03/26/2013 04:26 EDT | Updated 05/26/2013 05:12 EDT

The 411 on Power of Attorney

A Power of Attorney is a written document in which authority is given to your Attorney to make decisions on your behalf. In other words, it is the appointment of a substitute decision maker. A Power of Attorney is a very important document which allows you to plan for situations when you may become incapacitated. In that unfortunate situation, it is desirable to have someone that you have legally appointed making decisions on your behalf.

In Ontario, there are two different kinds of Powers of Attorney. The first is called a Power of Attorney for Property, which addresses decision-making over property such as bank accounts and real estate. The second is called a Power of Attorney for Personal Care, which governs decision-making for health and well-being.

When deciding who to appoint as your attorney(s), it is important to consider who it is you want doing which job for you. Different people are often appointed as Attorney for Personal Care and Attorney for Property for the same person. In most cases, married couples will choose each other, as they are likely familiar with both aspects of each other's lives. Sometimes, however, a person with business acumen and time to deal with finances is appointed as Attorney for Property and someone with more understanding about healthcare needs is appointed as Attorney for Personal Care.

Powers of Attorney are not required by law. In fact, according to the statistics, less than 50 per cent of Canadians have executed a Power of Attorney. If you become incapable and don't have a Power of Attorney, you do not have anyone with legal authority to make decisions on your behalf. What that means is that someone will have to go to court and apply to be appointed as your Attorney so that they may be able to make decisions with regards to your finances and/or healthcare.

In regard to property, an Attorney has the legal authority to do anything on your behalf except for the making of a will. A Power of Attorney for Property is an extremely powerful document that has an effect on every aspect of your life. An Attorney for Personal Care, on the other hand, only has authority to make decisions relating to your healthcare.

Both Power of Attorney documents typically begin with the appointment of an Attorney or multiple Attorneys, depending on the choice of the individual. What usually follows is a set of restrictions imposed on the appointed Attorney. For instance, it is common to restrict when the Power of Attorney can be invoked, be it on a finding of incapacity or during a specific timeframe or specific purpose. Powers of Attorney are required to be signed in the presence of witnesses and are only effective during your lifetime. If circumstances change during your lifetime and you wish to change your Power(s) of Attorney, you can do so as long as you are capable.

Given the rise in the number of Powers of Attorney for property and for personal care that have been executed in Ontario, the volume of complaints, problems and litigation arising from those Powers of Attorney has increased and will continue to do so. In order to help your family and friends avoid the stress and significant cost related to Power of Attorney litigation, it is important to have these documents drafted by an experienced lawyer. It is also extremely important to have open and honest communication with the person(s) whom you choose to appoint as your Attorney(s), so that they are aware of the powers and duties that will be afforded to them in the event you become incapable.

Ian Hull and Suzana Popovic-Montag are partners at Hull & Hull LLP, an innovative law firm that practices exclusively in estate, trust and capacity litigation. To watch more Hull & Hull TV episodes, please visit our Hull & Hull TV page.