This blog has been written by Pritika Deepak, Associate at Fasken LLP.

My peer, Robin Ellis, and I recently spoke at the Ontario Bar Association on the topic of important considerations when drafting powers of attorney (“POAs”) in Ontario. Preparing for this presentation was an excellent exercise as it served as a valuable reminder of several important aspects that must be reviewed carefully when preparing POAs for property.

The first part of this three-part series will provide an overview of the various types of POAs for property in Ontario. The second part will focus on the creation and termination of POAs for property while the last part will discuss specific provisions to consider when preparing such POAs.

What is it?

A POA is an authority given by an individual, commonly referred to as the “grantor”, to another person, the “attorney”, to act on the grantor’s behalf. The POA for property essentially allows the attorney to act as the grantor’s “agent” in managing the grantor’s financial assets, while the grantor retains ownership of these assets.

There are various types of POAs for property which differ in their scope, timing, and purpose. A few of these are discussed below.

General POAs for Property under the Powers of Attorney Act

A general POA for property is addressed in the Powers of Attorney Act [1], which is a rather short piece of legislation with only three sections. The Powers of Attorney Act refers to the individual giving the POA as the “donor” instead of a “grantor”. This type of POA for property is valid immediately upon execution. Under this type of POA, the attorney is authorized to do anything on behalf of the “donor” until the incapacity of the donor at which time the attorney’s authority terminates. These days it is quite rare to see POAs for property under the Powers of Attorney Act as the act has been substantially repealed.

Continuing POA for Property under the Substitute Decisions Act

A continuing POA for property under the Substitute Decisions Act [2] (“SDA”) is the most common type of POA for property in Ontario. The continuing POAs for property are most typically used when individuals are dealing with their estate and incapacity planning. Under this type of POA, the grantor gives the named attorney the authority to do anything that the grantor can do with their property, except make a Will. Unlike a general POA under the Powers of Attorney Act, the attorney’s authority continues in the event that the grantor becomes incapable. However, the POA for property must state that it is a “continuing power of attorney” or that it is the intention of the grantor that such POA may be exercised during the grantor’s incapacity. It is also important to note that a continuing POA for property is effective immediately upon execution and as such should be guarded carefully.

Springing POA for Property

A springing POA is a type of continuing POA which ‘springs’ into effect upon the occurrence of a certain event. This type of POA is of no force or effect until the event occurs. Most commonly, grantors provide for the springing POA to be triggered upon their incapacity. Although a useful tool, springing POAs can be challenging to implement and can cause significant delays, if the triggering event cannot be readily and easily determined.

Limited POA for Property

A limited POA for property is a type of POA which provides restrictions or limitations on the attorney’s authority. Such restrictions can specify the particular assets over which the attorney has authority, for example, shares of a family business or real property. They can also limit the duration of the POA where the authority would terminate on a certain date or upon the happening of a certain event. Limited POAs for property are often used by financial institutions to deal with accounts held at that specific institution. They are also commonly used by individuals who are travelling and need particular property to be managed during their absence.

Stay tuned for Part II which will outline the validity and termination of POAs for property.

[1] Powers of Attorney Act, R.S.O. 1990, c. P. 20.

[2] Substitute Decisions Act, 1992, S.O. 1992, c. 30, as amended.