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.
POWERS OF ATTORNEY FOR PERSONAL CARE
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.
POWERS 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!
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.
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!
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.
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.