Tag: power of attorney
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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When considering the commencement of an application for guardianship, either guardianship of property or the person, keep in mind the extensive notice requirements under the Substitute Decisions Act (“the Act”) contain extensive notice requirements.
An application for guardianship of property must be served on:
- the alleged incapable person;
- the person’s attorney for property under a Power of Attorney, if known;
- the person’s guardian of the person, if known;
- the person’s attorney for personal care under a Power of Attorney, if known;
- the person’s guardian of the person, if known;
- the Public Guardian and Trustee;
- the proposed guardian of property.
The above listed people are the parties to the Application.
In addition, application must be served by regular mail on:
- the alleged incapable person’s spouse or partner;
- the alleged incapable person’s children who are at least 18 (16 in the case of an application for guardianship of the person);
- the alleged incapable person’s parents; and
- the alleged incapable person’s brothers and sisters who are at least 18 (16 in the case of an application for guardianship of the person).
Similar service requirements apply to an application to terminate a statutory guardianship of property, a motion to terminate a guardianship of property, an application to appoint a guardian of the person, and a motion to terminate a guardianship of the person.
An exemption to the service requirements on family members is provided if the person’s existence or address cannot be ascertained by the use of reasonable diligence.
In addition to the Notice of Application, the applicant must serve the proposed guardian’s consent, a Management Plan, and a statement signed by the applicant indicating that the alleged incapable person has been informed of the nature of the application and their right to oppose the application, and describing the manner in which the person was informed. If it is not possible to so advise, reasons for not advising must be provided.
Failure to provide proper notice under the Act may lead to an adjournment of the proceeding in order to allow for service, causing further expense and delay.
In J.R.B. v. T.M.T., the court addressed the requirement that family members be served. There, the applicant was applying for guardianship of property for his wife, who was severely injured in a car accident. The applicant did not want to have to reveal his financial circumstances and those of his wife to her family members. The family members agreed that this was not necessary, and consented to a waiver of the service requirements. The Public Guardian and Trustee argued that service on family members was mandatory, and for the benefit of the incapable person, and could not be waived. The court held that the right to service was a right of the family members, and they could therefore agree to waive service.
It is implicit, however, that without such a waiver, service on known family members will be required.
Any person who is required to be served with the application materials is entitled to be added as a party to the application: s. 69(9) of the Act.
Have a great weekend.
Elder financial abuse is a growing concern. What is being done in Ontario to prevent it?
I recently came across a new service called Estate Protect which acts as a registry and fraud monitoring service for important estate documents, including powers of attorney.
Lawyers (on behalf of their clients) are able to register estate planning documents with Estate Protect being a secure and accessible place. The idea is that the most recent documents, and a record of any changes, are available to the appropriate person when necessary to ensure that valid estate planning documents are used (and relied upon).
Using a power of attorney document as an example, through Estate Protect’s notification service, designated parties are made aware when someone tries to rely on a power of attorney document. If the document is the valid power of attorney, the notified individual need not take any steps. However, should the power of attorney be, for example, a fake or previously revoked power of attorney, or should the transaction seem suspicious, the notified individual has the opportunity to intervene to avoid misuse.
The service also allows people accepting instructions, such as banks, to determine whether the power of attorney is valid before acting on instructions.
It makes sense that Estate Protect relies on tackling financial elder abuse through preventative measures, as opposed to remedial options.
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Let’s say that you are an estate trustee of a trust, or a beneficiary of a trust. The trust consists of investments. How can you be sure that the investments are performing adequately?
A new product from Asset Risk Consultants will allow you to make a quick check of the performance of the investment portfolio.
“Performance QuickCheck” allows you to enter information about the portfolio, and will immediately compare its performance to 130,000 portfolios having similar risk across five major currencies.
To conduct the check, users pick their currency (currently, British Pounds, US dollars, Euros, Swiss Francs or Canadian dollars), and the percentage of the fund invested in equities (allowing the comparison to be made based on the risk assumed by the trust: either cautious, balanced, steady growth or equity risk). The program then asks for the period over which the portfolio was held, and the percentage return over the period.
The program will then compare your investment return to other portfolios having similar risk.
