A Power of Attorney Guide for Property

Balancing Care and Responsibility

Managing a parent’s or anyone’s financial affairs through a Power of Attorney for Property (POA) can be both challenging and a significant responsibility. As a Power of Attorney, you step in if someone cannot manage their own financial affairs. 

This guide outlines the process and explains what you may be required to do as a POA for Property. There are two types of Powers of Attorney: 

• one for health care and 
• one for property. 

This guide specifically addresses the Power of Attorney for Property, covering all financial matters.

Over the years, we have assisted many individuals acting as a Power of Attorney for Property. Below are some key areas this guide will address:

• Why Is a Power of Attorney Required?
• What Types of Power of Attorney Are There?
• What Can’t a Power of Attorney Do?
• What Are the Responsibilities of a Power of Attorney for Property?
• What Tasks Might You Need to Perform?
• How Can We Help You as Your Parents’ Financial Advisor?
• The Four Essential Family Conversations You Might Want to Have with Your Parents and Your Children.

 

Please review this information, and if you would like to schedule a meeting to discuss these topics further, let us know.

Why Is a Power of Attorney Required?

Planning for incapacity is an essential part of the financial planning process. This preparation ensures the right arrangements and documents are in place so that your property, financial affairs, and health care decisions can be managed on your behalf if you become incapable of doing so.

What Types of Power of Attorney Are There?

Generally, there are two types of powers of attorney:

1. Personal Care – The person appointed to make healthcare decisions when someone is unable to do so.
2. Property – The person appointed to make financial decisions when someone is unable to do so. The individual who appoints a Power of Attorney is called the “Grantor.”

What Can’t a Power of Attorney Do?

There are certain actions a Power of Attorney for Property is not permitted to undertake:

• Cannot make or amend a Will
• Cannot change or add beneficiary designations on RRIFs, TFSAs, life insurance policies, or other financial accounts

• Cannot use the grantor’s property or assets for personal benefit
• Cannot make gifts or loans from the grantor’s assets, unless explicitly allowed by the legal documents and legislation

What Are the Responsibilities of a Power of Attorney for Property?

A Power of Attorney for Property is generally governed by provincial or territorial legislation. A common overarching principle is the fiduciary duty owed by the POA to the grantor, which includes:

• Acting in the grantor’s best interests
• Acting in good faith
• Avoiding conflicts of interest
• Refraining from personal gain
• Exercising care and skill, especially with investments and financial decisions

• Keeping meticulous records
• Respecting the grantor’s wishes and values, and consulting with them whenever possible

What Tasks Might You Need to Perform?

Acting as a POA for Property can involve a wide range of financial tasks on behalf of the grantor. Some key responsibilities may include:

Banking

• Managing Accounts: Opening or closing accounts, making deposits/withdrawals, and transferring funds
• Bill Payments: Paying utilities, mortgage or rent, credit cards, and insurance on time
• Online Banking: Setting up and monitoring online banking for real-time access

Cash-Flow and Income Planning

• Income Sources: Overseeing cash flow from CPP, OAS, pensions, RRIFs, TFSAs, and non-registered investments
• Tax Planning: Creating tax-efficient strategies to minimize taxes, maintain government benefits, and ensure assets last as needed

Investments

• Portfolio Management: Ensuring investments match the grantor’s risk tolerance and goals
• Financial Advisor Consultation: Working with advisors to keep strategies aligned with the grantor’s long-term objectives

Taxes

• Tax Returns: Preparing and filing the grantor’s personal tax returns, leveraging all available deductions
• Tax Payments: Paying property, income, or other taxes on time to avoid penalties
• Professional Collaboration: Consulting accountants or tax advisors for accurate and advantageous tax planning
• Benefit Applications: Assisting with any government or private benefits

Real Estate

• Property Management: Taking care of upkeep, insurance, taxes, and potential sale of any real estate
• Buying/Selling: Handling transactions, including negotiating terms and finalizing deals

Insurance

• Policy Oversight: Reviewing health, home, auto, and life insurance to ensure adequate coverage and timely premium payments
• Claims: Filing and tracking insurance claims for appropriate settlements (including health plans)

Debt Management

• Handling Liabilities: Managing mortgages, loans, and credit card balances; negotiating with creditors if necessary Day-to-Day Financial Management
• Budgeting: Balancing the grantor’s income and expenses to prevent overspending
• Financial Planning: Collaborating with a Financial Planner to maintain the grantor’s financial security and meet their goals