I have previously blogged about Vanier v Vanier, a decision of the Ontario Court of Appeal relating to a dispute amongst attorneys, in which the Court of Appeal agreed with a statement by the motion judge that the attorneys had “lost sight of the fact that it is [the incapable’s] best interests that must be served here, not their own pride, suspicions, authority or desires”. Unfortunately, it is often the case that in disputes amongst family members over the management of an incapable family member’s care or property, the incapable’s interests may be overshadowed by the fight amongst the other members of the family.
The recent Ontario Superior Court of Justice decision in Lockhart v Lockhart, 2020 ONSC 4667, appears to be another similar situation.
The applicant, Barbara, and the respondent, Robert, are children of Mrs. Lockhart. Mrs. Lockhart was 89 years old at the time of the decision. A number of years before, she had contracted bacterial meningitis and had suffered some long-lasting effects that impacted her cognition. Mrs. Lockhart’s husband predeceased her on October 2, 2018. Prior to his death, he had made personal care and treatment decisions for Mrs. Lockhart when she was not able to do so herself. After Mrs. Lockhart’s husband’s death, Barbara was unable to locate a power of attorney for personal care for Mrs. Lockhart; accordingly, Barbara and Robert proceeded to make personal care decisions on Mrs. Lockhart’s behalf, jointly.
However, in December 2018, Robert arranged to have Mrs. Lockhart sign a power of attorney for personal care and a power of attorney for property naming him as her sole attorney (the “2018 POAs”). Barbara was not aware of the 2018 POAs, and was not involved in their preparation or execution. Barbara did not even become aware of the 2018 POAs until April 2020 when Robert revealed them to her in the midst of a dispute between Barbara and Robert relating to Mrs. Lockhart’s care. Barbara subsequently challenged the validity of the 2018 POAs on the basis that, among other things, Mrs. Lockhart was not capable of granting them.
The court found that the 2018 POAs were of no force and effect, and were void ab initio. The court was also asked to determine which of Barbara and Robert would be authorized to make decisions on Mrs. Lockhart’s behalf under the Health Care Consent Act, 1996 (the “HCCA”). Each of Barbara and Robert took the position that they should have sole decision-making authority.
Notably, the court stated specifically that “[t]his dispute has less to do with Mrs. Lockhart’s interests and more to do with a power struggle between two siblings.” Given this outcome, and the facts leading to the litigation, I found the solution arrived at by the court interesting. The court determined that both Barbara and Robert are authorized to make personal care, health care, and treatment decisions under the HCCA, on behalf of Mrs. Lockhart, jointly. It appears that the court was satisfied that both of Barbara and Robert would exercise that authority in Mrs. Lockhart’s best interests, notwithstanding the dispute between them that lead to litigation. Other than the major disagreement between Barbara and Robert that lead to the litigation, the court found that “it appears that they have, in the main, come to decisions that have been in Mrs. Lockhart’s best interest and have kept her safe.” This historic ability to make joint decisions seems to have been sufficient for the court to decide that Barbara and Robert should continue doing so going forward.
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As we age, many of us begin to experience the normal consequences of aging, including some memory loss. Unfortunately, many of us may end up suffering from Alzheimer’s and related dementias. As a result, capacity has become a bigger problem among seniors.
There are ways to manage decision-making for a senior who has lost capacity to make his or her own decisions about care or property. If the person executed a power of attorney, their attorney can step in. If there is no power of attorney, a guardian can be appointed by the court. However, the imposition of a substitute decision maker can be a significant restriction on an older adult’s liberty, and some seniors may resist that imposition.
An article in The Walrus earlier this year considered this issue, and the impact a finding of incapacity can have on a senior’s autonomy in Canada.
One of the concerns discussed in the article is that “some seniors find that, once declared incapable, they are unable to challenge the decision.” In Ontario, we have the Consent and Capacity Board, which is an independent tribunal that, among other things, reviews various determinations regarding an individual’s capacity. However, this is apparently a rarity in Canada. The only other similar body is located in the Yukon.
Another issue raised by the Walrus article is with the lack of a standardized system for assessing capacity. The person doing the assessment can vary (doctor, nurse, social worker, etc.), as well as the tests conducted. This is made even more complicated by the fact that there are differing levels of capacity for different tasks (e.g. making a Will, managing property, getting married, granting a power of attorney for personal care).
Unfortunately, the lack of attention paid to the issue of aging and capacity appears to be systemic. As cynically, but perhaps also realistically stated in the Walrus article: “It can seem like a great deal of attention is paid to other institutions that house vulnerable segments of the population, such as children in daycares. But there’s no future in aging; there is next to no potential that a senior might one day cure cancer or be the next prime minister. Reform in elder care may be desperately needed, but it hasn’t been forthcoming.”
