What the law says about powers of attorney and wills

This client education piece explains the basics of powers of attorney and wills under Canadian laws, their relationship with each other, and other legal considerations

What the law says about powers of attorney and wills
Powers of attorney and wills are legal documents that a person can use to control their estate when they don’t have the mental capacity to do so

It’s never too early or too late to prepare ourselves for the future. To prevent uncertainties and even disputes among the family of an incapacitated or a deceased person, Canadian law shows how to make and use power of attorney and wills.

To simplify the complex aspects of powers of attorney and wills, this article will provide an overview of the important points. Lawyers can share this guide with clients when having initial conversations on making a power of attorney and a will.

What is a power of attorney and a will?

Powers of attorney and wills are legal documents that set out a person’s wishes and preferences about their health and property.

These documents become legally binding when executed according to Canadian laws. Certain requirements must be followed, such as its form and the capacity of the person executing it.

Power of attorney vs. Wills

Power of attorney and wills in Canada are different from each other in many ways. Here are some of their differences:

 

Power of attorney

Last will and testament

What it’s about

Who can decide on a person’s healthcare, financial matters, family affairs, and property management

How a person’s assets and properties are to be distributed in relation to the laws on succession

When it takes effect

While the person is still alive

When the person dies

These distinctions are important when a person is thinking of making a power of attorney and a will.

Powers of attorney and wills may be executed without a lawyer. However, to know more about their legal requirements, it’s important to consult lawyers who are experts in the field of wills, trusts, and estates.

Watch this video to learn about the advantages of consulting a lawyer first:

Check out our Special Report on the Top Wills, Trusts, and Estate Law Boutiques 2023–24 to consult experts in powers of attorney and wills.

Validity of powers of attorney and wills

Both powers of attorney and wills have certain requirements to make them legally binding and valid. Common to both documents are these requirements:

  • a person executing a power of attorney and a will must be of legal age and of sound mind
  • both a formal will and a power of attorney must be signed in the presence of two witnesses
  • witnesses in a formal will and a power of attorney must also sign the document
  • both documents must be in writing; there can never be an ‘oral’ power of attorney or will
  • both documents must be signed by the person executing it

The specific requirements of each document are discussed below. It’s still important to consult a lawyer before making a power of attorney and will.

Relationship of powers of attorney and wills

While powers of attorney and wills differ in many ways, both are still related when it comes to certain aspects.

First, makers of powers of attorney and wills are ensured that their wishes are followed when they cannot do so – specifically when they become incapacitated or has died.

Second, as part of estate planning, the maker of a power of attorney and will is assured of the future and stability of their families.

That is why advocates for making a will also encourage persons to do a power of attorney, since these two documents are closely interrelated.

Restrictions related to powers of attorney and wills

Canadian laws establish certain boundaries between powers of attorney and wills.

An appointed person in a power of attorney cannot make or change the will of the person who appointed them. This is strictly prohibited. A will, or changes in a will, made by an appointed person is void and has no legal effect.

The reason for this is that a will is a personal act of a person. This follows that only that person can make their own will.

Also, insertions and alterations in a will must be done according to law. If a person wants to change their will through an agent or attorney, they must do so following Canada’s laws on wills and succession.

Here’s a video that shows the importance of powers of attorney and wills in Canada, which can be part of one’s financial planning:

To find more resources on trust and estate planning, head over to Trusts and Estates practice area.

What are the Canadian laws on powers of attorney and wills?

Both powers of attorney and wills are guided by Canada’s laws on wills, trusts, and estate.

Different statutes have also been enacted by the provinces and territories in Canada, which separately govern powers of attorney and wills. Anyone drafting a power of attorney or a will must know which laws apply to them since it may differ from every province or territory.

Powers of Attorney Act

Each province or territory has enacted their own Powers of Attorney Act. These laws define:

  • what is a power of attorney
  • the responsibilities and roles of an appointed person
  • the requirements to be a valid appointee
  • the requirements for the validity of the power of attorney itself

For instance, British Columbia’s legislation would be its Power of Attorney Act. Ontario also has a law under a similar name.

Wills are also governed by successional laws covering testacy (when a person dies with a will) and intestacy (when a person dies without a will).

Laws on wills

There are also separate provincial and territorial laws on wills and succession. These laws outline:

  • who can write a will
  • how a will should be executed to be valid
  • the order of succession when a person dies without a will

Some examples of these laws include:

  • Succession Law Reform Act in Ontario
  • Wills, Estates and Succession Act in British Columbia
  • The Wills Act in Manitoba

What is a power of attorney in Canada?

