Attorneys for Property, Conflicts, and Divorce

June 27, 2017 David M Smith Uncategorized Tags: , , , , 0 Comments

It is commonly understood that an Attorney for Property can do anything that the grantor of the Power of Attorney could do other than make a Will.  Indeed, s. 7(2) of the Substitute Decisions Act provides: “The continuing power of attorney may authorize the person named as attorney to do on the grantor’s behalf anything in respect of the property that the grantor could do if capable, except make a will.

In practice, “will” has been expanded to mean testamentary dispositions.  Accordingly, as an example, beneficiary designations under RRSPs and life insurance policies cannot be changed by an attorney on behalf of the incapable grantor.

The unpredictable onset of incapacity can make for some unintended consequences.  And the choice of attorney can create situations of inevitable conflict of interest that challenge the limitations of the statute.

An example would be a situation in which a separated but not divorced spouse is appointed under a Power of Attorney for Property.  What if an application for divorce was jointly initiated by the grantor and his spouse and the grantor then becomes incapable before the divorce is finalized and before the Power of Attorney is revoked?

In such a situation, the Attorney for Property/separated spouse is in a curious predicament: on the one hand, the grantor would presumably (but not as a certainty) have wanted to complete the steps required to conclude the divorce.  On the other hand, the separated spouse clearly has a competing interest:  he or she would presumably financially benefit from the divorce not being finalized.  To complicate matters further, if the grantor/incapable spouse chose to maintain his separated spouse as his attorney for property, he or she may been seen as wanting to trust that person to act in his or her best interests despite the conflict.

The reality is that there can be no certainty that the grantor would have as a matter of indisputable fact performed the additional steps required to conclude a divorce.  While the surviving spouse in this scenario would have a conflict of interest which raises a question of whether there would be a motive to avoid concluding the divorce, it would seen that, in addition to not being able to make a Will, an Attorney for Property, could not necessarily conclude a divorce on behalf of an incapable Grantor.

There are surprisingly few cases on point.  One such case is O.(M.K.) (Litigation Guardian of) v. C.(M.E.) in which the British Columbia Supreme Court decided against allowing a Divorce to proceed at the behest of a Committee for an incapable husband where the Court found, on a balance of probabilities, that no intention to divorce had been demonstrated before the incapacity.

Of course, it is a nice question as to whether intent to separate is the same as intent to divorce….

Thanks for reading,

David Morgan Smith

 

 

 

 

 

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