Canada: What Will Happen If You Become Incapable Of Managing Your Financial Affairs And You Do Not Have A Proper Power Of Attorney For Property?

What is a Power of Attorney for Property?

A Power of Attorney for Property appoints someone (the "attorney"), or more than one person (the "attorneys"), to act for you (the "grantor") in your name, to do anything in connection with any property owned by you, unless that document restricts specifically what the attorney can do. Once that document is properly signed by the grantor and witnessed, the attorney is empowered to act immediately for the grantor. That means that the attorney "steps into the grantor's shoes" and can do anything that the grantor could do with the grantor's property, subject to certain limitations – such as not being able to make a new will for the grantor.

However, unless that document states that it is a "Continuing" Power of Attorney, or its terms make it clear that it can be acted upon in case of the incapacity of the grantor, it cannot be used after the grantor does, indeed, become incapable of managing property.

Thus, the "proper" Power of Attorney for Property for you to have – in the context of this answer – is only a Continuing Power of Attorney.

In the absence of a Continuing Power of Attorney for Property and you become incapable, the Ontario Public Guardian and Trustee (the "PGT") – a provincial government office – automatically becomes the "statutory guardian of property".

It is, however, likely that a spouse, partner, family member or friend who is close to the incapable person will want to step in to manage the incapable person's financial affairs, rather than have that done by someone representing a public office. If so, either the PGT or the Court can name an alternate as the guardian of the incapable person's property. Also, if a spouse or partner consents, a Trust Company can be so appointed.

When making that application, the applicant must, among other things, prepare and submit a detailed "management plan", demonstrating, in some detail, how the affairs of the incapable person will be managed.

Additionally, when appointing an individual as the guardian of property for the incapable person monetary security may be required to ensure that the applicant, once appointed, carries out the duties properly and/or conditions may be imposed on the appointment.

As can be seen from what is outlined above, without a Continuing Power of Attorney for Property in place, specific mandated steps have to be taken, involving considerable expenditure of time and substantial cost, before an incapable person's property can be managed. So, too, the guardian has to follow that approved management plan and, on an ongoing basis, satisfy the authorities that such a plan has been adhered to in the process of managing those affairs.

Finally, as important as any other situation forced upon the incapable person, is the possibility that whoever is ultimately appointed as guardian may well be quite a different person from the one who the incapable person may have wanted and who could have been appointed appropriately in a Continuing Power of Attorney for Property.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.