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Powers of Attorney for Property
Protect!
Most people know that a Will is a
necessary part of their planning, and that it ensures their wishes and
intentions are carried out after their death. However, not enough people
realize that there is another essential component to their planning,
which is often overlooked. This is called a Power of Attorney for
Property.
A Power of Attorney for Property is a
document that provides lawful authority for another person to act in
your name and to legally deal with your financial, business and property
affairs. Powers of Attorney for Property can take many forms, but they
are most useful in two situations.
The first situation is to assist if you are
physically unable to conduct your affairs for yourself. For example, if
you are out of the country on a trip while your house is up for sale,
you would be wise to arrange for someone to have the authority to deal
with any offers that arise in your absence. Equally, if you are laid up
in the hospital, you may need someone to do your banking and bill paying
until you are mobile again. These call for a Limited Power of
Attorney.
The need for a Limited Power of Attorney can
be assessed and arranged without much lead time. If you are planning a
trip and anticipate a business or financial concern, your lawyer can
prepare the right document on short notice. If the only concern is to
operate your bank account while you are in hospital, the bank will
provide their standard form across the counter. In other words, you can
usually wait to arrange these until the need presents itself.
The second, and far more serious, situation
is to protect yourself and your family from the legal problems that
result from mental incompetency. Mental incompetency frequently arises
from illnesses such as a stroke or Alzheimer's disease, but it can also
occur from motor vehicle accidents or from a fall that causes head
injuries. Senility and severe depression can also lead to a loss of
mental competence.
It should be remembered that a mental
incompetency need not be permanent or even lengthy, but the difficulties
that occur often cannot be put off. Many stroke victims, for example,
will eventually have a full recovery. Nevertheless, while the
incompetency exists, bills and taxes must be paid, cheques deposited and
written, investments tended and personal matters resolved. A
Continuing Power of Attorney for Property is required.
The Continuing Power of Attorney for
Property must be prepared before it is needed, since you cannot execute
a Power of Attorney if you are mentally incompetent. If a mental
incompetency arises, and no Power of Attorney for Property is ready,
then your family will either have to deal with the Public Guardian and
Trustee, or apply through the Court process for the necessary authority.
Neither of these are attractive options for either you or for your
family.
If you were to be rendered mentally
incompetent and did not have a Continuing Power of Attorney for
Property, the Public Guardian and Trustee has the duty to take over your
assets and to manage them on your behalf to ensure that you are properly
looked after and not exploited financially. Although this may be better
than nothing, few people would prefer that the Government be in charge
of their finances and person.
The Provincial Auditor's report released
December 1, 1992 makes it clear how important it is to take matters into
your own hands and to make a Power of Attorney rather than risk the
Public Trustee's involvement: "The Public Trustee's handling of estates
and the trusts of mentally incompetent people lacks care, says the
report of the Provincial Auditor'' (Globe and Mail, December 2, 1992).
The Auditor examined 125 files, and concluded that 55% indicated
deficiencies in administration of the affairs.
Horror stories abound. In one case, the
Public Trustee had failed to locate several million dollars worth of
real estate owned by a mentally incompetent client. In another instance,
a rental real estate property was not inspected or maintained. In fact,
the Public Trustee failed to collect 18 months of rent, and wrote off
$20,000 owed to the client. The Public Trustee sold the entire contents
of another client's house for $700, even though the Trustee's own staff
had valued the contents at $15,000.
Even at best, the involvement of the Public
Guardian and Trustee is an intrusive and disruptive consequence of a
mental incompetency. Accordingly, if you are lucky a family member may
come forward and apply to the Court for authority to replace the Public
Guardian and Trustee. If successful, the family member will assume the
responsibility and rights to deal with your assets while you are
incompetent. Unfortunately, this process is time consuming and costly,
and when you do recover your mental competency it must be reversed,
again at the expense of much time and money.
The best solution is to ask your lawyer to
prepare a Continuing Power of Attorney for Property that will authorize
a person of your choosing to look after you and your assets, but only if
you become incompetent.
It is important to be aware that
most Powers of Attorney for property, including the forms provided by
the government, take effect immediately upon signing. The unwanted result is that
you have handed over full control of your legal affairs to others even
while you remain fully competent. To avoid this, a more sophisticated
document that works in several stages is highly recommended.
A modern Power of Attorney will set out in
what situations it is to take effect -- for example, in the event of a
mental incompetency. It should also state how the incompetency is to be
determined, preferably by the certificate of a doctor. It should also
name not only one attorney, but a substitutionary attorney. This is
important in case your primary attorney dies, or is otherwise unable or
unwilling to act. It is also wise to include authority for your attorney
to appoint a backup for him- or herself, to provide for flexibility if
circumstances change after competency is lost. To accomplish its goals,
the Power of Attorney must also contain a clause that permits it to
continue after the incompetency, and a further clause to send the Public
Trustee back to Toronto.
