How to get paid as a power of attorney in Ontario

What is a local attorney?

In Ontario, a power of attorney allows someone (called an “attorney”) to manage the finances and property of a person who is still alive but may be unable to manage their affairs due to illness or incapacity. This includes tasks such as paying debts, overseeing investments and selling property on someone’s behalf.

In contrast, a personal care power of attorney is a person appointed to make personal decisions about the health, medical care and living arrangements of a person who is unable to make those decisions for themselves.

This role is also different from bad. They only step in after someone has died to administer the estate, including paying debts and outstanding debts, and distributing assets according to the will.

The main difference is that a power of attorney controls things while a person is alive, while an executor takes over after death. One person or different people can be placed in these roles.

Powers of attorney are compensable in Ontario?

Managing someone else’s finances as a power of attorney is a huge responsibility. In Ontario POAs are generally entitled to fair compensation. But like most things in estate planning, there are a few important details you should know before you start paying yourself for someone else’s care. Here are the basics:

1. He is (usually) you are entitled to compensation: In Ontario, if you act as a POA for someone, you are generally entitled to compensation, unless otherwise stated in the POA document. Your nominee may have explained the fee to you, but if they haven’t, the Alternative Decisions Act, 1992 sets out guidelines. The standard compensation is 3% of the funds you manage (paid periodically in installments or a lump sum on death), plus an annual “care and management” fee of 0.6% of all assets under your management. It’s a great way to appreciate the time and effort you put into managing someone else’s finances.
2. Family dynamics can be difficult: Let’s be honest, money can sometimes cause rifts, especially in families. As a POA, you are entitled to compensation, but not everyone in the family may see it that way. Others may think that you are doing it out of the goodness of your heart, or they may feel uncomfortable with the idea of ​​your payment. To avoid misunderstandings, it is always good to be clear about your role and the fact that you are entitled to fair compensation under the POA document or under the Substitute Decisions Act, 1992.
3. You must keep clear records of: To ensure that you are compensated properly—and legally—keep careful records. Every penny that goes into or out of one’s accounts must be written down. You will need to track everything and make a backup. That means payments, debts, investments and all the decisions you make about their finances. Not only does it justify your compensation but it also protects you if questions arise down the line. Trust me, you’ll thank yourself later for doing this.

How is POA compensated in Ontario?

Now that you know the basics of attorney compensation power, let’s look at how you can make the process smooth and efficient.

1. Clarify compensation in advance to: To avoid awkward conversations later, disclose compensation early in your role as POA. If your surrogate can make decisions, discuss how you want compensation to be handled. If they can’t have this conversation, review the POA document to make sure you understand what’s allowed. If in doubt, consult an attorney to interpret any clauses that seem unclear to you.
2. Perform and delegate tasks where possible: Managing one’s finances can be time-consuming, but there are ways to get things right. Set up automatic payments for recurring bills, such as utilities and rent, to reduce your workload. You may also consider hiring a professional, such as an accountant, to help you with any tedious tasks. Make sure any expenses incurred by outsourcing POA duties are reasonable and justifiable, especially if you plan to include them in your compensation calculations.
3. Schedule a regular check-in with an expert: It’s always a good idea to visit a financial advisor or attorney regularly to make sure you’re on track with everything. They can review your records, make sure you’re following compensation guidelines correctly and provide guidance if any tricky situations arise. Regular reviews like this can help prevent any problems from escalating and give you peace of mind that you are handling POA duties correctly.

Does a POA pay income tax in Ontario?

Yes. Any compensation you receive as a power of attorney in Ontario is considered taxable income. This means that the amount you pay yourself for your POA services must be reported on your income tax return, just like any other income.

It doesn’t end there. You are also required to prepare a T4 slip to get the compensation you receive. Of course, you will need to treat this income as if you were a paid employee for your services.