Legalese_09-14

Jeff Green | Apr 09, 2009

By Susan Irwin, Lawyer/Executive Director, Rural Legal Services

A number of years ago dear old Aunt Hilda asked if you would mind being her attorney to manage her financial affairs when she was no longer able. Quite flattered, you willingly agreed.

Of late however, Aunt Hilda has become quite forgetful and you realize that you are soon going to have to act as her attorney under the Continuing Power of Attorney for Property that she signed. You recall her telling you it would just be a matter of paying a few bills. Now you’re not so sure. Is there more you need to know?

In a word, yes! Assuming dear Aunt Hilda didn’t impose any restrictions on what property you could deal with under the Power of Attorney document, you essentially step into her shoes for the purpose of financial decisions and transactions. It is now up to you to not only look after day-to-day bills but also to do her banking, pay for her food and shelter, recover any money owed to her and deal with her assets such as the house and her investments. In doing so you do not become personally liable for any of Aunt Hilda’s financial obligations but you will be responsible for managing, in the best way possible, what money and property she has.

When a person is no longer capable of handling their own finances they become extremely vulnerable. Decisions made by the attorney can impact greatly on the incapable person’s life. For this reason the law demands the highest standards of honesty, integrity and trust on the part of the Attorney for Property.

The specific duties and powers of the attorney are contained in the Substitute Decisions Act, 1992. The Act requires that the attorney exercise these responsibilities diligently and in good faith for the incapable person’s benefit. More specifically, the attorney is directed to consider the effect of a decision on the incapable person’s well being or personal comfort, and to make such expenditures as are necessary for the person’s support, education and care.

In making such expenditures, the attorney must take into account the value of the incapable person’s property, their accustomed standard of living and the nature of their other legal obligations (i.e., debts, responsibility for dependents, etc.). The attorney is also directed to consult with supportive family members and friends of the incapable person and to encourage the incapable person to participate, to the best of his or her ability, in making financial decisions. Additionally, the attorney must also manage the property in a manner consistent with decisions made about the person’s personal care.

The law requires that the attorney exercise a certain degree of care in making these decisions. However the standard of care expected is different, depending upon whether or not the attorney is receiving compensation for carrying out his or her duties. If you are recovering a fee for managing Aunt Hilda’s financial affairs, you will be expected to manage her property and finances with the same degree of care and skill as a person who is in the business of managing the property of others. On the other hand, if you’re simply doing it out of the goodness of your heart, you will only have to bring to the task the same degree of diligence and skill as that of a person of ordinary prudence in managing their own affairs.

Of course, accounts of all financial transactions will have to be kept and they must be kept separate from your own. The Substitute Decisions Legislation specifies the types of records that must be kept and imposes an obligation on the attorney to have the accounts reviewed by the Court in certain circumstances. There are rules about how an attorney may deal with property that is specifically gifted in the incapable person’s will. There are rules about charitable donations, loans, and when an attorney will be liable for damages for breach of duty.

By now you may be having second thoughts about whether Aunt Hilda has done you any favour. The obligations of an attorney under a Continuing Power of Attorney are very serious and clearly should not be undertaken lightly. If you would like more information about the duties of an attorney, or what’s involved in making a Power of Attorney, please talk to a lawyer. Further information is also available without charge from Rural Legal Services. Why not give us a call?