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Processes for Activating Powers of Attorney – Do You Know Where Your Documents Are?

Those of you who watch U.S. network T.V. news at night are probably familiar with the catchphrase “It’s 11 (or 10) o’clock. Do you know where your children are?”. Many comedic versions of this phrase have been coined over the years, and it has become part of our modern pop culture. Despite the obvious satirical uses, the message can still be a serious one, reminding us to check on those things most important to us, which we can sometimes lose sight of in our busy lives. Like so many things, powers of attorney for property and personal care are sometimes overlooked until they are most needed, and then finding and using them can sometimes prove challenging.

Knowing where powers of attorney are located and how and when they can be used is important for both grantors (i.e., those who execute the power of attorney and whose property or care will be managed under them) and attorneys (i.e., the persons appointed in a power of attorney to manage the grantor’s property or care and note “attorney” in this context has a different meaning than “lawyer’). Grantors should review the documents regularly to ensure they still meet their needs and are up-to-date. Attorneys will want to know where the documents are so that if they need to use them, particularly when urgent problems arise, they can do so. 

Once located, if the documents need to be used right away, the attorney will then need to determine how they can be “activated” and used. If the documents are held by a third-party, such as by a lawyer or in a safety deposit box, there will usually be a process to complete in order to get access to them. This can be a “catch-22” situation if the financial institution will not grant access to the safety deposit box without proof of authority and the power of attorney which provides such proof is located in the safety deposit box.

These issues can cause frustration for attorneys. Some grantors try to avoid this by keeping their powers of attorney available to their attorneys in their personal files or giving original powers of attorney to their attorneys. While this may simplify finding and retrieving the powers of attorney, it also greatly increases the potential for fraud and misuse, whether by the attorney or by an unrelated person who gains access to the documents (this is particularly of concern for powers of attorney for property). It may also create other problems, for example if the grantor executes new powers of attorney but fails to destroy all originals of their old powers of attorney, leaving conflicting powers of attorney in circulation which may lead to disputes and so-called “duelling powers of attorney”. Leaving powers of attorney with a third party such as a lawyer with express written directions on how and when to release them can avoid these types of problems, although individual solutions may be needed to suit complex situations.

Once the attorneys obtain the document(s), it is necessary to determine if the powers of attorney can be used. Under Ontario legislation, attorneys for personal care can only make decisions for the grantor if the grantor is incapable of making the particular personal care or healthcare decision in question. Attorneys for property can use a power of attorney for property immediately upon the grantor executing it, unless the document states otherwise. Some powers of attorney provide that they cannot be used until the grantor has been determined to be incapable of making decisions and may specify the manner of making this determination and the test(s) to be applied, although the laws of the place where the attorney seeks to use the power of attorney may need to be considered as well.

The question of how to determine if a person is not capable of making decisions can be difficult, even if a mechanism is provided in the power of attorney, especially if there is a dispute among those close to the grantor regarding whether the person is capable of making such decisions (see my February 2015 post). If such a situation is possible in the circumstances, some consideration should be given to putting more specific provisions in the powers of attorney to address how incapacity will be determined and deal with any disputes which may arise.

Many popular catchphrases can not only give us a chuckle in the middle of our day but can remind us to take steps on important matters. Knowing where your powers of attorney are and how to access and use them can not only ensure that your interests and needs will be able to be taken care of in a timely manner, but can avoid a lot of frustration for your attorneys and loved-ones as well.

— O’Sullivan Estate Lawyers

Don’t miss our next blog post on cross-border issues relating to retirement plans and emigration / immigration.

The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal advice on any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.