Get clear about your client’s PoA for property

Do you know if your client has a power of attorney (PoA) for property, as well as when it becomes effective and how to verify it? Also, should you act as your client’s PoA for property?

Those were some of the questions addressed on Thursday at FP Canada’s virtual ethics session, part of financial planning week.

A PoA for property can make decisions and do anything with your client’s property that your client can do, other than make a will, said Bianca La Neve, partner at WeirFoulds LLP and a session panellist. This could include managing investments, paying bills, filing taxes and selling real estate.

The PoA for property is a fiduciary who must meet their obligations and responsibilities to your client honestly, diligently and in good faith, La Neve said.

However, at the session, PoAs for property were discussed in the context of potential abuse: a family member or other person claims they have power of attorney for your client, and requests a transaction that runs counter to what your client would typically want.

If your client is capable, “it is important to speak with your client directly to confirm wishes and goals,” La Neve said. Also, “Always follow in-house procedures and verify … a power of attorney document.”

PoA documents may be immediately effective or require a triggering event — for example, when the client no longer has mental capacity.

“Always look to the terms of the actual power of attorney document to see what is required” to make the PoA effective, La Neve said.

She also suggested asking your client how many PoA for property documents they have, so you know which ones apply in which situations.

“Making a new power of attorney document may revoke an existing one,” she said. “Or you may have concurrent ones that deal with particular situations.”

Panellist Holly Allardyce, AVP, senior legal counsel, at MD Financial Management, urged advisors to reach out for help from their compliance and legal departments in difficult cases, such as when an attorney for property gives questionable instructions.

Advisors may also find they must remind attorneys for property that they have obligations under legislation, Allardyce said.

For example, Ontario’s Substitute Decisions Act “has some very specific sections on required expenses, gifts and loans, which we have had the occasion to point out,” she said.

When attorneys give questionable instructions, the advisor may want to consider an account hold or consult a trusted contact person, said Danielle Tetrault, vice-president of compliance and CCO with IG Wealth Management.

If an attorney wants to transfer funds to another institution (the situation isn’t suspicious), the advisor should inform them how to do the transaction in kind, as well as any consequences, she said.

Panellists suggested advisors don’t act as attorneys for property for their clients, because of conflicts. If an advisor were to act as a PoA, La Neve suggested they transfer the client’s funds to another advisor.

Establishing a PoA amid Covid-19 restrictions was also discussed.

“Check with the law society or legal counsel to see if changes have been put in place because of Covid-19, so [PoAs] could be executed remotely,” said Laura Tamblyn Watts, CEO at CanAge. Also, some jurisdictions don’t require a lawyer to create a PoA, she said.

She also noted that “essential family caregivers” can visit long-term care facilities, which in some jurisdictions include substitute decision makers.