With good fortune, Powers of Attomey may
never be needed. However, it is poor planning to depend on good fortune
alone. If you do suffer an incapacity, the Continuing Power of Attomey
for Property is a safety net to ensure that the right person has the
full power to do all that is necessary in your best interests, without
the involvement of the Govemment or the Court. Your lawyer can assist
you in this vital task.
Who needs a Power of Attorney
for Personal Care?
- Anyone who wishes to control
their own fate, through their own decisions and by their own chosen
representatives, even if they are incapable and in a health crisis.
- Those people who are facing
a serious illness, such as Alzheimer's Disease or cancer.
- Those whose family situation
makes it difficult for next of kin to be involved. Elderly people
without children, separated spouses, someone whose family is in
another province or country, or cohabitants are particularly
vulnerable.
- Those who have strong
feelings about matters like life support, palliative care or being
confined to a nursing home may obtain certainty and peace of mind
through such a Power of Attorney.
What are the purposes for which
the document may be used?
- To minimize or avoid the
government involvement in your Personal Care.
- To choose your own trusted
representatives, and to structure them into the most effective safety
net possible.
- To ensure that your own
decisions about your personal care will be legally fulfilled even if
you are incapable at the critical time of communicating them yourself,
and to ensure that the emotional burden on your family is minimized.
Your lawyer and doctor can assist in explaining your alternatives.
A proper Power of Attorney for
Personal Care must include provisions for multiple attorneys, careful
structuring of the attorneys in an effective manner, preferred
assessors, carefully considered and worded instructions, dispute
resolving mechanisms, and clauses excluding and minimizing government
involvement and expense.
When it is completed, special efforts are
required to ensure that all of your thorough planning comes to the
attention of the right people at the right time. In order to best
accomplish this, it is recommended that:
- One copy of the document be
retained by your lawyer, to serve as a backup in the event that other
copies are lost or destroyed.
- Another copy should be
provided to your doctor to be kept with your medical records. This
will ensure that your specific instructions are made known at the
necessary time, and your chosen decision makers can be identified and
located without delay.
- A third copy should be
retained by your primary attorney.
Finally, it is advisable that
you carry an Emergency Contact Card at all times, containing specific
information relating to your Personal Care Power of Attorney. This will
help ensure that knowledge of the existence of your planning, the names
of your attorneys, and ways to contact them, are readily available in
the event of a medical crisis.
Like any other complex document with legal
effect and serious consequences for your life, it is highly recommended
that you obtain the assistance of a lawyer in discussing and preparing a
Power of Attorney for Personal Care. After all, it's your own life on
the line.
Power of Attorney
pitfalls
After the death of her husband Bert, Sally Simpson found the
children paying her a lot of attention. Daughters Melissa and Katie
loved their Mom but weren't sure how well she would cope on her
own. They were concerned
that by herself, she might not be able to care properly for
herself. Melissa and Katy
tried to convince Sally of the benefits of a seniors residence, but
Sally was content, even firm, about staying in her own
home.
Sally did cope, with welcome help from her
daughters now and then. In
fact, she was very satisfied with her progress, until a medical
setback. She began to have
some balance problems.
Nothing serious apparently, but unpleasant. Her doctor told her she would
have to be careful going up or down stairs, and encouraged her to
consider a condo or apartment where she would be on one
level.
Sally's daughters strongly seconded the
doctor's advice, but she wasn't overly concerned. She liked her home, was
comfortable there, and not about to move. Imagine Sally's surprise a
couple of months later when Melissa and Katy arrived at her front door
with a moving truck!
Legal pitfalls
Years ago
Sally had signed a Power of Attorney (POA). She knew she needed one if she
ever had a period of mental incapacity. Without it, the provincial
government could take over her affairs instead of her own family.
What Sally didn't know was that the POA was a
"blank cheque". It took
effect as soon as she signed it, without any conditions or restrictions
on when it could be used.
Her daughters were convinced they had the moral authority to
resolve a potentially dangerous housing situation for their mother. Mom had, without realizing it,
given them full legal authority to do whatever they thought best. So, Melissa and Katy listed
Sally's house with a real estate broker using the POA. No sign was put up. The house was shown when Sally
was spending time with one or the other of her daughters.
When a good offer was presented to them, the
girls signed the contract of sale of Sally's home. Later they signed the deed and
other papers at the lawyer's office. They rented a one bedroom suite
in a lovely seniors residence not far away, and then called to reserve
the moving truck. All steps
taken were legally authorized by Sally's POA.
