Limits: what the attorney cannot do
The law in Ontario is that an attorney for property cannot ‘make or change any testamentary dispositions of the grantor’.
Thus, as the law currently stands, the attorney acting for an incapable grantor cannot:
- make or amend the grantor’s will;
- amend the grantor’s beneficiary designations on a life insurance policy or RRSP;
It is not clear whether a designation on a TFSA is a ‘testamentary disposition’. It likely is.
If the grantor is competent, different rules may apply (see below, Duties of the Attorney).
Bank accounts held in joint tenancy
Joint tenancy for bank accounts is a challenging ownership structure that can lead to unfairness and disputes (we do not recommend it with independent adult children, especially as a way to avoid probate or manage your finances: a properly drafted PoA is better).
While the grantor is alive, the grantor has the power to handle all funds held in bank accounts in joint tenancy unilaterally without consultation with the other joint tenant. Thus, arguably so too does the attorney for property, at least while the grantor is capable.
On occasion the attorney may, even if the grantor has lost capacity, remove funds from a bank account held in joint tenancy and transfer them to third parties or to a separate account in the name of the grantor only, but only if the attorney can clearly establish that this was in the best interests of the grantor (not, for instance, the attorney or the beneficiaries of the grantor’s estate).
However, it is very unclear what an attorney can do with or to bank accounts held in joint tenancy between the grantor and someone who is not the grantor or the attorney. It is especially unclear whether the attorney can revoke the joint designation, close the account, or remove most of the funds.
We strongly recommend that an attorney should receive good legal advice before taking any drastic action with a joint account.
Real estate held in joint tenancy
Most of the time it is not possible for a joint owner of real estate to act unilaterally to sell real property without the other joint owner, and thus it is unlikely than an attorney can sell real property jointly owned by the grantor without the consent of the other joint owner.
On the other hand, a joint tenant does have the right to demand, unilaterally, that title to a property be changed from ‘joint tenancy’ to ‘tenants in common’. Unlike with joint tenants, one tenant in common does not inherit the interest of the other tenant in common. Such a change is likely a testamentary disposition, and therefore cannot be effected by a power of attorney acting for an incapable grantor.