In Ontario, as in other jurisdictions, powers of attorney for property are crucial tools for individuals who may become incapable of managing their property and financial affairs. A power of attorney for property grants the power for one or more people (the "attorney(s)") to act on behalf of the person granting the power (the "grantor").
While an attorney for property has significant responsibility in managing the grantor's financial affairs, the authority to make gifts on the grantor's behalf is limited under Ontario law. In this blog, we'll look at when and how an attorney for property may make gifts on behalf of a grantor.
Under Ontario law, an attorney for property does not have an unrestricted right to make gifts on behalf of a grantor. This limitation is built into the law because gifts involve transferring the grantor's property to someone else, which raises concerns about whether this is in the best interest of the grantor, especially if they are incapable.
Ontario's Substitute Decisions Act, 1992 (the "SDA") limits the authority of attorneys for property to make gifts on behalf of the grantor. Under the SDA, section 37(3), an attorney may make gifts or loans to a grantor's friends and relatives and may make charitable gifts. The attorney's ability to make gifts is subject to several rules under section 37(4) of the SDA.
- Gifts may only be made if the grantor's property is and will remain sufficient to satisfy payments for the grantor's necessary care and basic living expenses as well as supporting his or her dependants and satisfying his or her other legal obligations. Gifts must not jeopardize the grantor's ability to meet his or her own needs.
- Gifts or loans to the grantor's friends or relatives may be made only if there is reason to believe, based on intentions the grantor expressed before becoming incapable, that he or she would make them if capable.
- An attorney for property may make gifts to friends or relatives
and charities if there is a specific authorization in the power of
attorney. Even with express gifting authority, the gifts made by
the attorney must be reasonable in relation to the grantor's
assets and the circumstances. Gifts must not jeopardize the
grantor's ability to meet his or her own needs. For example,
the attorney cannot gift large sums of money that would leave the
grantor unable to pay for necessary support and care.
- A gift shall not be made if the grantor expresses a wish to the contrary.
- Charitable gifts are only permitted if the grantor authorized the making of charitable gifts in his or her power of attorney or the gifts are consistent with past giving practices while the grantor was capable.
- The total amount or value of charitable gifts shall not exceed the lesser of:
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- 20% of the income of the property in the year in which the gifts are made; and
- the maximum amount or value of charitable gifts provided for in a power of attorney executed by the incapable person before becoming incapable.
When preparing a power of attorney for property, it's important to consider whether you wish for your attorneys to continue certain gifting practices, in which case this can be expressly provided for in a power of attorney for property. This may be relevant if you are making annual donations to a charity or charities or making gifts to certain family members on special occasions.
As well, attorneys for property must understand the scope of their authority and their fiduciary responsibilities provided under the SDA and the power of attorney for property. They must consider whether gifting is in the grantor's best interests and aligns with his or her past giving practices or known wishes.
In preparing a power of attorney for property or determining the authority to make gifts under a power of attorney for property, it is important to seek appropriate legal advice.
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.
