Continuing Power of Attorney for Property FAQ
What is a Continuing Power of Attorney for Property (CPAP)?
A Continuing Power of Attorney for Property (referred to in this article as “CPAP”) allows a person (the “grantor”) to give to another person (the “attorney”), the power to do anything on the grantor’s behalf with respect to the financial matters of the grantor, whether the grantor is incapacitated or not. The only exception is that the attorney cannot make a new Will. Though the term “attorney” implies a lawyer, a lawyer need not be the attorney. The granting of the CPAP does not prevent the grantor from continuing to act for himself or herself.
Why have a Continuing Power of Attorney for Property (CPAP)?
The main reason to have a CPAP is to ensure that upon the grantor’s incapacity, the person the grantor appointed as the attorney, would act on behalf of the grantor, otherwise the Ontario Government will in effect become the attorney. A family member may be appointed to take over from the Government but that is after time and money on legal fees are spent and the family member appointed may not be the one the grantor would have chosen as his/her attorney.
Who can make a CPAP?
A person must be over eighteen years of age to grant a CPAP. The Substitute Decisions Act, (hereafter referred to as the “Act”) states a person is capable of giving this power of attorney if a number of criteria are met. Those criteria are the person: (a) knows what kind of property he or she has and the approximate value of it; (b) is aware of obligations owed to dependants; (c) knows the attorney will be able to do anything on the person’s behalf in respect of assets, except make a Will and be subject to exceptions in the power of attorney; (d) knows the attorney is required to account; (e) knows the power of attorney may be revoked by the grantor; (f) appreciates that unless the attorney manages the property prudently its value may decline; (g) appreciates the possibility that the attorney could misuse the authority given to him or her. The test of granting a power of attorney is therefore not related to the ability to manage one’s financial affairs but in some regards a lesser test.
What decisions have to be made in making a CPAP?
- Choosing the Attorney: The only legal requirement is that the attorney be over eighteen years of age. It should be someone the grantor trusts. More than one attorney may be appointed, in which case the grantor must decide whether the attorneys must act together or may act individually. One is also allowed to appoint alternate attorneys in case the attorney appointed is not alive or unable to act as the attorney.
- Effective Date: The CPAP allows one to state when the CPAP comes into effect. It is recommended (and the usual practice) that the CPAP comes into effect immediately on signing the PA. The other alternative under the Act is to state that the CPAP comes into effect when the grantor is incapable. The grantor may set out the test of capacity. If the grantor is worried that the attorney will use his or her powers before the incapacity of the grantor without the grantor’s knowledge, in my opinion, there is not enough trust to appoint that attorney in the first place.
- Compensation: The CPAP may state if the attorney may take compensation for work performed and, if so, how much. The Government has a fee schedule for attorneys. In most cases a relative appointed to be the attorney will not take compensation, but if he or she is doing considerable work, then he or she should be compensated.
- Gifts, Loans and Charitable Donations: The Act allows for the attorney to make gifts and loans to friends and relatives and donations to charities. A gift or loan can only be made if there was intention shown by the grantor to make such a gift or loan prior to becoming incapacitated. It is therefore best to spell out in CPAP whether the grantor does or does not want gifts and loans to be made to friends and relatives and whether donations can be made to charities.
- Restrictions and Conditions: The CPAP may put any restrictions and conditions on the attorney’s use of the CPAP. Such restrictions may relate to the type of investments the attorney can invest in or a request that certain assets be dealt with in specific ways.
What are the Duties of the Attorney?
An attorney is to act honestly and diligently for the grantor’s benefit. An attorney is to explain to the incapable person what the attorney does and is to encourage the incapable person’s participation. There is also the important obligation to keep accounts of all financial transactions.
The attorney is obligated to make expenditures that are reasonable and necessary for the grantor’s care and the care of the grantor’s dependants and to others whom the grantor has a legal obligation.
What form must the CPAP be in?
There is no requirement that a specific form must be used, simply that the intention of the grantor must be clear. The CPAP must be in writing and signed in front of two witnesses. Certain people may not be a witness such as the attorney, the attorney’s spouse or partner, the grantor’s spouse or partner, a child of the grantor (which includes a non-blood related person who is treated as a child by the grantor), a person under eighteen years of age, nor anyone under personal or property guardianship.
There is no requirement that the CPAP be registered. There is no Government registry.
A lawyer does not need to draft the CPAP to make it valid, however, the lawyer generally is doing much more than drafting the CPAP. He or she would be providing advice as to how the CPAP operates.
When is a CPAP terminated?
The CPAP is terminated when the grantor dies or when the grantor makes a new CPAP. The CPAP is terminated when the attorney dies, becomes incapacitated or resigns and there is no joint or alternate attorney.
The Ontario Government’s website at https://www.attorneygeneral.jus.gov.on.ca/english/family/pgt/incapacity/poa.php has Powers of Attorney kits and further information