Under the Ontario Substitute Decisions Act[i] (SDA), power of attorney (POA) for property appointments are made through a continuing or postponed POA for property. The continuing POA for property is one that takes effect immediately regardless of the grantor’s capacity to manage property and continues, if needed, through the development of the grantor’s incapacity such that the Office of the Public Guardian and Trustee (OPG&T) is not required to intervene with statutory guardianship. A postponed POA for property comes into effect on a specified date or when a specified contingency happens. The specified contingency is typically a declaration of incapacity. The method for determining incapacity can be stipulated by the grantor. For example, the grantor may specify that incapacity is to be determined by way of an assessment conducted by a specialized capacity assessor from the Ministry of the Attorney General even though capacity assessors are only required for statutory guardianship of property by the OPG&T. If the postponed POA for property does not provide a method for determining incapacity, the POA comes into effect when (a) the attorney is notified in the prescribed form by an assessor that the assessor has performed an assessment of the grantor’s capacity and has found that the grantor is incapable of managing property; or (b) the attorney is notified that a certificate of incapacity has been issued by a physician in respect of the grantor under the Mental Health Act[ii] (MHA). However, there are two caveats; under the SDA the assessment may not be carried out by an assessor if the person refuses to be assessed. The MHA permits a treating physician to make the declaration of incapacity to manage property, but only if the person is admitted to a Schedule 1 Psychiatric Facility.
Grantors of a postponed POA for property cannot predict the circumstances for which their incapacity may arise or how incapacity may present itself. With the development of dementia, the grantor may be suffering from paranoia, confusion, and impaired judgment. The grantor who chose by either default or by purpose for the assessment to be conducted by an assessor may not have the insight to recognize the need for cooperation with an assessor. This could effectively derail the effective activation of the POA, something the grantor may not have appreciated when originally granting the postponed POA. Alternatively, the grantor may have chosen for their family doctor to provide the declaration of incapacity but may not have appreciated that the physician may not be suitably trained in the evaluation of capacity to manage property and may be excessively reliant on information from the appointed attorney, who may be unduly eager to take over the management of the grantor’s property. In contrast to the right to refuse to cooperate with an assessor, refusal to be assessed by the family physician may be interpreted as indicative of incapacity. With assessments by an assessor, notification of the right of appeal of a finding of incapacity is mandated, but not so with declarations made by any others stipulated by the grantor (such as physicians) in a postponed POA for property.
Health is not predictable and the circumstances that will lead to the need for activation of the postponed POA for property cannot be foreseen by the grantor. Regardless of how activation is stipulated, it is possible that there will be unanticipated factors that could lead to either an obstruction in obtaining a declaration of incapacity, or alternatively an unduly obtained unfair declaration of incapacity.
In the summary, when it comes to a postponed POA for property, grantors beware: the scenarios involved and consequences of your specified contingency may be open to unforeseen factors and consequences!
[i] Substitute Decisions Act, 1992, SO 1992, c 30, <https://canlii.ca/t/l0gb> retrieved on 2015-07-16
[ii] Mental Health Act, RSO 1990, c M.7, <https://canlii.ca/t/ksnp> retrieved on 2015-08-13