Blank cheque POA
Sally's situation is sad, but not
uncommon. The root of the
problem was not her daughters, who were acting in what they considered
their mother's own best interest.
A "blank cheque" type of POA is the culprit. Without realizing it, usually
without intending it, most people sign POAs without specifying
conditions or restrictions.
The result is a document that can be used anytime, with or
without the involvement or consent or knowledge of the person, even
while the person remains mentally capable. This leaves the door wide
open to abuse by unscrupulous attorneys, and to misuse by well
intentioned attorneys who think they know better than Mom or Dad. The former gives rise to direct
threats to your financial safety net. The latter results in loss of
control of your life decisions.
Misuse of the intended protections of the POA
may not be as blatant as the sale of the family home. A son may think he is smarter
than Dad about investing, and decide for Dad's own welfare to make a few
changes to the financial nest egg.
A daughter may feel better if she is the one ensuring the cheques
are deposited and the bills paid, so Mom doesn't have to worry her head
about her own finances.
Trust is not the
issue
Sometimes when parents learn they have a blank
cheque POA, they are unconcerned because they trust the children. That's not good enough. The issue is not of trust, but
of purpose. You may be
fortunate enough to have trustworthy kids, but they may still do what
they think is best for you, whether you agree or not. Unless your purpose is to allow
others to take over your affairs right away, don't sign a blank cheque
POA.
You don't have to choose between risking
government involvement if you have a mental incapacity, or risking well
intentioned children (or unscrupulous ones, for that matter) taking
control of your legal and financial life while you are still capable.
The lesson from Sally's sad story is not to avoid POAs, but to get the
right type of POA.
Programmed POA
A POA does not have to work like a light switch
either On or Off. You can
program it to operate exactly when you want, just in circumstances
specified by you, and only with the safeguards you set
out.
For most of my clients, I recommend a
"Springing" or "Triggering" POA.
This is programmed to work in stages. Once signed, it is in existence
but not in effect. Like the
air bag in your car, it is there only to protect you in an emergency,
not to interfere with your normal driving.
Again like the air bag, triggered by a
collision to protect you, this type of POA springs into place only when it
is really needed. You
determine what event or circumstances trigger it, and you identify who
decides if that trigger should be pulled. Most people are comfortable with
requiring a doctor who has examined you, and is of the opinion that you
are not mentally capable, to confirm this opinion in writing. If so, then the POA allows your
chosen, trusted helper to keep your affairs in good order without
interference from the government or going to Court. If not, those chosen trusted
helpers will have to sweet talk you into taking their advice, not just
side step you by reaching for your blank cheque
POA.
Detecting blank
cheques
How can you tell if you have a blank cheque
POA? Look for clear wording
that restricts the POA operation.
If it contains words like ". . .take effect immediately, or upon
execution", it is a blank cheque.
Don't be mislead by words that allow it to operate ". . .if or while"
you are incapable. That is
not the same as "if but only if" you are incapable. Look to see if a test is set
out, like the requirement of a medical confirmation of incapacity. Really the only sensible way to
be sure about this important pitfall is to ask a lawyer to read over
your POA. The lawyer
will confirm whether it can
be used while you are still capable. If it is a blank cheque, then I
suggest you ask that same lawyer to replace it with a Springing Power of
Attorney for you. Then you
can rest reassured that when you see a moving truck coming down your
street, it will be for the neighbours!
Medical
pitfalls
Some provinces permit not only property or financial
POAs, but also medical or personal care POAs. These enable you to make medical
decisions now that have legal effect later, such as removing life
support in an irreversible coma, They empower you to select and
structure the people authorized to provide your doctor with consents for
your medical treatment if you are unable to do so yourself. They can
reduce delays in getting medical treatment if you are unable to consent
to necessary treatment. But
be alert - there are pitfalls for these important protective documents
too.
No matter how well you choose your safety net people, despite how
carefully you structure them to ensure they cannot work at cross
purposes in a medical emergency, even though you are thorough with your
advance medical directives, if the POA information does not show up at
the right time, at the right place, and with the right person, you have
wasted your efforts and put yourself at risk.
Take Mac Campbell for example. He lives with his wife Peg
outside Toronto. When his
lawyer told him the benefits of a medical type POA, he arranged for one
of his own. Once signed, he
then prudently tucked it away in the safety deposit box at his bank,
along with his Will and other important papers.