There is a fine balance to be struck between restricting seniors’ autonomy, and protecting vulnerable people. A collaborative “supported decision-making model”, as discussed in the article may be one way of doing this. I hope that as more attention is drawn to these issues, there will be greater awareness, and increased progress and reform for our seniors.
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Sometimes there is a grey area when it comes to a person’s loss of capacity, and the time when his or her attorney for property first began to act on an incapable’s behalf. In such a situation, it can be difficult to determine the starting date for an attorney’s fiduciary accounting period.
The recent decision of The Public Guardian and Trustee v Willis at al, 2020 ONSC 3660, dealt with this kind of situation. One of the issues was whether the respondent should be required to pass his accounts for the period before he became the attorney for property for his mother, Mrs. Willis.
The respondent was his mother’s only living child, and was acting as her attorney pursuant to a power of attorney for property dated May 2, 2018. Mrs. Willis was assessed as incapable of managing her property in September 2018, but the decision notes that she had been “clearly suffering from some cognitive deficits prior to June 2018”.
The Public Guardian and Trustee (the “PGT”) sought to have the respondent provide an accounting back to January 1, 2015, because the respondent had arranged several mortgages on his mother’s behalf in that period. The respondent, however, only agreed to pass his accounts starting from May 2, 2018 when he became his mother’s attorney for property. One of the main reasons that the respondent did not want to pass his accounts prior to that period was due to the expense, because it was clear that Mrs. Willis was insolvent, and the respondent would likely have to personally bear the costs of passing his accounts. The PGT clarified during the hearing that it was not seeking court format accounts for the period from 2015-2018, but only “justifiable explanations of money coming in and out of his mother’s RBC account and how mortgage advances were spent plus all relevant disclosure.”
The court found that the respondent had assisted his mother with paying bills and arranging mortgages prior to the time that she was assessed as incapable. It was also noted in the decision that there was “no doubt” that even while Mrs. Willis was capable, she was unsophisticated, vulnerable, and relied on the respondent. The respondent also had access to his mother’s bank account before January 1, 2015.
The court held that, even if an individual is not specifically appointed in a fiduciary role (such as an attorney) one must look at the types of duties that the individual was carrying out to determine if they were acting in a fiduciary capacity. On this basis, the court found that the respondent had been acting as a fiduciary for Mrs. Willis for some time, and determined that he should provide detailed explanations of financial transactions upon the PGT’s request from January 1, 2015 to May 1, 2018 (in addition to the passing of accounts to which the respondent had consented starting from May 2, 2018).
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Recently, the Advance Care Planning in Canada initiative, led by the Canadian Hospice Palliative Care Association, released a new resource to assist with advance care planning and choosing a substitute decision maker.
The “Speak Up” initiative includes two complementary resources.
One resource is the “Living Well, Planning Well” legal toolkit. The development of this toolkit was funded by Health Canada. The legal toolkit was designed to be used by lawyers and their clients, to encourage conversations and reflections about clients’ wishes for advance care planning, and putting appropriate arrangements in place.
The other resource is a public toolkit. It provides plain language information regarding the laws and processes with respect to advance care planning and substitute decision-making throughout Canada. This is helpful as the laws can vary between the provinces and territories.
It is very important to consider advance care planning, and to implement plans as early as possible. In particular, everyone should consider executing a power of attorney, to ensure that they are able to select the person responsible for making decisions on their behalf when they are no longer capable. Without a power of attorney, in Ontario, the ultimate decision as to who will make decisions on an incapable person’s behalf (other than those captured by the Health Care Consent Act, 1996), is left to the court. The court takes such matters very seriously, but most people prefer that the choice of substitute decision maker be their own.
Something else to contemplate is speaking with your family and friends, especially with your named attorney, regarding your wishes. As we enter the holiday season, and plan gatherings with our friends and family, consider taking this opportunity to have a conversation in this regard.
You can review Speak Up’s post about the release of their toolkit here.
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In Ontario, we are fortunate to have the ability to execute powers of attorney in respect of our property and our health care. I recently learned that Jersey, in the Channel Islands, has only lately gained the ability to execute a “Lasting Power of Attorney” to record their decisions and intentions in respect of their assets and care. On that note, I thought I would take the opportunity to provide a quick reminder of the importance of executing powers of attorney, and the possible consequences of not doing so.
Powers of attorney in Ontario are governed mainly by the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (the “SDA”). The SDA sets out, among other things, the requirements for powers of attorney, the requisite capacity to grant a power of attorney, and the powers and duties of attorneys. There are two types of powers of attorney: powers of attorney for personal care (dealing with your health, medical care, and other matters related to your well-being) and powers of attorney for property (dealing with your property and financial matters). Generally, powers of attorney will come into play if you become incapable of managing your property or personal care, respectively, but it is also possible to grant a power of attorney for property that is effective immediately (that is, not conditional upon later incapacity).
