What every older Canadian should know about: Powers of attorney (for financial matters and property) and joint bank accounts

Printable version in PDF format (1.69 MB, 24 pages).

Many Canadians are concerned about how to manage their money, property, and finances as they age or as life changes take place. They may worry about what will happen if they become unable to deal with their own finances. It is a good idea to plan ahead for a time when you may need help managing your affairs.

Two tools often used for managing financial affairs are powers of attorney and joint bank accounts.

It is important to know how a power of attorney or a joint bank account works before you use them. There are risks and advantages to both.

You should never feel pressured to sign a power of attorney or to open a joint bank account. Carefully consider all of your options before making any decisions.

Powers of attorney

What is a power of attorney?

A power of attorney is a legal document that you sign to give one person, or more than one person, the authority to manage your money and property on your behalf. In most of Canada, the person you appoint is called an “attorney.” That person does not need to be a lawyer.

Among other requirements, you must be mentally capable at the time you sign any type of power of attorney for it to be valid. In general, to be mentally capable means that you are able to understand and appreciate financial and legal decisions and understand the consequences of making these decisions. However, the legal definition of mental capacity will vary based on the laws in each province or territory.

What types of powers of attorney are used in Canada?

The names and requirements for the different types of powers of attorney that deal with finances and property will vary depending on the province or territory where you live.

Generally, there are two main types of powers of attorney commonly used for finances and property in Canada:

A general power of attorney is a legal document that can give your attorney authority over all or some of your finances and property. It allows your attorney to manage your finances and property on your behalf only while you are mentally capable of managing your own affairs. It ends if you become mentally incapable of managing your own affairs.

A general power of attorney can be “specific” or “limited”, which can give authority to your attorney for a limited task (e.g. sell a house) or give them authority for a specific period of time. The power of attorney can start as soon as you sign it, or it can start on a specific date that you write in the document.

An enduring or continuing power of attorney is a legal document that lets your attorney continue acting for you if you become mentally incapable of managing your finances and property. It can also give your attorney authority over all or some of your finances and property. An enduring or continuing power of attorney can take effect as soon as you sign it. In some cases, it is possible to have the power of attorney come into effect only when you become mentally incapable, if this was specified in the document.

What can my attorney do?

Unless you limit your attorney’s authority, they can do almost everything with your finances and property that you could do. If you don’t have any limitations in your power of attorney document, your attorney can do your banking, sign cheques, buy or sell real estate in your name, and buy consumer goods. Your attorney does not become the owner of any of your money or property. He or she only has the authority to manage it on your behalf.

Your attorney cannot make a will for you, change your existing will, change a beneficiary on a life insurance plan, or give a new power of attorney to someone else on your behalf.

Can my attorney make decisions about my healthcare and personal care?

In most parts of Canada, it is possible to prepare documents that give another person the authority to make health and other types of personal and non-financial decisions for you, if you were to become mentally incapable of doing so for yourself. Depending on where you live, these documents may be called powers of attorney, personal or health directives, representation agreements, or mandates.

These documents are not the same as powers of attorney for finances and property. It is important to be clear about what type of document you are signing. This publication deals with powers of attorney for financial matters and property only. This includes your money, investments, and everything that you own, including your home.

Can I still make decisions for myself if I grant someone a power of attorney?

As long as you are mentally capable, you can continue to make your own decisions about your finances.

Understand the laws where you live

Each province and territory has its own laws relating to powers of attorney. You need to follow the law in the province or territory where you live. You may want to consult a lawyer when entering into a power of attorney to be sure that your document is valid, and to fully understand what your attorney will be able to do. It is important that you learn how you or others can monitor your attorney’s actions, and what to do if you want to change or cancel the power of attorney. Be sure that you fully understand any document before you sign it.

What are the advantages and risks of having a power of attorney?

Advantages

Practical

Risks

May make you vulnerable to financial abuse

Choosing an attorney

Who can I ask to be my attorney?

You should ask someone you trust. You may choose your spouse, a close friend, a family member or anyone else that you trust. Carefully consider whether they are the best choice to manage your money and property, and do so in your best interest.

The minimum legal age for an attorney varies according to the province or territory where you live. The person you ask to be your attorney can refuse to act for you, so it is important to ask the person first if they are willing to take on this responsibility and everything that it entails. You should also consider appointing a substitute attorney in case the first attorney can no longer act for you.

Do I have to pay my attorney?

In some provinces, unless you state otherwise in the power of attorney, a person appointed under a continuing power of attorney may have a right to be paid. Before you sign any documents, it is a good idea to have a conversation with the person you choose as your attorney regarding compensation for their work. You should include this information in your power of attorney document.

You may also consider appointing a trust company or a legal or financial professional with the skills to manage finances and property. You will probably need to pay fees for this service. Also, these options may only be available to you if your property is over a certain value.

What are my attorney’s legal responsibilities?

The attorney’s role carries many legal responsibilities. Your attorney must comply with the legal duties and responsibilities of attorneys in the province or territory where you live. Your attorney must manage your finances and property, and keep records, according to any directions you have given in your power of attorney document. They must act in your best interest. However, there is always a risk that they may not do so, which is why it is important to name someone that you can really trust and that understands the legal responsibilities they will be taking on.

