This Blog was written by: Alicia Mossington (Godin), Estate and Trust Consultant, Scotia Wealth Management

Is your caregiver the best person to make financial and property related decisions for you? Should these roles be filled by different people with unique skill sets? Will your caregiver respect the input and decisions of your financial decision-maker?

There are many posts and articles highlighting considerations for a testator when making their Will, and the qualifications or characteristics found in an ideal executor/estate trustee. Overlooked at times, are the qualifications and characteristics of the attorney for property and attorney for personal care.

Many people appreciate the importance and significance of having a Last Will and Testament, however the importance of substitute decision making documents cannot be overstated. As a significant percentage of our population reaches older age, the need for competent substitute decision makers will increase.

The Continuing Power of Attorney for Property allows the grantor to appoint an attorney (or attorneys) for property, with the authority to make financial and property related decisions. The Power of Attorney for Personal Care allows the grantor to appoint an attorney (or attorneys) to make healthcare and related decisions, if the grantor is incapable.

The role, responsibilities, and legal obligations of an attorney for property and an attorney for personal care are different. An appointed attorney is not always aware of their role, responsibility, and legal duties. These roles may be fulfilled by different people or trust companies.

In a recent paper by Nagrani & Korn, the role of the estate solicitor is explored as a guide to help the client, their attorney(s) and family members navigate the “murky waters of substitute decision making (…).”[1]

Murky waters abound. A common area of confusion is when to start acting as an attorney. The “test” for capacity to manage property is different then the test to make personal care decisions. An attorney or family member may not appreciate that the attorney for property might commence acting well before the attorney for personal care.

Another area leading to confusion and tension is the interplay between financial and personal care decisions. For example, an attorney for personal care has the power to make decisions regarding healthcare, nutrition, hygiene, shelter etc.. but the decisions made may have financial consequences that impact the attorney for property.

The Substitute Decisions Act[2] outlines expenditures required by the attorney for property and some guiding principles:

37 (1) A guardian of property shall make the following expenditures from the incapable person’s property:

1. 1. the expenditures that are reasonably necessary for the person’s support, education and care
   2. the expenditures that are reasonably necessary for the support, education and care of the person’s dependents
   3. the expenditures that are necessary to satisfy the person’s other legal obligations

Guiding Principles

(2) the following rules apply to expenditures under subsection (1):

1. 1. the value of the property, the accustomed standard of living of the incapable person and his or her dependents and the nature of other legal obligations shall be taken into account.
   2. Expenditures under paragraph 2 may be made only if the property is and will remain sufficient to provide for expenditures under paragraph 1.
   3. Expenditures under paragraph 3 may be made only if the property is and will remain sufficient to provide for expenditures under paragraphs 1 and 2.

Individual grantors may appoint an attorney for property, and a different person as attorney for personal care. When planning and reviewing an estate plan, consider whether the attorney(s) will be able to effectively work together, in the grantor’s best interest.

Consider shelter. Firstly attorney(s) must ask:  is the individual capable of making a decision about where he or she resides? If the individual is not capable of making this decision for themselves, the decision may fall to their substitute decision maker, such as their attorney for personal care. However, the decision about where to reside is also informed by the individual’s financial circumstances, taking into account the guiding principles outlined above.

For “simplicity”, some may consider selecting the same person(s) to perform the role of attorney for personal care and property, however this also has potential consequences including the potential for a conflict of interest between the functions.

In this author’s experience, when a power of attorney for personal care is aware of the impact their decisions will have on the individual’s financial circumstances and makes these decisions in consultation with the attorney for property, a more harmonious relationship and better outcome will result.

Substitute decision makers play an important role, and a comprehensive approach to estate and capacity planning can have a lasting, practical impact in the event that substitute decision makers are needed. As one booklet states “for most people, preparing a power of attorney should be straightforward but not simple.”[3]

 

[1] Nagrani, K & Korn, J. “Advising Substitute Decision Makers: The Interplay between Attorneys & Extended Family Members.” (Law Society of Ontario, 24^th Estate and Trust Summit).

[2] Substitute Decisions Act, 1992, SO 1992, c. 30, s. 37(1).

[3] Milton Estates Law. “Powers of Attorney for Property: A Practical Guide.” Retrieved from www.ontario-probate.ca