What Happens if I Don’t Execute Powers of Attorney?
If you do not execute powers of attorney, and you never lose capacity, you may never realize how important they are. However, as we have blogged about previously, as our population begins to live longer, there has been an increase in dementia and other aging-related conditions associated with cognitive decline, meaning that the use and activation of powers of attorney is increasing.
Taking the step of executing powers of attorney means that you have the chance to make your own decision regarding who will handle your affairs in the event that you are no longer capable. If you become incapable, and have not named an attorney for property or personal care, it is open (and may become necessary, depending on your circumstances) for an individual to bring an application seeking to be appointed as your guardian for property or personal care, thus allowing them to act as your substitute decision-maker. The application process requires that notice be given to certain people (including certain family members), and if someone disagrees with the appointment of the proposed guardian, they may contest the guardianship—but the key detail to remember is that the ability to make the decision is taken away from you.
A guardianship application can also be brought if a person has executed a power of attorney, but the existence of a power of attorney will be an important factor for the court’s consideration: pursuant to the SDA, if the court is satisfied that there is an alternative course of action that is less restrictive of the person’s decision-making rights, the court shall not appoint a guardian.
Naming someone to act on your behalf with respect to your property and personal care is a big decision. It is almost certain that you are in the best position to make a determination as to who you want acting for you in this regard. We should all take the opportunity to exercise our own decision-making rights, to choose the person that we want to play the important role of attorney, and not leave it up to others to make this decision for us.
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Does an attorney, or guardian, have the power to change a grantor’s estate plan?
According to section 31(1) of the Substitute Decisions Act, a guardian of property (or attorney for property) has the power to do on the incapable person’s behalf anything in respect of property that the person could do if capable, except make a will.
The statute, however, is deceptively simple. Can a guardian transfer property into joint tenancy? Can a guardian sever a joint tenancy? Can a guardian change a beneficiary designation on a RRSP, RRIF or insurance policy? Can an inter vivos trust be established or an estate freeze undertaken to save taxes? There are numerous cases which have tested these issues.
For instance, in Banton v Banton, Justice Cullity found that although the grantor’s attorneys had the authority to create an irrevocable inter vivos trust, they nonetheless breached their fiduciary obligations owing to the grantor, in creating the trust.
The irrevocable trust provided for income and capital at the trustee’s discretion for the grantor’s benefit during his lifetime and a gift over of capital to the grantor’s children, who were also the attorneys. The scheme of distribution of the irrevocable trust was the same as provided for in the grantor’s will. However, the court found that the fact that the remainder interest passed automatically to the grantor’s issue defeated the grantor’s power to revoke his will by marriage and would deprive his common law spouse of potential rights under Parts II and V of the Succession Law Reform Act and Part I of the Family Law Act. The court found that the gift of the remainder of the interest went beyond what was required to protect the grantor’s assets.
Justice Cullity stated:
“I do not share the view that there is an inviolable rule that it is improper for attorneys under a continuing power of attorney to take title to the donor‘s assets either by themselves or jointly with the donor . This must depend upon whether it is reasonable in the circumstances to do so to protect or advance the interest, or otherwise benefit, the donor.”
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In today’s podcast, Stuart Clark and Sayuri Kagami discuss the issue of whether damages can be claimed on a passing of an attorney for property’s accounts in light of the fact that section 49(3) of the Estates Act, RSO 1990, c E21 only refers to the ability of a Judge to award damages against an executor, administrator, or trustee, not an attorney for property, in such proceedings. To read about this issue, see Stuart Clark’s recent blog on this topic.
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While digital assets constitute “property” in the sense appearing within provincial legislation, the rights of fiduciaries in respect of these assets are less clear than those relating to tangible assets. For example, in Ontario, the Substitute Decisions Act, 1992, and Estates Administration Act provide that attorneys or guardians of property and estate trustees, respectively, are authorized to manage the property of an incapable person or estate, but these pieces of legislation do not explicitly refer to digital assets.
As we have previously reported, although the Uniform Law Conference of Canada introduced the Uniform Access to Digital Assets by Fiduciaries Act in August 2016, the uniform legislation has yet to be adopted by the provinces of Canada. However, recent legislative amendment in one of Ontario’s neighbours to the west has recently enhanced the ability of estate trustees to access and administer digital assets.
In Alberta, legislation has been updated to clarify that the authority of an estate trustee extends to digital assets. Alberta’s Estate Administration Act makes specific reference to “online accounts” within the context of an estate trustee’s duty to identify estate assets and liabilities, providing clarification that digital assets are intended to be included within the scope of estate assets that a trustee is authorized to administer.
