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.
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.