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

In the continuation of the discussion on Powers of Attorney for Property (“POAs”) in Ontario, it is important to understand the nuances of drafting and executing these documents to ensure their validity and effectiveness. As mentioned in Part I of this series, which can be found here, Ontario  recognizes POAs under common law, the Powers of Attorney Act[1] (“POAA”) and the Substitute Decisions Act[2] (“SDA”).

Drafting and Executing a POAP

The majority of POAs prepared today fall under the SDA, which has stringent requirements for drafting and execution. This is in contrast to the POAA, which is a short  piece of legislation with only three sections and no formal execution requirements.

For a Continuing Power of Attorney for Property (“CPOAP”) under the SDA to be valid, it must explicitly state that it continues to be effective during the grantor’s incapacity or be titled as such.

With respect to execution requirements, a capable grantor must sign the document in the presence of two witnesses who are at least 18 years old. Importantly, these witnesses cannot be:

• The named attorney or their spouse/partner
• The grantor’s spouse/partner
• A child of the grantor or a person treated as such by the grantor
• A person whose property is under guardianship

Prior to the COVID-19 pandemic, these witnesses had to be physically present together. However, Ontario now permits video and counterpart witnessing.

Failure to comply with these requirements renders the CPOAP ineffective unless validated by a court application. [3]

Additional requirements

In addition to execution requirements, the grantor must freely and voluntarily give the POA, being at least 18 years old. The grantor must also have the capacity to grant the POA.

Without delving too deep into the concept of capacity for these purposes, a POA is valid only if the grantor was capable at the time of signing. The SDA defines capacity as being mentally capable. To grant a POA, the grantor must understand both the decision to delegate property decisions and the contents of the POA, including the attorney’s authority. Subsection 8(1) of the SDA specifies that the grantor must know the nature and approximate value of their property, their obligations to dependents, the potential for asset value decline without prudent management, and the scope of the attorney’s powers, excluding will-making. These provisions are typically included in the POA document, which the grantor acknowledges and signs.

Termination of a POA

Understanding the “life” of a POA is essential. Termination can occur in several ways, depending on the type of POA, including:

• Incapacity: A POA under the POAA typically terminates if the grantor becomes incapable. Similarly, a POA which is not a CPOAP terminates upon incapacity of the grantor.
• Revocation: The grantor can revoke a POA in writing, adhering to the same formalities needed for its execution (two witnesses, present simultaneously, etc.).
• New POA: Executing a new general POA for property can terminate an existing one, especially if it does not account for multiple POAs. For instance, a general continuing POA for property would normally cover all assets, making additional POAs for specific assets unnecessary.
• Death of the Attorney: If the named attorney dies and no successor is named, the POA terminates.
• Death of the Grantor: The POA automatically terminates upon the grantor’s death.

Drafting and executing a POA, particularly a CPOAP, requires careful adherence to legal requirements to ensure its validity and effectiveness. Understanding the termination conditions is equally important for effective estate planning. As with any legal document, seeking the appropriate legal advice is crucial to avoid unintended consequences and ensure the grantor’s wishes are accurately reflected and upheld. The next part of this series will delve deeper into specific provisions to consider when preparing POAs, providing insights and practical guidance for drafting these documents with confidence and precision.

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

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

[3] Ibid, at s. 10(4).