Liabilities as a Power of Attorney

Screenshot 2023-04-07 at 5.39.38 PM

Remember Your Limits

As the common phrase goes: “With great power comes great responsibility”. This is the motto Power of Attorneys should actively keep in mind when managing the affairs of the grantor. Key things POA’s must remember include:

  • They must act in the best interest (fiduciary duty) of the grantor
  • To keep records of all financial transaction the POA makes in managing the grantors affairs;
  • Consult with the grantor as much as possible:
  • And importantly, that the POA does NOT own the grantor’s property (eg. belongings: homes, money, etc.), they only manage it for the grantor

Powers that POA’s Do Not Have

While it may seem that granting someone the authority (permission) to act as your Power of Attorney means they have supreme ruling over your life decisions, there are certain that things that POA’s are forbidden from doing. Power of Attorneys are NOT allowed to:

  • Change or name a beneficiary (a person who inherits) in the grantor’s financial plans (ex. retirements savings plans or life insurance);
  • Create, or change the grantor’s will;
  • Transfer their duties as POA to another person. The only exception to this is if in the original Power of Attorney written document, the grantor has specifically mentioned allowing this.

Personal Liability

Section 33(1) of the Substitute Decisions Act (SDA) outlines that Power of Attorneys hold personal liability for any damages (money awarded for being wronged or for suffering loss) that result from a breach (violation) of duty. What does this mean?

Having personal liability means that you are personally responsible (accountable) for mistakes you make. In the context of being a POA, this means that you are responsible for your actions in role as a POA. If any loss of property (ex. homes, money, etc.) occurs due to specifically your actions, you will be personally responsible for paying any loss of money.

It is important though to understand a critical difference: guardians are responsible to pay for their own actions, NOT the consequences of the actions of the incapable person. Let’s look at the following example:

  1. POA is liable: POA sells the grantor’s home for much below market value (the value of the home in comparison to other homes for sale at the time) because they wanted to quickly finish the selling process.
  2. POA is not liable: the grantor had debt before requiring a POA.

For this reason, POAs need to act responsible in their role. A POA who can show that they have acted in a reasonable, honest, and diligent manner may be given relief from liability (protection from accountability partly or completely) as indicated by s.33(2) of the SDA.

When a POA acts deliberately (intentionally) or negligently (with a lack of care) in using their role for the wrong purpose, they may be found criminally responsible for breaking s.331 of the Canadian Criminal Code.


*DISCLAIMER*: The information and content on this website is for general information purposes only and is NOT legal advice. Use of this website does NOT create an attorney-client relationship between Gale Law Professional Corporation and the reader. Gale Law Professional Corporation makes no implicit or express representations or warranties. This website may contain links to third party sites or information that we find useful: these links should not be interpreted as a sponsorship, recommendation, or endorsement and Gale Law Professional Corporation makes no guarantee of their accuracy as Gale Law does not control those sites.