In other Canadian provinces, fiduciaries continue to face barriers in attempting to access digital assets. Until the law is updated to reflect the prevalence of technology and value, whether financial or sentimental, of information stored electronically, it may be prudent for drafting solicitors whose clients possess such assets to include specific provisions within Powers of Attorney for Property and Wills to clarify the authority of fiduciaries to deal with digital assets.
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The Substitute Decisions Act, 1992, S.O. 1992, c. 30 (the “SDA”), governs, among other things, the appointment of guardians for incapable persons. There are two types of guardians: a guardian for property and a guardian for personal care.
Sections 22(1) and 55(1) of the SDA provide that the Court may, on any person’s application, appoint a guardian of property or of the person, for a person who is incapable of managing property or personal care if, as a result of the said incapacity, it is necessary for decisions to be made on his or her behalf.
In order to appoint a guardian for someone, the Court will need to make a finding of incapacity for that person. This is an important hurdle, and the Court will generally need to see evidence that the person in question has been assessed as incapable of managing property and/or personal care prior to making a finding that he or she is incapable.
Depending on the circumstances, a person may submit to a capacity assessment voluntarily. However, according to section 78(1) of the SDA, if a person refuses to be assessed, an assessor shall not perform the assessment. Section 79 of the SDA allows the Court to order that a person be assessed, provided that the Court is satisfied that there are reasonable grounds to believe the person is incapable. Additionally, to obtain a Court Order for an assessment, there must be a proceeding under the SDA, in which the person’s capacity is in issue. The Ontario Court of Appeal in Neill v Pellolio, 2001 ONCA 6452 held that there is no stand-alone relief available for an Order for a capacity assessment in the absence of an application brought under the SDA. Accordingly, obtaining a finding of incapacity from the Court may not be a simple endeavour.
The SDA also has in place measures to protect an individual’s decision-making rights from undue restriction. Sections 22(3) and 55(2) state that the Court shall not appoint a guardian if it is satisfied that the need for decisions to be made will be met by an alternative course of action that does not require the Court to find the person incapable, and is less restrictive of the person’s decision-making rights than the appointment of a guardian.
Accordingly, for example, if a person has already granted a power of attorney, allowing the named attorney to act would constitute a less restrictive course of action which also does not require the Court to make a finding of incapacity in order for decisions to be made for an incapable person. Furthermore, if a person is incapable of managing their property or personal care, but remains capable of granting a power of attorney, that would likely also constitute a less restrictive course of action, and would allow that person to exercise their decision-making rights.
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Canada’s model legislation regarding digital assets, the Uniform Access to Digital Assets by Fiduciaries Act (the “Canadian Model Act”), was introduced in August 2016, and borrows heavily from its American predecessor, the Revised Uniform Fiduciary Access to Digital Assets Act (the “American Model Act”).
The Canadian Model Act defines a “digital asset” as “a record that is created, recorded, transmitted or stored in digital or other intangible form by electronic, magnetic or optical means or by any other similar means.” As with the definition appearing within the American Model Act, this definition does not include title to an underlying asset, such as securities as digital assets. Unlike the American Model Act, the Canadian Model Act does not define the terms “information” or “record.”
In the Canadian Model Act, the term “fiduciary” is also defined similarly as in the American Model Act, restricting the application of both pieces of model legislation to four kinds of fiduciary: personal representatives, guardians, attorneys appointed under a Power of Attorney for Property, and trustees appointed to hold a digital asset in trust.
One challenge that both pieces of model legislation attempt to address is the delicate balance between the competing rights to access and privacy. The American Model Act is somewhat longer in this regard, as it addresses provisions of American privacy legislation to which there is no equivalent in Canada. Canadian law does not treat fiduciary access to digital assets as a “disclosure” of personal information. Accordingly, under Canadian law, the impact on privacy legislation by fiduciary access to digital assets is relatively limited.
The Canadian Model Act provides a more robust right of access to fiduciaries. Unlike the American Model Act, the Canadian Model Act does not authorize custodians of digital assets to choose the fiduciary’s level of access to the digital asset. Section 3 of the Canadian Model Act states that a fiduciary’s right of access is subject instead to the terms of the instrument appointing the fiduciary, being the Power of Attorney for Property, Last Will and Testament, or Court Order.
Unlike the American Model Act, the Canadian equivalent has a “last-in-time” priority system. The most recent instruction concerning the fiduciary’s right to access a digital asset takes priority over any earlier instrument. For example, an account holder with a pre-existing Last Will and Testament, who chooses to appoint a Facebook legacy contact is restricting their executor’s right to access their Facebook account after death pursuant to the Will.
Despite their differences, both pieces of model legislation serve the same purpose of facilitating access by attorneys for or guardians of property and estate trustees to digital assets and information held by individuals who are incapable or deceased and represent steps in the right direction in terms of updating estate and incapacity law to reflect the prevalence of digital assets in the modern world.
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