We are undoubtedly in the early stages of a surge of a substantial segment of the Canadian population reaching ages when capacity issues will start surfacing for some. With advances being made every day in all areas of health care, we will be faced with an aging population living for increased periods of time in potentially varying states of diminished capacity. A corollary of this scenario should mean that in future we will have more people assuming the role of substitute decision maker for individuals with impaired capacity-either acting as an attorney under a power of attorney or as a court-appointed guardian.
In Ontario, two main categories of substitute decisions makers exist: one for property and the other for personal care. This post focuses on attorneys for property acting under a power of attorney document.
Acting as a substitute decision maker is an important role. It ensures that during a particularly vulnerable time in a person's life, his or her financial affairs are actively monitored and managed (income is received and deposited, bills are paid, assets such as homes and cars are insured and maintained, etc.) while his/her welfare and that of his/her spouse and dependants are not jeopardized.
The role of an attorney for property can be a tricky one to properly fulfill however-especially if it is unfamiliar territory for a new attorney. While ownership of the property does not change (it remains with the incapable person), one does essentially step into the incapable person's shoes in the sense of being able to do anything on the incapable person's behalf that he/she could have done with respect to their property except for certain testamentary-type actions like making a will.
Ontario's Substitute Decisions Act sets out most of the laws governing attorneys for property. The remainder of this post highlights some duties and rules to keep in mind when acting in this capacity, subject to any explicit instructions contained in the power of attorney document itself:
- Always act "diligently, with honesty and integrity and in good faith" and in the best interest of the incapable person, ensuring that all decisions regarding the property are based on maximizing the incapable person's quality of life.
- Do not comingle personal property and finances with the incapable person's property and finances: keep them separate.
- Keep detailed, accurate records and accounts of all transactions involving the incapable person's property, including debits, credits, investments, liabilities, compensation taken and inventories of original existing assets the incapable person owned as well as after-acquired and after-disposed of assets. Also locate and consult the incapable person's will to ensure that property gifted in it is not disposed of unless absolutely necessary.
- Make expenditures required for the reasonable support and care of the incapable person. If funds remain available after such payments, ensure the reasonable maintenance and education of the incapable person's dependants. If funds still remain after these expenditures, look after the incapable person's other legal obligations.
- Discretionary expenditures such as gifts, loans and charitable donations should only be made if there will be sufficient funds left to satisfy item 4 above and the circumstances permit. For example, gifts or loans can be made to the incapable person's friends or relatives only if "there is reason to believe, based on intentions the person expressed before becoming incapable, that he or she would make them if capable", unless the power of attorney sets out broader authority. The gift or loan should not be made, however, if the incapable person expresses a contrary wish.
- Maintain confidentiality regarding the incapable person's affairs except in the appropriate circumstances.
- Use the investment provisions in Ontario's Trustee Act as guidelines to prudently invest the incapable person's property.
- If there is a different substitute decision maker for personal care, where reasonable, coordinate property and personal care decision-making.
- Keep the incapable person involved in and informed of matters relating to their property to the extent they are able to participate and understand.
- Consult with supportive family members, friends and those providing personal/health care services to the incapable person.
Difficult questions regarding duties or obligations can always arise and it is best practice in those instances to consult a qualified professional advisor.
Join us for our next blog post when we update you on FATCA.
The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.