All About Estates

Power of Attorney for Property: The other sign of the coin

This Blog was written by Suzanna Walter, Estate and Trust Consultant with Scotia Wealth Management

In my previous blog, Road Testing your Incapacity Plan, I reviewed incapacity planning from the point of view of the Grantor (the person appointing the attorney) in the Continuing Power of Attorney for Property (CPA).

Now, I want to look at CPA from the other side of the coin; namely from the point of view of third parties, such as financial institutions, lawyers, and indeed anyone who is being asked to accept the authority of the attorney appointed by the CPA to act on behalf of the Grantor.

In Ontario, the authority of the appointed attorney is not generally confirmed by any court proceeding. In other words, there is no equivalent of a Certificate of Appointment of Estate Trustee (as it is known in Ontario) or Probate when dealing with an attorney for property. This means third parties must each develop their own policies and procedure for reviewing the CPA and determining the risks and potential liability of accepting or not accepting the authority and/or direction of the attorney.

For larger organizations, such as financial institutions there are reviews at different levels. A review at a higher level, such as by in house counsel, could be due to a perceived higher risk to the organization or because of red flags raised due to what the attorney is requesting or because of concerns of fraud or financial abuse.

A review of the CPA could include the following:

  1. Requesting the original CPA document or a notarized copy of the CPA so that the document can be reviewed.
  2. Check the date the CPA was signed to ensure that it complies with the governing legislation in force at the time the CPA was signed. In Ontario, this legislation is the Substitute Decision Act (SDA.) which came into force on April 3, 1995. This legislation requires two qualified witnesses who cannot be the named attorney, the attorney’s spouse or partner, the grantor’s spouse or partner, the grantor’s child or a person the grantor treats as a child. The previous legislation required only one witness so it is important to check the date of execution of the CPA. A CPA with only one witness dated after the change in legislation is not valid.
  3. Has the CPA been prepared and witnessed by a lawyer or is it a CPA from a Will Kit which is available on the internet? This is not to say the CPAs from Will Kits are not valid but a CPA prepared by a lawyer would give greater assurance that the document was properly executed, the grantor had capacity and was not unduly influenced.
  4. Are there any restrictions or conditions in the CPA which limit authority of the attorney? For example: if the authority of the attorney is conditional upon the Grantor being incapable what documentation is necessary to show that the Grantor is incapable?
  5. Does the CPA specifically provide that it is a Continuing Power of Attorney and the authority of the attorney continues after incapacity of the Grantor?
  6. If the attorney is the second-choice attorney what documentation should be requested to establish that the first-choice attorney has died, resigned or is incapable? Does the CPA itself assist in determining what documentation is needed to allow the second -choice attorney to act?
  7. If the date the CPA was completed is very close to the date the third party was advised the Grantor was incapable should the third party consider asking for further assurances that the Grantor was capable of signing the CPA?
  8. If there are numerous alterations to the CPA document is it clear these alterations were not done after the CPA was signed and witnessed?

Each Financial Institution will have their own policies and procedures for reviewing CPAs. Many Banks, including all of the Big Five Banks, are members of The Canadian Bankers Association. The Association publishes on its website information on Voluntary Commitments and Codes of Conduct for members, which include a Code of Conduct for Delivery of Banking Services to Seniors and Commitment on Power of Attorney and Joint Deposit Accounts

In addition to reviewing the CPA, financial institutions and indeed anyone relying on a CPA must be mindful of a totally fictitious CPA being used by fraudsters.

This danger was illustrated in the case of Reviczky v. Meleknia 88 O.R.(3d) 699 in which the fraudsters created a CPA document and used this CPA to transfer title out of the true registered owner’s name. This real estate fraud resulted in the Law Society of Ontario putting out guidelines for lawyers on Power of Attorney in real estate transactions and the recommendation to avoid if possible, the use of Powers of Attorney in Real Estate transaction.

It is important to point out that the primary purpose of policies and guidelines in whether to accept the authority of the attorney is to protect the organization or the lawyer, as the case may be.  In the case of a Bank, once the authority of the attorney has been accepted the bank will not monitor all transactions that might be done by the Grantor’s attorney, particularly in an online or telephone banking environment. That is why it is very important for Grantors in CPA to select your Attorney very carefully.



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1 Comment

  1. Malcolm Burrows

    March 11, 2021 - 5:30 pm

    Suzanna – thank you for this excellent summary. Malcolm

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