What to consider when choosing an attorney

Personal Suitability

What to consider before preparing a power of attorney

What to consider after you prepared a power of attorney

What if my bank wants me to sign a power of attorney form?

Banks, credit unions and other financial institutions may also have their own forms to appoint an attorney to make decisions about a specific account or property that you have with that institution.

If you already have your own power of attorney that gives your attorney authority over all of your financial affairs, including accounts with that financial institution, it likely isn’t necessary for you to sign the bank’s form.

Before you decide whether or not you want to sign the bank’s form, you may want to review it with your lawyer or with another person whose opinion you trust. You can also show your own power of attorney to the bank manager or a knowledgeable bank representative and ask them to confirm that it can be used for banking purposes. If you sign the bank’s form, there is a possibility that your other power of attorney could become invalid.

Joint bank accounts

Financial institutions such as banks, credit unions and trust companies may offer customers the option to set up a joint account. When the phrase “joint bank account” or “joint account” is used in this brochure it refers to joint accounts at any of these financial institutions.

What is a joint bank account?

Joint accounts are bank accounts in which two or more people have ownership rights over the same account. These rights include the right for all account holders to deposit, withdraw, or deal with the funds in the account, no matter who puts the money into the account.

How does a joint account work?

As a joint account holder, you share equal access to the account and responsibility for all the transactions made through the account. In most cases, unless you state otherwise, the other account holder can make transactions without your consent.

In some cases, it may be possible to specify that the consent of all joint account holders is required to access the funds in the account.

In many cases, joint accounts include the right of survivorship. This means that if one of the account holders dies, the surviving account holder becomes the owner of the account, with the right to deposit, withdraw, and deal with the funds in the account.

However, in some cases this could be challenged by others who may think they have an interest in the money in the account as an inheritance. The surviving joint account holder may have to demonstrate that the deceased account holder intended the remaining funds be a gift to the joint account holder. This could potentially lead to delays in the surviving account holder being able to access funds in the account.

Note:

In Québec, a joint account is frozen upon the death of one of the joint account holders. Consult with your banking institution to obtain more specific information about how this works.

Ask questions

Find out how joint accounts work at your financial institution and ask about what happens if a joint account holder dies. Make sure you fully understand all this information before making any decisions.

Why set up a joint bank account?

There are many reasons why someone may consider opening a joint account. For example, couples may set up a joint account to pay household bills or deal with other shared expenses. This is one of the most common uses of joint accounts.

In some cases, joint accounts may be considered as an option for someone to get help from family members or friends to pay bills and manage their finances.

For example, health conditions or mobility issues could make it difficult for someone to manage their personal banking on their own. Getting to the bank or using online banking services can be difficult for some people. A person may consider setting up a joint account with a family member, such as an adult child, after the death of a spouse who used to deal with the household finances.

It may also be important to consider other consequences of a joint account such as whether probate fees or taxes will apply upon the death of a joint account holder or whether the remaining funds are intended to form part of the deceased’s estate or be gifted to the surviving joint account holder. These considerations may be addressed in consultation with a lawyer.

Risks of a joint account

Control over the joint account

What to consider before setting up a joint bank account

Discuss the risks and benefits of a joint account with people you trust

Consider all your options

Even though setting up a joint bank account may seem to be a convenient option to get help managing your finances, there are many risks involved. Carefully consider all the risks and get information about all the options available to you before making any decisions.

If you prepare a detailed power of attorney that gives your attorney the authority to access specific bank accounts, they will be able to help you pay your bills and manage your finances.

With a power of attorney document, you can limit what your attorney is allowed to do. With a joint bank account, you may not be able to limit what your joint account holder can do with the money in the account.

There are also mechanisms in place to hold an attorney accountable if they mismanage your finances or do not manage your money in the way that you directed them to in the power of attorney document. It is very difficult to hold a joint bank account holder accountable for the mismanagement of money in the account.

Where can I find more information?

For more information on powers of attorney and joint bank accounts, contact knowledgeable professionals in your community, including legal aid services or associations that offer public legal education and information. You may also want to speak with a lawyer, an estate planner, or someone knowledgeable at your bank, credit union or trust company.

powers of attorney and joint bank accounts are not the only financial planning tools available. If you become incapable of managing your own finances and property, and you do not have a power of attorney or joint bank account, each province and territory has laws that allow someone else to get legal authority to manage your finances for you.

For information on other seniors-related issues, visit Canada.ca/Seniors, your local Service Canada office, or contact your provincial or territorial government.

This document has been jointly prepared by the Forum of Federal, Provincial and Territorial Ministers Responsible for Seniors. The Forum is an intergovernmental body established to share information, discuss new and emerging issues related to seniors, and work collaboratively on key projects.

Québec’s participation in the development of this document was aimed at sharing expertise, information and best practices. However, Québec does not subscribe to, or take part in, an integrated pan-Canadian approach in this field and intends to fully assume its responsibilities for seniors in Québec.

Date modified: