Today’s blog is written by Jessica J. Butler, Law Clerk at Fasken LLP.
Powers of attorney can be an area of confusion for those clients looking to create or update their estate plans. Clients can be uncertain as to what kinds of duties and responsibilities someone appointed under a power of attorney may have. Similarly, some clients are unsure of how beneficiary designations impact their estate plan. Today, I would like to review a particular issue that can arise when these two areas overlap.
Let’s start with the basics – a power of attorney is a legal document that gives someone else the right to make decisions on the grantor’s behalf. There are two kinds of powers of attorney – one for personal care, and one for property. An attorney for personal care can make decisions regarding health care, housing, and other aspects of one’s personal affairs. An attorney for property can make decisions involving financial matters. 1
A beneficiary designation is often made when a financial or retirement account or life insurance policy is opened or purchased. It allows you to name a beneficiary to receive the proceeds of said account or policy directly on death, allowing the proceeds to fall outside the estate.
Now let’s drill a bit deeper into the powers given to a power of attorney for property. Unless limited by the instrument itself, an attorney for property can do almost everything the grantor can do –banking, signing cheques, buying or selling real estate, purchasing consumer goods – an attorney for property does not become owner of the property, but the power of attorney grants authority to manage it on the grantor’s behalf. This power is therefore quite broad.
There may be times when an attorney for property may think it is in the best interest of the grantor to alter a beneficiary designation, for example, if the intended beneficiary pre-deceases the grantor. So, does this mean someone acting under a power of attorney for property can change a beneficiary designation?
To some clients’ surprise, the answer is no. “But Jessica,” you might say, “a power of attorney for property grants my attorney authority to make decisions regarding my financial matters – wouldn’t designating the proceeds of a financial account fall under the jurisdiction of my attorney for property?”
This logic is certainly understandable, but the key determinate here is the Courts finding that the designation of a beneficiary on an account is considered a “testamentary disposition”. 2
Why is this important?
For that we need to turn to Section 7 (2) of the Substitute Decisions Act 3 which says:
“the continuing power of attorney may authorize the person named as attorney to do on the grantor’s behalf anything in respect of property that grantor could do if capable, except make a will [emphasis mine]”.
Both case law and the statutes that govern substitute decision making generally confirm that an attorney is restricted from making a will on a grantor’s behalf. If an attorney had the ability to change a beneficiary designation it would ipso facto be giving an attorney, the ability to alter the intention and testamentary wishes of the grantor. The law is clear that testamentary wishes (the decisions about where and to whom one’s money goes on death) is something highly personal and unique to the individual and is not something that a person acting as attorney for property can hope to duplicate, even with the best of intentions.
It would be prudent to review beneficiary designations every so often to, among other things, ensure that (a) no changes ought to be made and (b) that the designations accurately reflect the intention of the individual who made the designation.
With November being “Make a Will” month, now is a good time as estate planners to be reminded of the importance of reviewing these designations with our clients at the time we are preparing new estate planning documents.
 It is important to note the difference between a general power of attorney for property and a continuing power of attorney for property. A general power of attorney for property ends if you become mentally incapable of managing your own affairs, whereas a continuing (sometimes referred to as ‘enduring’) power of attorney for property allows your attorney to continue acting once you become incapable.
 See for instance Fontana v Fontana,  BCJ No. 452 (SC) (QL); Rainsford v Gregoire, 2008 BCSC 310; Richardson Estate v Mew, (2008) 93 OR (3d) 537 at para 66 [Richardson (SC)], aff’d 2009 ONCA 403 [Richardson (CA)], Re Moss (Bankrupt), 2010 MBCA 39 [Moss], leave to appeal to SCC refused, 2010 Carswell Man 329 (WL Can) (SCC); Manufacturers Life Insurance, note 29.; Amherst Crane Rental Ltd. v Perring  2004 CanLii 18104 (ON CA) 187 O.A.C. 336 (Ont.C.A.); and, MacInnes v. MacInnes,  S.C.R. 2002.
 RSO 1992, c 30