, the trustee of the trust (who could be the same or different person(s) than the attorney(s)), must conduct the financial affairs according to the terms of the trust indenture. The trust indenture reflects the client's wishes while not incapacitated. The standby trust would be a revocable trust, such that the client could recall the assets from the trust if the disability disappears.
Since the standby trust is revocable, there are no income splitting or other tax savings as the trust assets can revert to the settlor (the client who is incapacitated). When you review the Trusts section, you will see that irrevocable (rather than revocable) inter vivos trusts provide additional income splitting and tax savings upon death that the revocable trust cannot provide.
Annual trust tax returns will have to be filed once the standby trust takes effect. See the Trusts section, question 28, which explains when trusts must file a tax return. The trust indenture, developed by a lawyer, details how the client's personal affairs are to be conducted. However, where clients question the appropriateness of a Power of Attorney, and have sufficiently extensive estates to warrant a trust, this may be an appropriate alternative.
The Quebec Civil Code provides for the granting of a mandat, which is a document under which an individual authorizes another person to act on his or her behalf. For purposes of this manual, the mandat is equivalent to a power of attorney.