Are your clients protected? Are you?

By Geoff White

It’s a recipe for abuse: our clients live longer, but more often with disability; they have more divorces, with fewer kids who live farther apart; and the government struggles to provide adequate support services. It is inevitable that our clients will become more vulnerable, more often. Who will make decisions to protect them when they can’t? 

That question has been often answered in the financial context by creating a power of attorney that included the “magic” words of section 8 of the Power of Attorney Act to make it endure despite the donor’s subsequent mental incapacity. However, that single section provided little legislative guidance about the duties, powers and operation of the enduring power of attorney.

On September 1, 2011, amendments to the Power of Attorney Act came into force to replace that single section with 32 new sections (and six additional sections of Regulations). The amendments create more legislative certainty.

Two points should be first mentioned. The amendments do not affect “General (non-enduring) Powers of Attorney,” which are separate from the new “Enduring Power of Attorney” regime. Second, pre-existing powers of attorney that were validly made under the old section 8 will be deemed to be valid enduring powers of attorney – their formal validity is grandfathered, but they will be subject to all of the new rules regarding duties, powers and operation.

For many issues, the new rules simply codify the common law (with some exceptions, including the area of capacity). For other issues, the new rules create a new statutory default power or duty – some are mandatory and some may be modified by the terms of the document.

The critical changes include the following: a new statutory capacity test; restrictions on who may act as an attorney (prohibiting some paid caregivers); new signing requirements (including signing by the attorney in addition to the usual Land Title Act statutory declaration); a new positive duty on the attorney to be ready to act once they have signed the document; mandatory record keeping once the attorney begins to act; investment only as per the Trustee Act (unless otherwise stated in the enduring power of attorney); gifts limited to no more than $5,000 or lower per year (unless otherwise stated); beneficiary designations in limited circumstances; no delegation (unless otherwise stated); and no compensation (unless otherwise stated).

The new Act also sets out procedures for resignation by the attorney, revocation by the adult (donor), and circumstances under which the authority of the attorney or the document itself may be suspended or terminated.

Provisions will recognize some extrajurisdictional enduring powers of attorney (but recognition is subject to significant geographic and procedural restrictions). There are also new provisions to allow the Public Guardian and Trustee to receive reports of abuse and to make investigations, and for applications to seek directions and orders from a court.

In short, there are many new rules to consider. As a practical matter, you may wish to update your interview checklist to consider the specific capacity test, and to determine your clients’ views about the attorney’s power to invest, gift, delegate, or be remunerated. The CBA and CLEBC have developed useful precedents that you may wish to compare to your own.

The ultimate goal is to protect your client. There are new tools and rules to do this with enduring powers of attorney. A good knowledge of these new amendments will ensure that you too are protected as you help achieve your clients’ goals.

Geoff White of Geoffrey W. White Law Corporation.

This article was published in the February 2012 issue of BarTalk. © 2012 The Canadian Bar Association. All rights reserved.