Appoint power of attorney for ultimate protection: Larson
By AdvocateDaily.com Staff
Appointing a power of attorney (POA) to make decisions about finances is always preferable to having a joint bank account or adding a joint owner to property, says Thunder Bay wills and estates lawyer Rene Larson.
“I highly recommend that the power of attorney for property be used because of the protection it gives against abuse by the party who’s put in the position of managing financial and property assets,” says Larson, principal of Larson Lawyers Professional Corporation.
A POA for property, used in cases of physical or mental incapacity, “is under a fiduciary obligation to act solely in the interests of the donor of the attorney at all times, and not in the interest of the power of attorney,” he tells AdvocateDaily.com.
Under the Substitute Decisions Act, “the power of attorney has an obligation to account under Ontario law for his or her dealings with the property,” he adds, calling it “the key consideration.”
When property or bank accounts are jointly held, there is nothing the authorities can do in cases of impropriety, Larson says.
“The police will say they can’t do a thing. This person has been made an owner of the property and is entitled to all the rights of an owner, and there’s absolutely no way the police can take any kind of criminal action against somebody in that case,” he says.
It’s also not possible for the original owner of a property to remove someone who’s been made a joint owner without offering to purchase their share, Larson says. “If you make someone a joint owner, the courts will consider it an irrevocable gift and you cannot just simply ask for the property back.”
But a POA for property gives the donor “leverage” when there are concerns about how assets are being handled, Larson says.
The POA can be asked to “make a formal accounting in front of a judge in Superior Court. They are then obligated to provide an opening balance of assets, itemize all the transactions, and justify whatever compensation the attorney is intending to take or has already taken for doing the work as the power of attorney,” he explains.
“Controlling the compensation is key, but the kind of abuse that really happens is when the power of attorney actually converts the assets to his or her own benefit and they just go missing.”
Larson says that unlike a joint ownership situation, the police can be asked to investigate when there is “any kind of financial abuse by the power of attorney for property. When you’ve gone through the accounting process, if you find out that there has been some kind of fraud or conversion of assets that’s doesn’t benefit the donor of the power of attorney, the police can probably lay criminal charges and support getting money back from the power of attorney.”
The POA for personal care, also granted under Ontario’s Substitute Decisions Act, gives someone the authority to make personal care decisions on behalf of a person who becomes mentally incapable. Those decisions can range from where the person lives and what they eat, to health-care and end-of-life issues,” he says.
Like the POA for property, the POA for personal care must be selected before the individual becomes mentally incapacitated, and Larson says it’s essential that at least one alternate name be provided in case the first person is unable to fulfil their duties.
“The law in Ontario presumes that people have the capacity to make decisions for themselves until it’s demonstrated that they don’t. A person may be able to make some personal care decisions but not others,” he says.
“The wisest method of approach for the person who’s been appointed to be the power of attorney for personal care is to get instructions from the donor. Whether or not those instructions make sense is always a question mark, but at least the person who holds that paper can talk to the doctor, talk to the hospital and make arrangements for long-term care if necessary.”