Being appointed under a power of attorney for an incapacitated family member or friend requires administrative expertise and forethought. You also need the ability to make sound, and sometimes emotionally difficult, decisions on behalf of the individual (the “grantor”). Here are a few tips to consider while taking on such an important role.[1]
1. Keep organized and accurate records
Our number one tip: account for every penny in and out. From the stamp at the post office to the monthly rent, all expenses (and income) should be recorded and justified. Ensure you start your the record system from day one – it will save time and effort if you are required to explain changes to the grantor’s assets to the courts or inquiring family members.
2. Record your time and tasks
Do this even if you don’t think it’s necessary. There are many reasons to track your time and tasks. For one, you might request compensation for acting as an attorney in the future. With a complete record of work completed, it will be easier to ask the court or beneficiaries for compensation. Further, when questions arise about whether a task was completed, you can go back into your records to find out.
3. Follow the document
Most Canadian jurisdictions allow an attorney to do anything that the grantor can legally do, with some important exceptions. In Alberta, for example, an attorney is not allowed to gift to family members or charities if the document does not explicitly allow it. Even if the grantor made a donation to her church every week, continuing the donation without permission from the document or from the court is not permitted.
4. Mind the Will
You must ensure you don’t sell or otherwise dispose of an asset outlined in the grantor’s will. If Grandma’s wedding ring is supposed to go to her sister when Grandma passes away, then you may be required to safeguard that asset until the eventual distribution of the estate assets, or unless Grandma is so destitute that she needs the funds for her living expenses. And even then, tread carefully.
5. Don’t mix assets or make accounts joint between the grantor and the attorney
Despite what many think, this is rarely a good idea. Joint accounts could be at risk if the attorney has creditors, such as in the case of a lawsuit or divorce. The grantor may also lose unilateral decision making authority on those assets. And, after death, there is the question of whether the account is an estate asset or if it passes to the joint account holder.
6. Don’t change beneficiary designations
Attorneys are not permitted to change the ultimate division of a grantor’s estate. This would include changing or making a beneficiary designation for registered accounts like TFSAs or RRIFs. Even if financial institutions allow you to do so, changing beneficiary designations solicits tough questions from the estate’s stakeholders.
7. Consider providing the ultimate beneficiaries of the estate regular accounting
Transparency reduces questions and suspicions. Providing statements to the beneficiaries of the grantor’s estate can reduce questions down the road when the estate is divided. On the other hand, providing accounting too early can affect the privacy of the grantor and negatively impact the relationships with family. Bottom line: consider the factors, and talk to your lawyer, before deciding whether to provide accounting.
8. Work with the Agent under the Personal Directive
If the Agent and attorney are not the same person, working together will ensure the needs of the grantor are met. How are the living conditions? Does the grantor need additional money for clothing, food, or personal expenses? If possible, the grantor should be provided a similar standard of living they were accustomed to before incapacity.
9. Hire experts
Despite your honest intentions, an innocent mistake could prove very costly to you personally. Just as you would hire a realtor to sell your home, you can hire professionals to help you manage your role as attorney. Accountants, lawyers, investment managers, and trust companies can reduce your liability and ensure you are managing your role appropriately. You’re not expected to do everything by yourself, and having experts in your corner can prevent a range of issues from developing.
10. Act in the best interests of the grantor
Although obvious, this one can be challenging especially if you are a beneficiary under the will. If you find yourself in a conflict of interest, you must always consider the interests of the grantor above all else, in every single transaction that is completed.
If you are acting as an attorney and need some guidance, contact us to discuss how we can help you successfully manage your role.
The above is for informational purposes only. It is not intended to be legal or financial advice. We accept no liability for any losses arising from use of the above information. We recommend you speak to your lawyer to obtain specific advice or guidance regarding your unique situation.
[1] Note: for the purposes of this article, grantor refers to the individual that executed the Enduring Power of Attorney and later lost capacity, and attorney refers to the individual appointed in the document and acting on behalf of the grantor.