Lawyers Financial
Estates & Wills & Trusts

The benefits and risks of naming a second POA

Appointing more than one person to be an attorney for property has its benefits, not the least of which is convenience, but it’s not always necessary and can have a downside as well, Toronto estates and trusts lawyer Ian Hull tells

“For most people who have standard affairs, such as paying the bills and making sure that their finances are well managed, one attorney is good enough. When you add more, you create bureaucracy and potential headaches,” says Hull, co-founding partner of Hull & Hull LLP.

“But you also create oversight, which is a good thing. If you think you need oversight, you can add one more person. Or if you need flexibility because the person you want to name as the power of attorney lives in a different city, you can use two, just to make sure any one of them can do it.”

If two POAs for property are appointed, he says, a decision must then be made if they’ll act jointly, or jointly and severally, which means they can make decisions and sign documents either together or, when the circumstances call for it, on their own.

“From a practical sense, most of my clients like to have two people available, appointed jointly and severally, so it gives them the flexibility to act on their own in circumstances where the other attorney isn’t around, but at the same time, both attorneys have sort of a watchdog role in the sense that they’re both able to legally get access to any information and make any decisions together,” Hull says.

In more complex business situations, he says, “sometimes people say they want them acting jointly because there’s a great deal at stake in every transaction — it’s not just paying a Rogers' bill — so you want them to know it's not that you don’t trust them, but that they’re both going to work together and consider judiciously and carefully their decisions.”

Hull says when a business is involved and affairs are more complicated, clients who choose to have two POAs acting jointly should also consider appointing a third person, who can break any deadlocks on decisions and provide more oversight.

“Most of the time, when you get into those kinds of situations, it’s an operating company or something where you need heavy activity on a day-to-day basis. The thing about a power of attorney for property is you can do anything except make a will. Your powers are very broad, which is a good thing, but you need to personalize it to your circumstances,” he says.

Although POAs are given broad authority, Hull points out “They still have to be engaged in transparency and inclusiveness with the family. So even though the appointment’s made, it doesn’t mean that the power of attorney has the only word. If they misbehave, there are many legal remedies to straighten out the behaviour of the attorney.”

When appointing a POA, it’s necessary to determine when it takes effect, he says. “There are really two schools of thought. One is that a power of attorney comes into effect the moment it is signed, and the second is that a power of attorney doesn’t spring into effect until you have a condition met, typically a note from your doctor confirming that, in fact, you are incapable.”

Hull says most of his clients use the first approach and allow their POA to come into force the day it’s signed, but he tells them to “make sure you trust that person today.”

The second approach, what he calls the “springing” POA, “comes with its own headaches” because a doctor has to carry out a capacity assessment.

“If you do a power of attorney with someone you trust, it’s effective the day you signed it, so it’s much easier to use when the day comes that you need it.”

It’s also important to appoint an alternate, who can step in if a POA dies or becomes incapacitated, he says, adding that while that happens rarely, it’s still good to be prepared.

“There’s a real mix of schools of thought on who your power of attorney should be and on what basis. It really is driven by your personal circumstances,” Hull says. “I always say to my clients, ‘You’re signing a blank cheque to that individual, so you have to immensely trust them in every respect.’”

To Read More Ian Hull Posts Click Here
Lawyer Directory
BridgePoint Financial Services (post to 5.31.19)Toronto Lawyers Association (post to 6.30.19)MKD International (post until Sept. 30/19)Feldstein Family Law (post until May 31/19)Legal Print & Copy Inc.Morrow Mediation Lawrence ForstnerAchkar Law