When Mac collapsed while shopping one weekend, an ambulance
quickly whisked him to the nearest hospital emergency room. The doctor soon diagnosed the
nature of his collapse, but Mac was too mentally confused to provide an
informed consent to the doctor's recommendations for treatment. Because his medical situation,
while serious, was not a life threatening emergency, the doctor was not
permitted by law to provide the treatment until consent to that
treatment was received from an authorized person.
The hidden POA
Peg was out of town that
afternoon and had no idea that Mac was at the hospital. Mac was in no shape to say
who to call and a phone number.
The hospital staff found his health card and driver's licence in
his wallet. They looked up
his number in the phone book, but no one was home. His medical POA, designed to
identify the people authorized to consent to his medical treatment, to
assist in contacting them and to provide the necessary medical
information? Securely
locked away in the safety deposit box at a financial institution whose
doors would not open for two days.
The POA is certainly safe and secure in a
safety deposit box. It is
also virtually inaccessible in a medical emergency and therefor useless
to help you in a crisis. You are at risk if you cannot consent to
treatment yourself, and you are unable to direct the doctor to your
safety net people, your essential medical information and the medical
directives you have made.
The dangers are of delays in getting treatment started, and of
the wrong people making decisions for you, and of medical treatment you
do not want. These are the
very pitfalls the medical POA is supposed to protect
against.
Avoid these
pitfalls
A medical POA is of little protective value to
you unless the right information reaches the right people at the right
time. Get around these
pitfalls by distributing copies of the medical POA where they and the
important accompanying information will come to the attention of the
necessary people without delay.
·
One
copy must be kept with your medical records at your family physician's
office. If you are in the
hospital needing treatment, the medical team will routinely consult your
medical records. They need
to know what medications you are on, your medical history, your
allergies and more in order to determine the best form of
treatment. Your medical
records will be accessed without requiring your involvement – which is
critical since at the time you may be unable to
help.
·
A
note must be attached to this copy, with the names, addresses and all
possible phone numbers for your designated medical decision makers
Accessing your records will provide the hospital staff with not only the
medical information required, but also your signed POA and note. This identifies the people who
should be contacted, provides many ways to contact them, and notifies of
medical decisions you yourself have already
made.
·
A second copy should be kept by you, at
home for your own reference.
You should check it from time to time to ensure the people named
continue to be the best available to assist you if needed.
·
Other copies should be in the hands of
your designated people, to be readily available to remind them of your
instructions and their responsibility if you are in a medical
crisis.
·
And
yes, keeping a copy in the safety deposit box or your lawyer's vault
actually is a good idea too.
This purpose of this copy however is not to assist in the medical
emergency, but to provide for physical security. If other copies are somehow
destroyed or mislaid, they are easily replaced by taking copies from
those with the bank or the lawyer.
Medical contact
card
Finally, and perhaps most crucially, prepare a Medical
Contact Card. The one I
provide to my clients is just the size of a business card. It says that there is a medical
Power of Attorney; provides the name and phone number of each safety net
person, and gives the family doctor's name and phone number. This is then attached to their
Health Cards, with a piece of tape or an
elastic.
In a worse case situation, if you are rushed to
the hospital in a medical crisis without the knowledge of your family,
they cannot be waiting at the emergency room door to tell the doctors
what to do. If you are
unconscious or incapable, you cannot tell the staff who should be
contacted. But, hospital
procedure requires the staff to locate the Health Card or proof of
health insurance as soon as possible after arrival. They will go straight to your
wallet or purse to find it if you can't hand it over yourself. Since your emergency information
is attached, they will also automatically know that you have a medical
POA, the names of your chosen people, the order in which to contact
them, and at least one phone number for each person.
Instead of waiting hours in a non-life
threatening situation until a family member becomes so worried he or she
contacts the hospital, within minutes the staff will be calling to
advise your chosen people of the medical situation and requesting
consents to start the appropriate
treatment.
Even in a life threatening emergency, when by
law the doctor may proceed without consent to save your life, proper use
of the POA can reduce delays.
The emergency room doctor may not need to wait for someone to
authorize treatment, but still may have to wait until more information
about your medications, allergies and existing health complications
turns up before it is safe to decide the appropriate treatment. With your own doctor's name and
phone number on the Medical Contact Card, the hospital staff can be
tracking down the necessary details within minutes of your
admission. This can reduce
treatment delays significantly, and as a bonus, not only is the needed
medical information revealed, but so is the signed copy of your medical
POA, with more contact phone numbers and your own instructions about
treatment in certain situations.
Safety first
Simply signing your
Powers of Attorney doesn't mean you're safe. Make sure the POA is of the
right type for your purposes, and the protection is available when most
needed and without delay.
By avoiding the pitfalls, you can depend upon your POAs to
protect when you cannot defend yourself.
