Alexander Procope of PBP LAWYERS explains the importance of having a power of attorney:
Clients often come to our firm months or years into using a power of attorney without having had any guidance on the obligations that follow these powerful instruments.
Unfortunately, attorneys can find themselves in hot water if they have not complied with their obligations. Hot water could mean personal liability for any unaccounted-for money even if you did not steal a thing. That example is not the worst-case scenario.
Here are some tips to help you understand the role of an attorney and flag when you may need legal advice (which this article is not). Incidentally, some of what follows will apply to other jurisdictions and fiduciary roles but I only refer to the law here in Ontario.
DO get your terminology straight.
A Power of Attorney is a document not a person. In Ontario, there are a few different types of powers of attorney: (1) a general power of attorney for property; (2) a continuing power of attorney for property; and (3) a power of attorney for personal care. The person or persons appointed are the “attorney for property” and the “attorney for personal care” respectively. Just identifying someone as the “attorney” or the “POA” is pointless. The precise role should always be identified.
DO understand when the document takes effect.
This may not be easy because sometimes doctors or other third parties are required to confirm incapacity, but if somebody told you being an attorney was easy than you’ve been lied to. The document may have conditions setting out when it takes effect so the document itself should be examined first. If there are no conditions, the Substitute Decisions Act, 1992 (“SDA”) has rules for when the document takes effect. On a side-note, get used to reading the SDA and its regulations.
DO comply with your record keeping obligations.
Attorneys for property of incapable people have elaborate records to keep, down to every nickel. I recommend getting these record books set up by an accountant or bookkeeper familiar with estate accounting but that’s just because I don’t want my clients sued for having sloppy records. Attorneys for personal care have record-keeping obligations too. This is all in the SDA and its accounts and records regulation (O. Reg. 400/96).
DO act in the best interest of the incapable person.
Attorneys are fiduciaries which, for the purposes of this article, means that they must act in the incapable person’s interest only. This is not always as easy as it sounds. A common conflict in this vein that I have seen is a transfer of an incapable parent’s home or bank account into joint ownership with the attorney. This does not benefit the parent, it benefits the attorney. If you need to benefit from the incapable person’s funds by, for example receiving wages for caregiving, make sure the payments are fair. I would include a generous love and affection discount so that nobody can say your services could have been obtained elsewhere for less.
DO respond professionally to anyone challenging your authority or decisions.
The majority of the disputes that we see could have been resolved early on with clear communication, openness and a focus on the incapable person’s wishes and best interests as appropriate. Trust me when I say that contested power of attorney court battle costs everyone involved -big time. Try to keep in mind that if someone challenges you the motivation is typically a genuine concern for the incapable person’s well-being. These concerns should be met with respect and productive responses, not avoidance nor threats.
DO account for your actions.
This means that you have to show the incapable person, on demand, all of your records and be ready to explain every decision and transaction. You may also have to account to a concerned (or meddling) family member or friend, to the Public Guardian and Trustee, to the Court or to any of the above. You may not have to account to an interloper, but you’ll probably have to account to someone so don’t spend much energy trying to avoid it.
DO consult with the incapable person and supportive family and friends.
Being incapable of one aspect of decision-making does not mean that you should be any less involved in decisions that affect you. The SDA requires consultation with the incapable person and that communication should be ongoing so long as communication is possible. The SDA also requires consultation with supportive family and friends. On a side-note, most people don’t like being called unsupportive so please consider cutting family and friends off from your consultations only sparingly.
The above truly is the tip of an iceberg. If you are not sure what you should do in a specific situation, you should definitely seek out legal advice respecting your duties and obligations. Your lawyer can help you determine what to do including whether you should pay for or reimburse the legal fees from the incapable persons assets.
As a capacity lawyer I have seen power of attorney cases end up destroying relationships and savings accounts. Hopefully the above helps avoid a few such battles before they start.
Alexander Procope is a partner at Perez Bryan Procope LLP, a boutique law firm in Toronto with a practice focused on health law, estate advocacy and civil rights. Mr. Procope is also a co-director of the Osgoode Professional Development in Elder Law Program and a member-at-large on the Ontario Bar Association’s Elder Law and Trusts and Estates Law Sections.
Disclaimer: King Law Chambers Inc. is not in partnership with Alex Procope, PBP LAWYERS LLP, and does not provide legal advice and make no representations on the accuracy of this advice. PBP LAWYERS are tenants of King Law Chambers Inc.