The ability of a person to appoint a substitute decision-maker, known as an attorney, is a longstanding right of those in Ontario with the requisite capacity and is governed by various provincial legislation and case law.
This right is much the same in many other common law jurisdictions, but terminology may vary and there may be nuanced differences between the powers available to such substitute decision-makers.
In this blog, I will focus on Ontario exclusively, and the constraints imposed on the powers of an attorney.
Constraints on Powers of Attorney (POA) in Ontario
In Ontario, the governing legislation for substitute decision-making is the Substitute Decisions Act (SDA). The application of the SDA is informed by other legislation, including the Health Care Consent Act (HCCA) and the Trustee Act, in addition to case law.
To appoint an attorney, you can do so by signing a power of attorney. In the case of financial decision-making, typically a continuing power of attorney for property; in the case of personal care decision-making, including health and medical decisions, typically a power of attorney for personal care. The former presumes capacity at the age of eighteen, the latter at the age of sixteen.
This speaks to our first constraint: an attorney may not act upon the purported authority granted them under power of attorney where the document was entered into by a minor, being someone under the age of eighteen in Ontario, or, in the case of health care decisions, an individual under the age of sixteen.
Upon death, where a last will and testament was entered into, it will govern the distribution of your assets. Setting aside the concept of powers of appointment, the ability to enter into a binding distribution upon death is personal and cannot be delegated.
This speaks to our second constraint: attorneys are unable to interfere with a donor's testamentary dispositions, including by entering into a new will on behalf of the donor for whom the attorney is making decisions.
There is a related duty imposed upon an attorney for property to have knowledge of the gifts and distributions set out in the donor's last will and testament and ensure they review it, so as not to interfere with those intentions in the management of the donor's assets during his or her lifetime.
Trust declarations are not presumed to be testamentary dispositions, but can be found to be so. For recent case law on this topic, see Selkirk v Selkirk, 2022 ONSC 2653.
On the other hand, changes to beneficiary designations are considered testamentary dispositions which cannot be delegated to an attorney for property. Hanson Estate, 2016 ONSC 2382, however, offers a caveat. In this case, the owner of a life insurance policy was mentally capable but physically disabled, and the change in the beneficiary designation made by his attorney for property on the donor's instructions was upheld by the Court as a valid change.
There is also debate as to whether carrying over an existing designation, when, for example, an RRSP converts to a RRIF, is a testamentary act.
Attorneys for Personal Care and Medical Assistance in Dying (MAID)
In relation to attorneys for personal care, an issue becoming more pervasive is that of medical assistance in dying (MAID). The legislation does not permit the delegation of authority to consent to MAID to a donor's attorney for personal care. This must be a personal decision made while one is still capable.
This speaks to our third and final constraint: authorities granted to an attorney for personal care concerning end-of-life decision-making cannot be extended to decisions to consent to MAID.
As a parting thought, there is a further unsettled issue on the question of commingling of funds by an attorney for property. While it is generally prudent to keep funds segregated to ensure the ability of the attorney to provide a clear accounting, there is no absolute legal requirement to do so. For case law discussing this issue, see McLaughlin Estate v McLaughlin, 2001 CanLII 21213 (ONCA).
Under the SDA and general legal principles, an attorney, as a fiduciary, must carry out their duties diligently, honestly, and in good faith, always acting in the best interests of the incapable donor. Powers that are given to an attorney in contemplation of these duties are constrained by the need to ensure the attorney:
- acts under a valid power of attorney and obeys the directions set out in that instrument;
- preserves the testamentary intentions of the donor; and,
- understands where the authorities granted under a power of attorney end.
The powers you may grant an attorney acting on your behalf are wide-ranging, but not unlimited. Being mindful of the various constraints imposed on attorneys can help to guide your planning.
It is always wise to seek the help of an experienced estate planning lawyer who can guide you through the intricacies of constraints on the authority of attorneys, for the specifics of your particular situation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.