By: Rajesh K. Sharma, Advocate (LinkedIn)
A Power of Attorney is a legal document that lets someone make decisions about a person’s behalf. In Canada, attorney does not usually mean lawyer.
Powers of attorney is governed by the common law of agency, which establishes an agency relationship when a principal authorizes an agent to act on their behalf. Agency relationship would terminate upon the principal's mental incapacity.
To overcome this situation of automatic termination of POA upon the principal's mental incapacity and for continuous care of the property of the person, Power of Attorney Act (POAA) introduced statutory changes in Ontario to allow power of attorney to continue despite the principal's incapacity, provided this intention is declared in the document.
The Substitute Decisions Act, 1992 (SDA) was created in Ontario as a comprehensive statutory framework for substitute decision making with respect to property and personal care of the person. Under the Substitute Decisions Act, 1992 (SDA), an attorney appointed through a power of attorney acts as a fiduciary. This means they must account for their actions, act with reasonable care, avoid conflicts of interest, and not make secret profits.
There are two types of SDA powers of attorney:
- Continuing Power of Attorney for Property: Comes into effect when the grantor becomes incapable of managing their property. It allows the attorney to manage the grantor’s assets.
- Power of Attorney for Personal Care: Allows the attorney to make personal care decisions for the grantor.