Powers Of Attorney And Guardianship For The Dependent Adult

Power of Attorney and Capacity Issues

An important tool in estate planning is having a Power of Attorney (POA). A POA is a legal document where the individual appoints one or more persons (known as Attorneys) to make decisions for you. A POA for Property enables the Attorney to manage the individual's property, including finances. The POA for Personal Care allows the individual to set out instructions regarding his or her care and medical treatment. Those wishes are carried out by the Attorney.

Mental Capacity

An individual cannot sign a Power of Attorney if he or she is not "mentally capable" decisions. In legal terms, the person does not have "capacity" if he or she does not have the ability to understand information relevant for making decisions and appreciate the consequences of a decision or a lack of a decision.

For example, for a POA for Property the individual has the ability to grasp and retain information, be aware of his/her assets and property and be able to comprehend options when making a decision. If selling a home or investing monies, the individual can appreciate the consequences. It has been described as a “realistic appraisal of outcome" and "justification of choice".

Last month at a meeting hosted by Developmental Services Ontario (DSO), parents expressed concerns over their children’s ability to make decisions. As a parent, my default is to make decisions for my daughter, especially if the issue is significant. Our ability to make decisions for them is challenged when they reach the age of majority. Legally they are presumed to be capable of making decisions. Parents will often seek to have themselves appointed as guardians.

Many individuals with mental and developmental disabilities live independently, have bank accounts, investments, etc. but some are unable to manage these properties by themselves. Rather than giving up ownership and control over these items through guardianship, the individual can sign a Power of Attorney (POA). It is a common tool in the estates law community for all persons. It provides for the appointment of another person – called an attorney - to act on the individual’s behalf. There are two types of POA, one relating to property and the other relating to personal care. This blog will focus on the POA for Property (POA-Property).

A Power of Attorney appoints one or more persons (attorneys) to make decisions for you. Its scope can be broad or specific. The appointment can dictate when the attorney acts according to your directions. Care is needed when selecting the attorney.

You cannot sign a Power of Attorney if you are incapable of making decisions.  Generally, you are incapable when you are not able to understand information or appreciate the consequences. Should a sudden illness or accident render you incapable, you cannot sign a Power of Attorney to manage your affairs.


Legal and Financial Tools

For the special needs community, financial planning and the creation of trusts are indispensable. There is a significant risk of losing eligibility of the Ontario Disability Support Program (ODSP) if sizable funds are left as an inheritance or gift without a Will or placed in a Trust.

Inheritance or Gift
When a parent dies without a Will, for example, the laws in Ontario provide for the distribution of his or her estate to dependents. If that inheritance exceeds the asset limits set out in the ODSP, that person may lose the ability to receive the monthly payments.

Even with a will, ODSP eligibility may be lost. “Store bought” or “do-it-yourself” wills may not be designed to address the needs of the special needs community and fail to include a Henson Trust.

The same is true for gifts made during someone’s lifetime. A grandparent, for example, may want to give the money to the grandchild receiving ODSP. If the gift is over the asset limit, ODSP eligibility can be lost.

The purpose of this section is to provide you with an explanation of the financial sources of income and the legal tools typically used in estate planning.


What does disability mean to you?

The word "disability" has many meanings and uses in our society. A dictionary defines it as:

a condition that damages or limits a person's physical or mental ability; the condition of being unable to do things in the normal way; the condition of being disabled

It is easy to understand why "disability" carries a negative connotation to many. 

There are preferable synonyms such as "special needs" or "differently abled". My preference is to use the terms "dependent adult" or "dependent child". Those terms will be used unless referring to specific legislation or titles.

From a legal perspective the term "disability" is used in legislation such as the Ontario Disability Support Program Act. The purpose of this article is to examine the different criteria for defining "a person with a disability" in federal and provincial acts and regulations.

More information about government programs for the disabled >>

Ontario Disability Support Program (ODSP)

The Act  defines a “person with a disability” as having:

  • a continuous or recurrent substantial physical or mental impairment (on the person’s ability to care for oneself, function in the community and workplace) lasting one year or more;
  • which substantially restricts the person activities of daily living; and
  • the impairment, its duration and the restriction is verified by a qualified person.

A physician, physiotherapy, speech therapist or other health care professionals can sign the medical forms.

More information about the ODSP >>   

Federal Disability Tax Credit Certificate

A person with a disability can obtain a Disability Tax Credit Certificate (DTCC) from the federal government, providing them and their families with significant tax credits and retirements saving through the RDSP. To qualify the applicant must to establish the following requirements:

a) the individual has one or more severe and prolonged impairments in physical or mental functions;
b) the effects of the impairment or impairments are such that the individual is either:

  • markedly restricted in the ability to perform a basic activity of daily living or would be markedly restricted but for life-sustaining therapy (referred to in this Chapter as the markedly restricted requirement); or
  • significantly restricted in the ability to perform more than one basic activity of daily living and the cumulative effect of the significant restrictions is equivalent to being markedly restricted in the ability to perform a basic activity of daily living.

This criteria appears similar to the language used for the ODSP.

The DTCC allows the individual or another taxpayer to take advantage of the credits and deductions. It also permits a plan holder to purchase a Registered Disability Savings Plan for a beneficiary holding a DTCC.

Canada Pension Plan (CPP) Disability Benefit

This benefit is for a person who has contributed to the Canada Pension Plan. To qualify for a Canada Pension Plan Disability Benefit, you must:

  • have a severe and prolonged disability
  • be under the age of 65
  • meet the CPP contribution requirements.

Severe means that you have a mental or physical disability that regularly stops you from doing any type of substantially gainful work. Prolonged means that your disability is long-term and of indefinite duration or is likely to result in death. Both “sever” and “prolonger” must be established and occur simultaneously when the application is made. Service Canada  acknowledges that the definition of disability varies across Canada and within a province between government programs and private insurers.

The determination does not consider the diagnosis itself but rather the manner in which the disability impacts your daily life. As noted on the government website, the medical adjudicators consider several factors together, including:

  • the nature and severity of your medical condition
  • the impact of the medical condition and treatment on your capacity to work the prognosis
  • personal characteristics such as age, education and work history
  • your work performance, productivity and how much you are earning.

If the application is rejected you can request a reconsideration. You must make your request for reconsideration in writing within 90 days after you are notified in writing of the decision.

If the reconsideration decision is not in your favour, the next step is to contact the Social Security Tribunal to appeal. You are allowed to bring counsel or proceed yourself.

More information about CPP Disability >>