This blog has been written by Mohena Singh, Associate at Fasken LLP

As estate planners, one of the most important aspects of our job is to discuss incapacity planning with our clients. Mental incapacity has become a social, health and legal challenge that affects a surprising number of Canada’s senior citizens. According to Statistics Canada, by 2068 it is projected that over 20% of Canadians will be over the age of 65.[1] With an aging population, the topic of powers of attorney becomes more prevalent.

Since COVID, the need to express wishes about certain treatment decisions has taken on a higher importance for many people. COVID has also changed people’s perspective from primarily viewing incapacity planning as an issue for more senior adults to an issue for everyone.

With capacity planning now becoming a widely-held conversation, it is important for estate planners to ensure they are diligently drafting power of attorney documents so that they are valid and accepted by third parties.

The Ontario Court of Appeal recently ruled that a set of powers of attorney were not validly executed for an individual who had dementia. The case of Rudin-Brown v Brown, 2023 ONCA 151 reiterates the importance of incapacity planning and ensuring that the drafter ensures capacity of the grantor when preparing powers of attorney.

The appeal arose from a dispute between family members concerning the care and guardianship of the grantor. The grantor had updated her will and powers of attorney following the death of one of her daughters in 2009 (the “2009 POAs”). In the 2009 POAs she appointed her sister-in-law as her attorney for property and her daughter and son, acting jointly and severally, as the attorneys for personal care.

In 2016, the grantor updated her powers of attorney once again, naming her son as the sole attorney for property and personal care (the “2016 POAs”). In 2017 the grantor was found to be incapable by multiple assessors, however she had started showing symptoms of loss of capacity several years before.

The issue before the court was which set of powers of attorney were valid. The trial judge found the 2016 POAs to be invalid, a decision that the appellant (the son) appealed to the Ontario Court of Appeal. The Ontario Court of Appeal found that the trial judge had not made any error in the analysis and dismissed the appeal.

The trial judge found the 2016 POAs to be invalid because the individual lacked the requisite capacity when she executed them and found that that 2016 POAs were a product of the son’s undue influence over his mother. These conclusions were supported by ample evidence. The trial judge further found that the consideration of the validity of the powers of attorney requires a factual foundation and in this case there was evidence that proved there were suspicious circumstances surrounding the execution of the powers of attorney.

This case is a reminder to all planners that when drafting powers of attorney, it is important that the grantor meets the tests for both the power of attorney for property and personal care that are set out in the Substitute Decisions Act, 1992[2]. It is also important to know that each test is a little different and the drafter of the powers of attorney should be able to satisfy to themselves that the grantor can meet both tests. The right questions must be asked of the grantor and meticulous notes should be kept so families can avoid lengthy and expensive litigation battles, especially at a time when their family member requires their full support.

Thank you for reading.

[1] https://www150.statcan.gc.ca/n1/pub/91-520-x/91-520-x2022001-eng.htm

[2] See subsections 8(1) and 47(1) in the Substitute Decisions Act, 1992 for the tests.