This week on Hull on Estates, Rick and David discuss procedure under the Substitution Decisions Act and review executor and attorney obligations as well as specific procedures permitting someone to compel an accounting.
While it is often said that an attorney can do anything on behalf of the grantor except make a Will, this isn’t really so. For instance, while a grantor can delegate decision-making authority to his or her attorney, an attorney generally can not sub-delegate such authority to someone else unless it is in respect of administrative tasks.
This issue was the subject of a paper recently presented by Anne Werker, one of our firm’s Associate Counsel, at the Six-Minute Estates Lawyer 2007. In particular, she focuses on the difficulty an attorney faces when dealing with investment decisions, the main type of decision that in many cases ought to be made by a specialist. Anne notes that historically, both attorneys and estate trustees were prohibited from delegating such decisions to others. However, since 2001* trustees have been allowed to have investment counsel make investment decisions for them (subject to certain conditions). No like legislative or common-law permission has been granted to attorneys.
So, what is an attorney to do when faced with the obligation to manage an investment portfolio, particularly a sophisticated one? Anne notes that one way to cope is for a grantor to include in the power of attorney a clause expressly granting the power to delegate investment authority. She also offers some helpful precedents for the content of such a provision in her paper.
However, even if that measure is taken, the question of whether such sub-delegation is valid has not yet been answered. Rather, questions remain about what formalities, if any, are necessary to validate sub-delegation, about whether third parties will refuse to contract with an attorney’s agent, and about whether they would face liability for dealing with a sub-delegate acting under an invalid power of attorney.
I expect that the answers will vary on a case-by-case basis, and that it may take a while before any uniformity develops in this area in the absence of legislative change.
Have a nice day.
* further to amendments made to the Trustee Act, as a result of Haslam v. Haslam (1994), 114 D.L.R. (4th) 562.