Why Everybody Ought to Have Persevering with Power of Attorney Over Property: A Context for Private Harm – Litigation, Mediation, and Arbitration
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While a plaintiff’s mental incapacity in a formal personal injury / disability lawsuit is addressed through an attorney, the need for a guardian may be urgent and independent of a litigation. A rolling real estate power of attorney is a recommended way to ensure that your property is seamlessly and promptly serviced by your chosen attorney in the event of your incapacity. This helps avoid potential losses and financial difficulties, and requires only a small amount of upfront effort.
What is the power of attorney?
The term “power of attorney” refers to the legal document by which an “approver” grants decision-making authority to another person (the “attorney”). There are two main types of authority in Ontario:
1. A. Power of attorney for personal hygienewho hires a lawyer to make decisions about the personal care of a person who is unable to do so; and
2. A. Power of attorney for propertyauthorizing a lawyer to make real estate-related decisions.
The powers of attorney for property are further divided into two types:
on. ON Non-ongoing power of attorney for propertyThis enables the attorney to make certain decisions in the absence of the approver. This is used when, for example, the fellow is out of the country for an extended period of time or when inconvenience such as temporary immobility due to injury or illness occurs. and
b. ON Continued power of attorney for propertyThis enables the attorney to make decisions regarding the grantor’s property and financial affairs if the grantor becomes mentally challenged. A continuing property attorney may do anything on your behalf other than making your final will, the scope and beginning of the attorney’s powers of attorney solely at the discretion of the grantor, if so chosen.
Who can be a grantor?
Section 8 of the Substitute Decisions Act (Ontario), SO 1992, c30 (SDA) provides that:
8 (1) A person is able to issue a permanent power of attorney if they
(a) knows what kind of property he or she has and what its approximate value is;
(b) has knowledge of obligations to his relatives;
(c) knows that the attorney will be able to do anything in relation to property on behalf of the person that the person could do, except as to make a will, subject to those set out in the power of attorney Conditions and restrictions;
(d) knows that the attorney must explain his dealings with the person’s property;
(e) knows that if he or she is able to do so, he or she can revoke the continuing power of attorney;
(f) recognizes that if the attorney does not manage the property prudently, its value may decrease; and
(g) estimates the possibility that the attorney could abuse the authority conferred on him.
(2) A person is able to revoke a continuing power of attorney if he is able to issue one.
In particular, s.9 (1) SDA provides that a person may not be able to manage their own property and still be able to issue ongoing power of attorney. Therefore, Ontario case law provides for an additional capacity test, and page 8 cannot normally be considered absolutely necessary.
Personal injury and disability of the plaintiff outside of litigation
Situations that result in injury or disability can lead to litigation. The legal counsel of a mentally incapable claimant may bring or continue a lawsuit on behalf of the claimant without judicial appointment provided that they submit an affidavit to the court.
However, the plaintiff’s attorney has no powers outside of the litigation and cannot handle the plaintiff’s other property matters, which could potentially be much more significant and urgent than the litigation itself.
For all property matters unrelated to the dispute in question and not having permanent authority over property, the guardian must be appointed on behalf of the plaintiff either by the court or by the public guardian and trustee who is the ultimate legal guardian. This means that the process must be initiated and any proceeding can be lengthy and costly due to the need for legal representation and the cost of verifying the verifier’s evidence by properly qualified assessors and medical experts.
In addition to these costs, a delay in property guardianship can adversely affect the plaintiff’s assets. This could, for example, prevent acquisitions, liquidations, financings or significantly delay the proper execution and pursuit of insurance coverage or the application for disability benefits.
The above problems can place the plaintiff and his relatives in a difficult and undesirable financial position, especially during a difficult time of injury or illness when they suffer loss of income or wages. What could have been achieved with the modest cost of properly preparing a rolling power of attorney for real estate in advance creates a sudden and short-term need for unnecessary legal costs, a delay in the payment of insurance coverage or disability benefits, and financial losses to the plaintiff.
Establish ongoing power of attorney for property
The grantee should select a trustworthy person who is aware of the grantee’s ownership intentions and who will act as the grantee’s advocate. There are certain formal legal requirements for drafting and certification of ongoing power of attorney for property that must be met for the documents to be valid.
The Attorney General’s Department has very detailed information including a kit here on how to properly execute and prepare a rolling power of attorney for property.
Despite its apparent simplicity, the ongoing power of attorney for property may require legal advice before it is carried out, as it can have far-reaching ramifications for the grantor’s property. For example, the applicant may need advice on how to start, how to keep safe, how to use and the potential variety of attorneys, the decision rules involved, and / or attorney replacement (s), to name a few. If the personal and family environment of the scholarship holder is controversial, legal advice is recommended.
Legal advice is strongly recommended when preparing ongoing power of attorney for property following the violation or the onset of a disability that compromises the grantor’s ability. The ability to power of attorney is a legal test, and since the fluctuating ability is approved by the courts, legal assessment and opinion would be a must to properly and solidly establish the attorney and ultimately make it functional and valid, when he is later challenged for some reason.
Originally published by Devry Smith Frank, January 2021
The content of this article is intended to provide general guidance on the subject. A professional should be obtained about your particular circumstances.