When you’re young, selling a home can be an exhilarating experience. It often means you’re moving on to the next stage in your life, which can feel like quite the accomplishment. The process can be much different when you get older. Moving doesn’t always feel like a happy milestone. All too often, it feels like the end of an era and can come with feelings of sadness or nostalgia.
In addition, the market has changed substantially since your last move, and there can be legal hurdles. What happens if you can no longer handle the process or don’t want to be involved? Can you hand it all off to someone else to take care of? You can when you assign someone you trust to be your POA (Power of Attorney).
What Does Power of Attorney Mean?
The legal aspects of real estate can be confusing for many people. Nowhere is this more true than when you call upon someone to authorize a major transaction on your behalf, like buying or selling a house.
Executor and Power of Attorney are two terms that frequently get mixed up. What is the difference?
An executor is someone you appoint to handle your affairs after you have passed away. They oversee your will and ensure your wishes are honoured per your expectations.
A Power of Attorney takes charge of your financial decisions while you are still alive, either because you are no longer able to or not willing to.
At Thompson Sells, we specialize in helping seniors make the most of their real estate decisions, whether buying or selling. Here are some of our other articles you may find informative:
- Advice for Seniors Selling Their Family Home
- Why Work With an SRES® Agent as a Senior
- A Practical Guide to Downsizing
Types of POA
The topic of POA can be intimidating, especially when you are accustomed to managing everything yourself. How much authority do you give up, and for how long? Signing over the right to act on your behalf, either personally or financially, is not a decision to make lightly.
Both you and your chosen POA must understand the limits of authority. Let’s take a look at the three different types of POA in Ontario.
- Non-Continuing Power of Attorney for Property. This type of POA is usually assigned to accomplish a specific task (like selling a house). The document will clearly outline what your POA is allowed to do on your behalf and will expire at a predetermined date or if you become mentally incapacitated.
- Continuing Power of Attorney for Property. In this case, you grant authority to someone else to handle your financial and business decisions if you become incapable. It isn’t just about buying or selling a home. Your POA becomes responsible for managing your investments, ensuring your bills are paid on time, and even collecting money that is owed to you.
- Power of Attorney in matters of health. Your POA will be able to make medical decisions for you if you become unable to do so yourself.
You can assign any or all types of POA. However, Power of Attorney for Property is essential if you want someone else to buy or sell a home for you.
Moving can be particularly stressful for seniors, but we do everything we can to ease your transition. Find out more about our process here.
How to Choose a Power of Attorney
Legally, your POA must act in your best interests and only for the purposes specified in the document. That said, assigning authority to the wrong person can lead to fraud or theft, so it’s imperative that you choose someone you trust while you are of sound mind. Once you are sick or infirm, the courts may be the ones who decide your fate.
Though fraud can happen, it is rare. Your bigger concern is not whether your POA will steal from you but whether they are capable of performing in the role. Someone may have your best interests at heart but find themselves in over their head with the responsibility POA entails. Here are some steps you can take to protect yourself to ensure your POA is both trustworthy and capable of acting on your behalf.
- Speak to a lawyer to understand your rights under a POA agreement.
- Assign POA to two different people.
- Avoid holding joint bank accounts with your POA.
- Make sure your document details any limits on your POA authority. Keep all financial statements and valuables in a separate place they don’t have access to.
- If you ever suspect fraud (or incompetence), contact your lawyer and financial institution immediately.
Can You Revoke POA Once Assigned?
What happens if you decide you want to remove someone as your Power of Attorney? You can revoke any POA as long as you are of sound mind and do so in writing, with the signature of two witnesses. Once you cancel your POA, be sure to notify your lawyer and all financial institutions to ensure your wishes are known.
You can also have your lawyer register the revocation on your property and any accompanying mortgage so no one can make decisions on your behalf.
Your original document is also considered revoked if you assign a new POA unless stated otherwise.
How Your POA Is Compensated
Under Ontario law, your Power of Attorney is entitled to compensation. You can work out an agreement between the two of you. If nothing is stated in writing, your POA will automatically be compensated according to the provincial fee scale:
- 3% of any capital your attorney collects
- 3% of any money paid out by your POA
- .06% of the average annual value of your assets
Choosing your POA carefully means that you will have peace of mind that someone you trust will step in to protect your best interests at all times. However, it’s a complex process and a legally binding agreement, so it’s highly recommended to seek legal advice and talk to your family members before making any decisions.
Did you know that SRES® real estate agents are specifically trained to help seniors over 55 buy or sell property? We have extensive experience working with older adults and Power of Attorneys and are happy to help you in any way we can. Reach out to us today by email or call 416.450.5900 for a friendly chat with no obligation.
