Was He or She Capable? Disputing or Defending the Validity of Power of Attorneys

Faith is a fine invention
For gentlemen who see;
But microscopes are prudent
In an emergency
-Emily Dickinson-

With an aging population, it has become increasingly common for people to put continuing powers of attorney (POAs) in place to ensure their affairs are managed by trusted ones if they lose capacity before death. It’s a smart – and often necessary – step. But not without risk of abuse.

What’s also on the rise are legal disputes on the validity of a POA. Did the “grantor”, the person who signed the POA, have capacity to appoint such attorney(s) in the first place? When did conditions like dementia or Alzheimer’s disease begin to impair the grantor’s capacity? The evidentiary challenges around these issues are often compounded by the fact that a POA might only have surfaced years after it was executed by the grantor.

This article discusses a specific type of POA, the Continuing Powers of Attorney for Property (“CPOAPs”), to illustrate some of the challenging legal issues on validity. CPOAPs are self-evidently prone to property and family disputes. We highlight three major points for the reader to think through when challenging or defending the validity of a CPOAP.¹A CPOAP is governed under Part I of the Substitute Decisions Act, 1992, S.O. 1992, c. 30. Another type of Power of Attorney is the Power of attorney for Personal Care under Part II of the Substitute Decisions Act.

1. Does the CPOAP satisfy the Substitute Decisions Act criteria for being valid?

First things first. To establish the validity of a CPOAP, the document itself must either state expressly that it’s a “continuing power of attorney” or in effect that the authority may be exercised during the grantor’s incapacity to manage property.²Section 7 of the Substitute Decisions Act. This requirement underscores the conceptual difference between a CPOAP on the one hand, and a general POA which does not purport to survive the grantor’s incapacity on the other.³A general power of attorney is governed under the Powers of Attorney Act, R.S.O. 1990, c. P.20. The distinction is critical: unlike a CPOAP, under a general POA, the attorney may manage the grantor’s properties while the grantor has capacity, but not after capacity is lost.

To qualify as a CPOAP, other formal requirements include the following:

– The CPOAP must be executed in the presence of two witnesses;⁴Section 10(1) of the Substitute Decisions Act.

– Each of the witnesses must sign as witness;

– Several groups of people are prohibited from being a witness.⁵They are: (i) the attorney or the attorney’s spouse or partner; (ii) the grantor’s spouse or partner; (iii) a child of the grantor or a person whom the grantor has demonstrated a settled intention to treat as his or her child; (iv) a person whose property is under guardianship or who has a guardian of the person; and (v) a person who is less than eighteen years old. Section 10(2) of the Substitute Decisions Act.

2. What if the grantor refuses to undergo a capacity assessment?

What do you do if the grantor’s capacity at the time of signing the CPOAP is in issue, but the grantor refuses to undergo any capacity assessment: “My body, my temple”?

The court has the discretion to order a person to be assessed to determine the person’s capacity where there are reasonable grounds to believe that the person is incapable.⁶S 79(1) of the Substitute Decisions Act. In exercising this discretion, the courts will consider a list of factors:⁷Zagorac v. Zagorac, 2021 ONSC 4448 (CanLII), paras 83-84.

– the nature and circumstances of the proceedings in which the issue is raised;

– the nature and quality of the evidence as to the person’s capacity and vulnerability to exploitation;

– if there has been a previous assessment, the qualifications of the assessor, the comprehensiveness of the report and the conclusions reached, whether there are flaws in the previous report, evidence of bias or lack of objectivity, a failure to consider relevant evidence, the consideration of irrelevant evidence and the application of the proper criteria;

– whether the assessment will be necessary in order to decide the issue before the court;

– whether any harm will be done if an assessment does not take place;

– whether there is any urgency to the assessment; and

– the wishes of the person sought to be examined, taking into account his or her capacity.

The court’s overriding objective is “to balance the affected party’s fundamental rights against the court’s duty to protect the vulnerable.”⁸Zagorac v. Zagorac, 2021 ONSC 4448 (CanLII), paras 83-84. In other words, while the grantor’s wishes will be taken into account, they are not necessarily determinative of the issue.

3. What other evidence or considerations may help in a CPOAP validity dispute?

Lastly, it’s tempting to assume a medical capacity report is all you need. Don’t make that assumption. It’s entirely possible that there would be insufficient medical records or cognitive test results that can pinpoint when the grantor developed the disease that might have affected the grantor’s capacity.

Additional evidence, including witness attestations regarding the grantor’s capacity (e.g., ability to manage affairs) or incapacity (e.g., forgetfulness or other signs of impairment) at a particular point in time could prove invaluable in assisting the court to decide the issue of capacity. They bridge evidentiary gaps in the medical evidence. In one case, the court looked at financial statements indicating the grantor’s irrational financial decisions.⁹Zagorac v. Zagorac, 2021 ONSC 4448 (CanLII); see also Zagorac v. Zagorac, 2022 ONSC 3733 (CanLII). Objective documentary evidence can carry added weight, often tilting the balance in CPOAP-validity disputes.

Other questions, such as whether the power of attorney was signed under “undue influence” of another person, can be relevant. Undue influence is a distinct but related topic that goes beyond the scope of this article. For present purposes, undue influence considerations range from simpler questions such as whether a person was asked to leave the room during the grantor’s signing, to complex issues like the extent of the grantor’s emotional and physical dependence on the individual that may unduly influence the grantor.¹⁰John Gironda et al. v. Vito Gironda et al., 2013 ONSC 4133 (CanLII). Naturally, these considerations are intertwined with capacity disputes in will-and-estate litigation.

Disclaimer: The article is for informational purposes only and should not be used as a substitute for competent legal advice from a licensed professional in your region.