For example, a Canadian portfolio holding 30% equities producing a 7% return for the period from June, 2016 to July 2017 will result in a smiley green face, indicating above average performance. However, a Canadian portfolio holding 80% equities producing a 7% return for the same period will result in a sad red face, indicating below average performance. As suggested by the website, trustees may want to ask their investment manager for a comment, or consider another investment manager. Beneficiaries may want to speak to the trustee, or legal counsel.
A more comprehensive report is also available, for a fee of £25.
Performance QuickCheck from Asset Risk Consultants is a great, easy to use, free tool to allow you to quickly ask and answer, “How am I doing?”.
Have a great weekend.
We all know that bad people can do some very bad things. So, if your estate plan includes a continuing power of attorney for property (as it likely should), and you name someone to manage your affairs in the event you can’t, you’ll undoubtedly be choosing a “good person” to be your attorney, not the bad apple nephew with a spotted past.
But here’s the unfortunate thing: when it comes to a power of attorney, and access to money, some otherwise good people have been known to do some very bad things.
There are usually three reasons for this:
- First, there is opportunity, with a perception that there is little chance of detection, penalty, or consequences.
- Second, there is often rationalization, which can involve a sense that the attorney is “entitled to some financial help anyway” or that they “are the only ones looking after mom” so deserve more than the others.
- Third, there is often a financial need – children in post secondary school, mounting credit card debt, or other emerging financial stress.
A power of attorney is an extremely powerful document – in many cases, the objective of the grantor is to allow someone else to completely take over management of their property, due to age, potential incapacity, or other reasons. And while the law holds attorneys to a high standard to protect grantors (the attorney has a duty of utmost good faith to act in the grantor’s best interests), the potential for abuse is immense.
If someone suspects an attorney for property is abusing the granted legal authority to commit a financial crime, there are options available to protect the vulnerable person. Theft, fraud and forgery conducted under the guise of a power of attorney can be reported to the police and prosecuted under the Criminal Code. In addition, in Ontario, the Public Guardian and Trustee can be contacted to protect an incapable person being victimized by financial abuse.
In terms of steps that you can take in advance to safeguard your assets from abuse, this article highlights a recent Ontario case of theft under a power of attorney, and outlines some protection steps that individuals can include in their power of attorney to help guard against theft or fraud:https://estatelawcanada.blogspot.ca/search/label/theft%20by%20attorney.
Thank you for reading!
Vanier v Vanier: Power of Attorney Disputes, Undue Influence, and Losing Sight of a Donor’s Best Interests
Often in power of attorney litigation, relationship issues between past or present attorneys may take centre stage, with the unfortunate consequence that the best interests of the donor of the power of attorney may get lost amid suspicions and accusations being thrown back and forth. This can often arise in situations where siblings are involved in a dispute regarding power of attorney for a parent, and, in fact, was the situation in the recent Ontario Court of Appeal decision in Vanier v Vanier, 2017 ONCA 561.
At issue was the power of attorney for property of Rita, whose husband had predeceased her, leaving her his entire estate. She had three adult children: twin sons, Pierre and Raymond, and a daughter, Patricia. There was a power of attorney for property executed in 2011 naming Patricia. Unfortunately, Patricia allegedly took advantage of her role as Rita’s power of attorney for property, leading to litigation and a settlement. As a result, Rita executed a power of attorney for property in 2013 naming Pierre and Raymond, jointly and severally, as her attorneys for property (the “2013 POA”).
However, Pierre and Raymond became suspicious of each other, steps taken by each of them as Rita’s attorneys for property, and their relationship broke down. Issues arose in relation to Rita’s ability to access her money; in particular, Raymond had failed to cooperate in relation to unfreezing some corporate assets that had been frozen as part of the litigation with Patricia, and instructed Rita’s lawyer not to release settlement funds received from Patricia to Rita. Consequently Rita could not access funds to pay for basic living expenses, including rent at her retirement home. As a result, Pierre suggested that Rita take certain steps to facilitate access to her funds, including executing a power of attorney for property naming Pierre as her sole attorney for property, which Rita did in 2015 (the “2015 POA”).
