A power of attorney ("POA") is a legal document in which one person, sometimes termed the "grantor", appoints another person - the attorney - to make decisions and act on the grantor's behalf. In Canada, POAs are governed by provincial and territorial laws. Two types of POAs are used in Ontario for estate planning: Continuing Power of Attorney for Property and Power of Attorney for Personal Care.
In order for a POA to be valid, it must comply with the formal POA requirements of the applicable jurisdiction. These requirements are generally concerned with who may make a POA, who may be appointed as an attorney, who may or must witness the execution of the POA and when the POA will be in force. Although the formalities may appear similar across jurisdictions, each jurisdiction generally has its own unique requirements, with the result that extra-provincial/extra-territorial or foreign country POAs may not be recognized locally.
Ontario's Substitute Decisions Act provides that a foreign POA will be valid in Ontario if it complies with the internal law of the place where it was executed or where the grantor was domiciled or habitually resident. Not every jurisdiction in Canada provides for such recognition, and even where it is provided, how such recognition plays out in practice is uncertain. In the United States, where POAs are governed by state law, some state legislation addresses the recognition of other state POAs, however, such legislation is generally silent with respect to other country POAs. Florida's POA legislation (Title XL of the 2018 Florida Statutes, Chapter 709), for example, provides that a POA that is properly executed under the laws of another state is generally recognized in Florida, but a third party in Florida who is asked to accept an out-of-state POA can ask for a legal opinion as to the POA's validity under the other state's laws. No provision is present with respect to other country POAs.
This lack of uniform recognition of POAs is a significant issue given today's multicultural societies, where many people maintain ties with many different places on the globe. This lack may be an even greater issue for Canadian "snowbirds" who spend significant amounts of time and own properties in the warmer regions of the United States. Generally, if recognition of a foreign POA is refused locally and the grantor cannot execute a new local POA because he or she has lost capacity, the likely only remaining option for dealing with the matter that requires substitute decision-making is to make a court application for the appointment of the person's guardian or an equivalent.
The need for a court appointment was required in a situation we recently encountered in which an Ontario couple's sale of their Florida residence was halted because one spouse's Ontario POA was not recognized in Florida and no Florida POA was in place. In that case, the wife had become mentally and physically incapable and was no longer able to travel to Florida to spend winters at their residence there. The husband listed the property for sale, found a buyer and was in the process of closing the sale. He presented his wife's continuing POA for property which had been executed by the wife in Ontario two decades prior, when she had capacity, as part of the closing document package. The title company in Florida, which was in charge of transferring title to the purchasers of the property, refused to accept the Ontario POA and requested either a valid Florida POA or a relevant court document confirming the wife's incapacity and her husband's guardianship of his wife. One key difference between Ontario and Florida POA formalities is that, unlike Ontario, Florida requires that the grantor's signing of the POA document be witnessed by a notary. As the wife did not have capacity to grant a new POA, the husband had to proceed via the cumbersome, time-consuming and expensive court route, which may have compromised the closing of the property sale.
Problems caused by the lack of uniformity in POA law among various jurisdictions are becoming well known to the legal community. The uniform law commissions of Canada and the United States have enacted uniform model POA legislation which, if implemented in these jurisdictions, would solve many of the various problems that exist with divergent laws. Some progress in this field has been made, however, a complete overhaul of the POA laws is far from complete. It is therefore imperative that individuals who have ties to other jurisdictions speak to their lawyers about having valid local POAs as part of their personal, estate and incapacity planning so that inconveniences such as those recently encountered by the Ontario couple can be avoided
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 or tax advice on any individual situation. In particular, they are not intended to provide U.S. legal or tax advice. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.