A power of attorney is a legal document where a person appoints another person to manage their financial matters or medical care. It takes effect when the maker loses the mental capacity to decide for themselves (e.g. coma, mental illnesses where capacity is impaired).

Under the law, the appointing person is called the principal while the appointed person is called the agent, attorney-in-fact, attorney, donee, or representative.

Validity of a power of attorney

The following are some of the common requisites for a power of attorney to be valid according to Canadian laws:

  • maker must be of sound mind and of legal age
  • must be signed at the end by the maker, which must be witnessed by two capable persons
  • must be signed by the witnesses, in the presence of the maker and each other
  • must be stored in its physical form

Types of Power of Attorney

Power of attorney are called differently across the different provinces and territories in Canada. However, it may be divided into two distinct types according to its use:

1. Power of attorney for personal and medical care: appointing someone to make decisions for a person’s personal medical care in case they become mentally incapable; also called:

    • power of attorney for personal care (Ontario, New Brunswick)
    • representation agreement (British Columbia)
    • personal directive (Alberta, Nova Scotia)
    • healthcare directive (Saskatchewan, Manitoba)
    • protection mandate (Québec)

2. Power of attorney for financial matters: appointing someone to make decisions for a person’s financial, legal, and property matters in case they become mentally incapable; also called:

    • continuing power of attorney for property (Ontario)
    • enduring power of attorney (British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia, New Brunswick)
    • power of attorney (Québec)

These should be distinguished from a general power of attorney, which applies when the person is still mentally capable.

Power of attorney and wills vs. Living wills

A living will is executed by a person and outlines in advance what their preferences are regarding medical and personal care. Canadian laws on wills and succession do not use the term “living will” because its contents may be included in a person’s power of attorney.

As mentioned above, provincial and territorial laws refer to living wills as:

  • advance directive
  • advance health care directive
  • health care directive
  • mandates
  • personal directive
  • representation agreement

In other words, a power of attorney, directive, and living will may mean the same in Canada; it also depends on the law of the province or territory.

Living wills are different from wills. Living wills – as the name suggests – are effective when the person who prepared it is still alive, and only for its purpose. On the other hand, wills take effect only after a person dies.

Appointees in a power of attorney

An appointed ‘attorney’ need not be a lawyer. It can be anyone trusted by the person making the power of attorney. One’s personal lawyer is usually the one being appointed.

A person can also appoint two or more people to serve as attorneys. Their roles may be joint or separate from each other. They can also act jointly or separately, depending on whether their roles are different or similar.

An appointed person may also decline their appointment. If this happens, the court may appoint someone else.

What is a last will and testament in Canada?

Upon a person’s death, their power of attorney ends; their last will and testament takes effect.

Under Canada’s laws on succession, there are two instances when a person dies:

  • testacy: a person dies leaving a will
  • intestacy: a person dies without a will, or the will was invalid

The rules would differ between these two, and it’s important that makers of powers of attorney and wills understand them both.

Rules of testamentary succession

There are certain rules that a maker of a will (called testator) must follow to make their will valid. Because different laws apply in each province or territory, it’s important to always consult with a lawyer before making a will.

As for the capacity of a testator, the most common rules among the provinces or territories are:

  • testator is of legal age, usually 18 years old and above
  • testator is of sound mind at the time of making the will

These rules on capacity apply to both formal and holographic wills.

Formal wills

As for the form of formal wills, the provincial or territorial statutes provide that it must be:

  • signed by the testator at the end, in the presence of two witnesses
  • signed by at least 2 capable witnesses in the presence of the testator and each other

Holographic wills

Meanwhile, holographic wills have more lenient rules as to their form. The law only requires that it be personally handwritten and signed by the testator.

Rules of intestate succession

If a person dies intestate, the provincial or territorial law on succession states for the order of succession that will apply.

Depending on the surviving family and relatives of the deceased, their estate will be distributed according to the order of succession.

Summary

Powers of attorney and wills are related to each other. The first applies when someone is still alive but has lost mental capacity to make decisions, and the second applies when someone dies.

These legal documents are important since they document a person’s preferences long before they cannot express them anymore. When making these documents, it’s important that a person first consults with legal experts in the field of wills, trusts, and estate laws. This ensures that the power of attorney or will is drafted according to the law and is thus valid.

For a list of the top Canadian lawyers and law firms across different practice areas, visit our webpage on Rankings and Special Reports.

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