Litigation and Appeal
Raymond brought an application seeking Pierre’s removal as attorney for property and a declaration that the 2015 POA was void. He also brought a motion seeking interim relief. The decision on the motion was appealed by Raymond, leading to this decision from the Court of Appeal. The Court considered 5 issues on appeal, but I will address only 1 of them for the purposes of this blog, being whether the motion judge erred in applying the wrong test for undue influence.
Proper Test for Undue Influence
Raymond argued that the proper test to be used was not the test for testamentary undue influence, but rather the test for inter vivos equitable undue influence, which would shift the onus of proving undue influence from Raymond, to Pierre, who would have to prove that Rita signed the 2015 POA willingly and without undue influence.
The Court of Appeal found that the application of the inter vivos test had not been argued before the motion judge, was a new issue raised on appeal, and, based on the general rule, the Appeal Court could not consider it. Moreover, there was no need for the Court to consider whether to grant leave to allow a new argument in this regard, as in any event, the inter vivos equitable undue influence test had no application on the facts.
In order to shift the burden of proof from the complainant (in this situation Raymond, arguing on behalf of Rita) to the other party (in this case, Pierre), two prerequisites must be met:
- The complainant reposed trust and confidence in the other party; and
- The transaction is not readily explicable by the parties’ relationship; the transaction is “immoderate and irrational”.
Pierre conceded that Rita did repose trust and confidence in him. However, the Court found that Rita’s decision to execute the 2015 POA was not “immoderate or irrational”. The Court noted that while the decision was emotionally difficult for Rita, it was totally rational. She knew that she was having issues accessing funds needed to pay her basic expenses. She also knew that some of Raymond’s actions had led to her inability to access those funds. The Court also found that the 2015 POA conferred little, if any, benefit on Pierre. Lastly, even if the inter vivos test applied, the Appeal Court held that the record did not support a finding of undue influence.
In conclusion, the Court of Appeal commented that it endorsed the words of the motion judge who had expressed the view that Raymond and Pierre had “lost sight of the fact that it is Rita’s best interests that must be served here, not their own pride, suspicions, authority or desires”, stating also that it hoped that in light of this decision, Rita’s sons would honour her wishes and end the litigation.
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According to the Alzheimer Society of Canada, 25,000 Canadians are diagnosed with dementia each year, and more than 500,000 are currently living with the disease. While dementia can occur at a relatively young age, the risks increase as we grow older. According to the federal government’s Chief Public Health Officer, the average age of the onset of dementia symptoms is 70 years for men and 74 for women.
One of the risks for those with dementia is losing the ability to make sound financial decisions, or, even worse, falling victim to scams in which they willingly transfer money to others without a full understanding of what they are doing. In the United States, many financial advisors have put a safeguard in place to protect their senior clients who might develop the disease – it’s called an emergency contact authorization form.
How the Form Works
With an emergency contact authorization form, the client identifies someone they trust that their financial advisor can contact if the advisor believes the client is having trouble managing their finances or is being taken advantage of financially. You can view a sample form here: [http://www.virginialynn.net/files/72367/2016%20Emergency%20Contact%20Authorization%20Form.pdf]
The form only authorizes the financial advisor to discuss the situation with the designated individual. It does not give that individual authority to manage the client’s financial affairs, as a power of attorney would. The designated individual may be the same person named in the power of attorney, but it doesn’t have to be.
Because dementia is progressive, moving from mild, to moderate, to severe cognitive decline over time, financial advisors who advise seniors are in a unique position to see these changes occur between portfolio review sessions – or to spot any unusual financial requests or transactions that seem out of character for the individual. The emergency contact authorization form gives the financial advisor the ability to take action, and discuss the situation with someone the client has indicated they trust.
It’s a protection that we hope will gain greater prominence in Canada soon. You can learn more about the use of these forms in the U.S. here: http://www.themckenziefirm.com/financial-firms-roll-out-form-aimed-at-stopping-financial-elder-abuse/
Thank you for reading … Have a great day!
Elderly persons are unquestionably at greater risk of abuse than the general public. The five general categories of abuse are physical, sexual, psychological or emotional, financial, and neglect. No doubt such abuse is on the rise, and is an issue that is generating attention worldwide.
