While the mental incapacity of a plaintiff in the formal personal injury/disbility litigation is adressed via litigation guardian, the need for a guardian may be pressing and independent from any litigation. Having a Continuing Power of Attorney for Property in place is a recommended way to ensure that your property is seamlessly and immediately looked after by your chosen attorney in case of your incapacity, which helps prevent potential losses and financial hardships, while only requiring a small upfront expense.
What is the Power of Attorney?
The term “Power of Attorney” refers to the legal document by which a “grantor” grants decision-making power to another person (the “attorney”). There are two main types of Power of Attorney in Ontario:
1. A Power of Attorney for Personal Care, which appoints an attorney to make personal care decisions for a person who is unable to do so; and
2. A Power of Attorney for Property, which authorizes an attorney to make property- related decisions.
Powers of Attorney for Property are further subdivided into two types:
a. A Non-Continuing Power of Attorney for Property, which allows the attorney to make certain decisions in the grantor’s absence. This would be used if, for example, the grantor is out of the country for an extended period of time, or for the period of inconvenience such as temporary immobility caused by injuries or illnesses; and
b. A Continuing Power of Attorney for Property, which allows the attorney to make decisions pertaining to the grantor’s property and financial matters if the grantor becomes mentally incapacitated. An attorney under a Continuing Power of Attorney for Property can do anything on your behalf other than to make your last will, with the scope and onset of the attorney’s powers solely left up to the grantor’s discretion if chosen so.
Who can be a Grantor?
Section 8 of the Substitute Decisions Act (Ontario), SO 1992, c30, (SDA) provides that:
8 (1) A person is capable of giving a continuing power of attorney if he or she,
(a) knows what kind of property he or she has and its approximate value;
(b) is aware of obligations owed to his or her dependants;
(c) knows that the attorney will be able to do on the person’s behalf anything in respect of property that the person could do if capable, except make a will, subject to the conditions and restrictions set out in the power of attorney;
(d) knows that the attorney must account for his or her dealings with the person’s property;
(e) knows that he or she may, if capable, revoke the continuing power of attorney;
(f) appreciates that unless the attorney manages the property prudently its value may decline; and
(g) appreciates the possibility that the attorney could misuse the authority given to him or her.
(2) A person is capable of revoking a continuing power of attorney if he or she is capable of giving one.
Notably, s. 9 (1) SDA provides that a person may be incapable of managing the person’s own property and yet be capable of giving a Continuing Power of Attorney. As such, Ontario jurisprudence provides for an additional capacity test, and S. 8 may not be typically considered as an absolute necessary one.
Plaintiff’s Personal Injury & Disability Outside of Litigation
Situations that result in personal injury or disability may lead to litigation. The litigation guardian for a mentally incapable plaintiff may commence or continue action on behalf of the plaintiff without the court appointment, subject to filing an affidavit with the court.
However, the plaintiff’s litigation guardian has no powers outside of litigation and cannot look after the plaintiff’s other property affairs, which could be possibly much more significant and pressing than the litigation per se.
For any property matter unrelated to the subject litigation, and absent a Continuing Power of Attorney for Property, the guardian must be appointed for the plaintiff, either by the court, or through the Public Guardian and Trustee, which is the ultimate statutory guardian. This means that the proceeding must be commenced, and either procedure may be protracted and costly due to needs for legal representation and costs for the expert’s evidence by duly qualified assessors and medical experts.
On top of these expenses, a delay of guardianship for property may negatively affect the plaintiff’s assets. For example, it might prevent acquisitions, liquidations, financing or significantly delay proper execution and pursuit of insurance coverage or applications for disability benefits.
The aforementioned issues may leave the plaintiff and his/her dependents in a difficult and undesirable financial position especially during a challenging time of injury or illness where they are experiencing a loss of income or wages. What could have been accomplished with the modest expense of having a Continuing Power of Attorney for Property properly prepared in advance, a sudden and last minute need for one turns into unnecessary legal expenses, delay in the payment of insurance coverage or disability benefits, and financial losses for the plaintiff.
Establishing a Continuing Power of Attorney for Property
The grantor should choose a trusted person, who is aware of the grantor’s property intentions, to act as the grantor’s attorney. There are certain formal legal requirements for drafting and witnessing a Continuing Power of Attorney for Property which must be met in order for the documents to be valid.
The Ministry of the Attorney General has very detailed information, including a kit here regarding how to have a Continuing Power of Attorney for Property properly executed and prepared.
Notwithstanding its apparent simplicity, the Continuing Power of Attorney for Property may require legal advice before its execution as it may have far reaching consequences on the grantor’s property. For example, the grantor may need advice regarding its onset, safe keeping, use, and potential multiplicity of attorneys, related decision making rules and/or attorney’s substitution(s), to name a few. If the grantor’s personal and family milieu is contentious, the legal advice is recommended.
If the Continuing Power of Attorney for Property is being prepared after the injury or onset of disability which brings the grantor’s capacity in question, then legal advice is highly recommended. The capacity to grant the Power of Attorney is a legal test, and as the fluctuating capacity is endorsed by the courts, legal assessment and opinion would be a must to make the Attorney properly and soundly established, and ultimately operational and valid if later challenged for any reason.
If you have any questions about Powers of Attorney, please contact Dejan Ristic, a lawyer at Devry Smith Frank LLP at 416-446-5812, or at email@example.com. Home and hospital visits, and video conferencing are available as necessary.
“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.”