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

The final part of this three-part blog series discussing Powers of Attorney for Property (“POAs”) in Ontario, will focus on specific provisions and some considerations to keep in mind when drafting these documents. Specifically, it will provide a high-level overview of the use of multiple POAs, considerations for appointments, and conflict of interest provisions in POAs.

Multiple POAs

There may be situations where having multiple POAs is advisable. This can arise from the complexity of client assets, such as a mix of personal and corporately owned assets, or due to the geographical distribution of their properties and interests.

In cases involving both personal and corporate assets, it is often advisable to appoint different attorneys through multiple POAs. A business associate with a deep understanding of the grantor’s business may be best for managing corporate assets, while a family member might be more suitable for personal assets, ensuring focused and expert management. For clients with assets in multiple jurisdictions, separate POAs are essential to comply with varying local laws and to facilitate smooth asset management. For example, a Canadian who owns property in Florida should generally have a POA prepared in Florida. Additionally, differences in provincial laws within Canada, such as those between Ontario and British Columbia, may also necessitate separate POAs.

When creating or working with multiple POAs, it is crucial to draft these documents carefully to avoid any inadvertent revocation of one by another. Each POA should explicitly acknowledge the existence of others, ensuring that all documents can coexist and function as intended without legal conflicts. Typically, one can use language such as: “ I expressly provide that I have multiple Powers of Attorney for Property”. Alternatively, if the intention is to revoke all previous POAs with the exception of one, the following language may be useful: “I revoke all previous Powers of Attorney for Property given by me, except for the Power of Attorney I executed on the __ day of ___, and I expressly provide that I have multiple Powers of Attorney for Property”.

Appointment of Attorneys

When appointing attorneys, consideration must be given, among other factors, to the choice of attorney, the number, any conditions that they must satisfy, and decision making powers.

The requirements of an attorney were discussed in part II of the blog here.

When selecting an attorney for a POA, many people initially consider family members, such as a spouse, child, or sibling. However, this decision should take into account factors like the complexity of assets and the individual’s capability, age, and location. For instance, appointing a non-resident attorney in the U.S. presents specific challenges, as U.S. resident attorneys must comply with U.S. reporting requirements if they have signing authority over Canadian assets exceeding $10,000 USD. For complex assets, choosing an attorney with experience in asset management is advisable. It’s also important to consider relationship dynamics, and include conditions to address potential breakdowns in relationships. Additional clauses may be added to the appointment/condition provisions of the POA to account for such dynamics, such as “… provided my [chosen attorney], and I are not living separate and apart at the relevant time.” Alternatively, a trust company may be a viable option, especially for complex assets or when local representatives are unavailable. Trust companies often require specific clauses and compensation agreements, so coordinating with a drafting lawyer is essential to meet these requirements.

When deciding on the number of attorneys to appoint under a POA, it’s important to weigh both legal flexibility and practical efficiency. While there is no limit on the number of attorneys one can appoint, typically two or three are recommended. It is also wise to consider decision-making processes; allowing attorneys to act by majority to streamline decision-making and avoid the pitfalls of requiring unanimous consent.

Grantors of a POA have the option to appoint attorneys either jointly, where all must act unanimously, or jointly and severally, which allows them to act together or independently. While joint appointments can help prevent abuse by requiring collective decision-making, they may pose challenges if all attorneys need to agree on actions, such as signing a cheque from an account. To address potential issues, it’s important to select like-minded individuals who can work well together and to establish clear mechanisms for resolving deadlocks. Including a delegation provision can also enhance flexibility in decision-making processes.

Conflict of Interest

Under the Substitute Decisions Act[1]  and common law, attorneys for property are prohibited from acting in a conflict of interest unless explicitly authorized. This means they cannot use their power for personal gain. When appointing a business associate or advisor as an attorney, it’s important to address potential conflicts in the POA. This can include authorizing the attorney to act despite conflicts or requiring disclosure of conflicts to other attorneys.

Conclusion

While POAs may appear straightforward, overlooking key factors can lead to significant consequences. Each POA should be meticulously tailored to the grantor’s specific circumstances, ensuring effective and compliant management of their affairs. For individuals with complex asset portfolios or international interests, engaging legal professionals with relevant experience is crucial. These experts can navigate the intricate legal landscape and ensure the creation of effective POAs that protect the grantor’s interests and uphold their intentions.

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