The Australian Law Reform Commission (ALRC) was reported to have taken a substantial step forward through its recent release of a lengthy report addressing abuse of the elderly.
The report includes many recommendations for change, with a focus on the betterment of care provided to those living in care facilities, including improving (i) the reporting and monitoring of abuse, with the process overseen by an independent body, and (ii) quality of care and staffing.
The authors of the article linked to this blog cite that little is known in Australia about the overall number and severity of abuse, with sexual assault being the least acknowledged, detected and reported. They applaud the ALRC for recommending a national study to explore how common elder abuse is.
Their chief critique of the report, however, is that although it addresses the legal aspects of elder abuse, the impact on health and well-being of the victims is ignored. Moreover, absent is any comment on whether inappropriate health care is a form of abuse (e.g. using resuscitation against someone’s wishes).
The authors highlight the primary challenge to prevention, which is to equip the legal, healthcare and elder care sectors to better screen, identify and intervene. As we face similar difficulties, I expect that the initiatives and recommendations made by the ALRC would be well-received in Canada as well.
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Divorces can change many things in relation to rights between two people, but it may not change everything you want it to.
Life insurance is a case in point. For example, let’s say Doug marries Jane and names her as the beneficiary of his $2,000,000 life insurance policy. After five years of marriage, Doug and Jane divorce and each “waives all rights to the other’s property except as set forth in this agreement”. The marital settlement agreement/property distribution divides assets between Doug and Jane.
Post-divorce, Doug never removes Jane’s name as the designated beneficiary on the insurance policy. Doug later remarries Susan, and stays married to her for 20 years until his death. As soon as Doug remarried 20 years previously, his existing will was considered revoked automatically, so it’s clear that Jane isn’t entitled to anything under the will. But Jane is still listed as the beneficiary on the life insurance policy. Who is entitled to the $2,000,000 – ex-spouse Jane or surviving-spouse Susan?
Based on Ontario court rulings, ex-spouse Jane may actually be entitled to the life insurance proceeds, despite the divorce settlement language. You can read about a similar case here: https://www.osler.com/en/blogs/pensions/october-2009/beneficiary-designation-in-favour-of-former-wife-t
Cases like this reinforce the need for spouses who are separating or divorcing to revisit all their estate planning documents to ensure they reflect their current wishes. This recent post contains a good discussion of how marital breakdowns can lead to unintended estate consequences unless a review of estate documents takes place – and changes are made if needed: http://www.osullivanlaw.com/blog/2015/03/the-importance-of-updating-your-affairs-on-separation-and-divorce.shtml
When the zip goes out of marriage, it’s still important to show your estate some love and do a thorough review of your assets and the documentation associated with them.
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I was fortunate to have the opportunity to participate in a panel discussion on CBC’s show “On the Money” last night. The panel discussion was prompted by an article posted by CBC news entitled “Care of aging parents costs Canadians an estimated $33B annually.”
The essence of the article was that Canada’s aging population is causing adult children to incur a significant burden, not only in terms of the outlay of money for caregiving costs but, perhaps more significantly, arising from time away from work required to care for their parents.
The Ontario Legislature has recognized the need to address this issue.
Section 49.1(2) of the Employment Standards Act, contains a section on Family Caregiver Leave, which permits employees to take an unpaid leave of absence of up to eight weeks in order to provide care or support to a sick family member.
Pursuant to the statute, an employee would be entitled to an unpaid leave of absence to provide “care or support” to the following family members/individuals who have a “serious medical condition”, including:
- The employee’s spouse.
- A parent, step-parent or foster parent of the employee.
- A child, step-child or foster child of the employee or the employee’s spouse.
- Any individual prescribed as a family member for the purpose of this section.
Although it would appear that there is some relief afforded by the Legislature when an aging parent needs assistance, the fact of the matter is that long-term needs cannot be met except by careful estate planning and consideration of financial resources. It might be worth adding that the family caregiver leave provisions appear to be more directed to short-term illnesses rather than the progressive decline associated with dementia and Alzheimer’s disease.
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