This week on Hull on Estates, Natalia Angelini and Nick Esterbauer discuss attorneyship planning options and the importance of full consideration of what may seem like basic options in protecting the interests of clients during periods of mental incapacity.
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Today on Hull on Estates, Jonathon Kappy and Noah Weisberg discuss the decision on Ghor and Steele and specifically when an attorney can be compelled to account.
As is often the case, a person who is concerned about a fiduciary’s management of property may wish to compel an accounting. However, it is important to remember that a person’s ability to compel such an accounting may vary depending on whether an accounting is being sought from an estate trustee of a deceased’s estate or, in the alternative, from an attorney for property during the lifetime of an incapable grantor.
The legal framework in Ontario
In Ontario, pursuant to section 50 of the Estates Act, an executor or administrator shall not be required to account by the Court “…unless at the instance or on behalf of some person interested in such property or of a creditor of the deceased….” Further, Rule 74.15(1)(h) of the Rules of Civil Procedure provides for any person who appears to have a financial interest in an estate to move for an order for assistance requiring an estate trustee to pass his or her accounts.
Conversely, the right to compel an accounting from an attorney for property or guardian of property is set out under section 42 of the Substitute Decisions Act. Pursuant to section 42, in addition to the attorney, the guardian and the incapable person, the following persons may apply for the fiduciary’s accounts to be passed:
- The grantor’s or incapable persons’ guardian of the person or attorney for personal care;
- A dependant of the grantor or incapable person;
- The Public Guardian and Trustee;
- The Children’s Lawyer;
- A judgment creditor of the grantor or incapable person; and
- Any other person, with leave of the Court.
This is an important distinction to keep in mind: although a person with a financial interest in the estate may be able to compel an accounting from an estate trustee, such a financial interest on the death of an incapable grantor may not in and of itself be sufficient to compel an accounting from an attorney for property during the lifetime of the incapable.
What is the criteria for obtaining the leave of the Court?
The recent decision of the Honourable Justice LeMay in Groh v Steele, 2017 ONSC 3625, is an important reminder of the high threshold for obtaining the leave of the Court to compel an accounting from an attorney for property under section 42.
In Groh, the Applicant, Ernest, sought a capacity assessment of his mother Gabriella under the Substitute Decisions Act. Ernest also sought an order for the suspension of Gabriella’s attorneys for property ability to act and an order for the attorneys for property to pass their accounts. Ernest’s Application was opposed by Gabriella and her attorneys for property.
On the issue of Ernest’s request that the attorneys pass their accounts, Justice LeMay reviewed section 42 of the SDA and concluded that “it is clear that the only circumstances in which Ernest could ask for a passing of accounts is if he can obtain leave of the Court.”
Justice LeMay went on to make the following statement regarding the circumstances in which leave should be granted by the Court:
In my view, such leave should be granted sparingly. The passing of accounts is a detailed review of the financial affairs of the grantor. As such, it is something that is intrusive, and will reveal private financial information about the grantor. In order to obtain leave, the party applying would have to establish both that he or she had some interest (at least indirectly) in the affairs of the grantor, and that there was at least some evidence that the Attorneys were not properly conducting the affairs of the donor. The Court should also consider the role that the Attorneys are playing in the Grantor’s affairs.
After reviewing the facts before the Court, Justice LeMay concluded that a formal passing of accounts should not be ordered, and Ernest’s Application was dismissed.
Thank you for reading,
Umair Abdul Qadir
Our population is aging but living longer. This has resulted in an increase in the prevalence of dementia and other aging-related conditions associated with cognitive decline, and a corresponding increase in the use and activation of powers of attorney.
As estate litigators, our firm is beginning to see a rise in power of attorney disputes between siblings and other family members. These types of disputes are often emotionally fuelled by longstanding sibling rivalry or distrust among family members, and can result protracted litigation and expensive legal bills.
Often a sibling or other family member will have concerns that the appointed attorney is acting improperly or is failing to fulfill his or her duties. In these circumstances, the sibling or family member may have concerns with respect to a lack of transparency or feel that they are being left out of the decision-making process.
It is useful for these individuals to know that the Substitute Decisions Act, 1992 (the “SDA”) imposes certain obligations upon an attorney, which may assist in addressing these concerns.
The SDA states that an attorney has a duty to consult with family members and keep them informed as to the incapable person’s health and wellbeing (ss. 32(5)) and that an attorney has a duty to foster personal contact between the incapable and his or her supportive family members (ss. 32(4)).
The SDA also states that an attorney has a duty to keep proper records and to provide updates regarding the incapable person’s financial circumstances (ss. 32(6)).
The SDA also states that an appointed attorney must also obtain and review a copy of the incapable person’s Will (s. 33.1). If the Will provides that a specific item of property is to be given to a particular beneficiary, the attorney must retain that property for that beneficiary unless it is essential to sell the item in order to satisfy the incapable person’s legal responsibilities or otherwise provide for the incapable person (ss. 35.1(1)).
These duties are ongoing and an attorney can generally be held personally liable for any damages that results from a breach of his or her duties.
The Office of the Public Guardian and Trustee has published a brochure that outlines the duties and powers of an appointed attorney for property in greater detail, which can be viewed here.
Communication is often the key to resolving these types of disputes between family members. However, where there is a breakdown in communication, the assistance of a litigator or mediator who specializes in this practice area is often helpful.
Thank you for reading.
In Estate Litigation we are faced every day with feuding families. Is the fight avoidable or inevitable? For those of you with siblings, I’m sure at some point in your lifetime you’ve gotten upset and yelled those words which for some reason really hit home: "Mom always liked you best". On some level, favouritism, or the perception of it, is at the heart of Estate Litigation.
A study released by Cornell University of child favouritism surprisingly discovered that mothers may have distinct preferences amongst their children. This may not be shocking to some, but I was frankly a little surprised that they admitted it. It shouldn’t come as such a surprise given the feuding I see everyday, and I’m sure some of you are feeling validation right about now for all those years where you thought it, but had no proof. I can already hear the ‘I told you so’s’.
On some level this favouritism is rooted in reasonableness. The study claims that the favourite is generally the child whom the mother feels closest to, who is most similar in attitude and values. Of note, is that this child is generally a daughter. Also, it’s often the child who has provided the most support in the past.
While the after effect of such favouritism is evident in Estates, the effect of this preferential treatment starts earlier than that. Often these feelings come to light when attorneyship becomes an issue. While the rationale for the decision can likely be explained to your children in a manner which could be understood, we tend to hide these feelings and let it come as a surprise. Maybe we should reconsider that and let our feelings show through, so at the end of the day we can understand our parent’s decisions and ask about them before it’s too late.
Nadia M. Harasymowycz – Click here for more information on Nadia Harasymowycz.