Tag: Substitute Decisions Act
Section 31 of the Substitute Decisions Act (“SDA”) states that an attorney for property “has 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.” An attorney for property also has the power to make gifts and loans to the grantor’s family and friends, as well as charitable gifts (SDA s37(3)).
There are strict limits, however, to how generous an attorney may be. The SDA includes guiding principles with respect to making gifts: the attorney cannot deplete the grantor’s property to the extent that there may not be enough to satisfy the needs of the grantor him or herself, during the grantor’s lifetime. The gifts or loans must also only be made if the attorney has a reason to believe, based on any expression the grantor might have made while capable, that the grantor would have made these gifts or loans if capable. Charitable gifts have further restrictions.
In addition to the prohibition against making a will, an attorney for property has an obligation to find and read the grantor’s will (SDA s33.1). Unless necessary to perform one’s duties to the incapable person, the attorney must not dispose of property subject to a specific testamentary gift, although this prohibition does not apply to a testamentary gift of money (SDA s35.1). The court highlighted the importance of the will in Weinstein v. Weinstein (Litigation Guardian of), stating obiter that s 33.1 of the SDA is “indicative of the importance the legislators attach, appropriately, to the will of an incapable person, in view of the permanent character of the will if the incapable person does not regain capacity.” Taken together, these provisions can be read to support the proposition that an attorney does not have the authority to dispose of assets in a way that undermines the grantor’s estates plan.
The case law on the subject of an attorney’s ability to make gifts is limited. Moreover, the cases largely deal with relatively small gifts. While not directly related to the issue of gifts made by an attorney on behalf of a grantor, the court in Banton v Banton held that it is improper for an attorney to deprive the grantor of his or her testamentary freedom by making inter vivos transfers. The attorneys in this case made a large transfer to a trust to protect the grantor from a predatory marriage, which is both allowed and an appropriate action for an attorney to take. However, the secondary beneficiaries of the trust were the grantor’s children, which the court held functioned as a will substitute, which is an inappropriate use of the power of attorney.
In summary, gifting must be done carefully and in a manner that would survive judicial scrutiny. An attorney should not make gifts if they represent so large a proportion of the estate that the attorney has substituted the testamentary intentions of the grantor with their own discretion. An attorney should also not make any gifts if the grantor was not in the habit of making gifts to friends and family or had expressed a contrary intention while capable.
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This week on Hull on Estates, Paul Trudelle and Noah Weisberg discuss the recent Ontario Superior Court of Justice decision of Keller v. Wilson, 2015 ONSC 6962, pertaining to applications for directions by Attorneys and passing of Attorney accounts pursuant to the Substitute Decisions Act.
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The Substitute Decisions Act directs that, when a person who does not reside in Ontario is appointed as a guardian of property, that person must provide security, as approved by the Court, for the value of the property to be administered. However, the Court also has discretion to waive the requirement that security be provided by a non-resident guardian of property. Under what circumstances the Court will exercise its discretion to waive the requirement to post security when appointing a non-resident guardian of property is unclear within the legislation and little guidance is provided by the sparse case law that deals with this issue.
In a paper presented by Dermot Moore of the Office of the Public Guardian and Trustee (the “PGT“) at this year’s Six-Minute Estates Lawyer, Mr. Moore outlined the policy of the PGT on recommending security when a non-resident guardian of property is being appointed. The PGT will typically recommend that security be required in the following circumstances:
- If the proposed guardian is not a parent or spouse of the incapable person and the value of property is greater than $100,000.00;
- If the proposed guardian is a parent or spouse, the incapable person does not own real property, and the value of the property is greater than $250,000.00; and
- If the proposed guardian is a parent or spouse, the incapable person owns real property, and the value of the property is greater than $500,000.00.
It may be worth noting that in a jurisdiction such as Toronto, where property values are so high, a guardianship application by a non-resident of Ontario in respect of the average person who own real property will result in a recommendation by the PGT that security be posted.
In his paper, Mr. Moore notes that it is not infrequent for the Court to dispense with the requirement that security be provided if there is some argument in support of waiving the requirement. One of the few decisions in which the issue of security in the appointment of non-resident guardians has been considered is Salzman v. Salzman, 2011 ONSC 3555, 2011 CarswellOnt 15786. In this case, a resident of Quebec was appointed as guardian of property for his mother and was not required to post security upon his appointment. In dispensing with the requirement to post security, Justice Hoy made note of the proposed guardian’s close relationship with his incapable mother, his historical assistance in managing her affairs, and the consent of his siblings, the only other beneficiaries of his mother’s estate, to the non-resident’s appointment and the dispensing of the requirement to post security.
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Today on Hull on Estates, Natalia Angelini and Josh Eisen look at a recent case addressing the requirements under the Substitute Decisions Act for resigning as an attorney under a power of attorney for property and for personal care. In Balacko v. Chepil-Coyle, 2014 ONSC 6931, the Court considered the effectiveness of a disputed resignation where the attorneys imposed a condition that had not been satisfied.
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This week on Hull on Estates, Jonathon Kappy and Doreen So discuss the 411 on Saunders v. Vautier and the jurisdiction of the Court to order a capacity assessment under the Substitute Decisions Act, as well as the Courts of Justice Act in the context of the recent Justice Himel decision in Stoor v. Stoor Estate.
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Today on Hull on Estates, Jonathon Kappy and Noah Weisberg discuss changes to the Substitute Decisions Act.
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Trustees often run into difficulties when they pay themselves compensation prior to passing their accounts. They are said to have "pre-taken" compensation, meaning having paid themselves compensation prior to passing their accounts. Fortunately for guardians of property (and attorneys), section 40 of Ontario’s Substitute Decisions Act allows guardians to pay themselves compensation at intervals during the guardianship before passing their accounts:
(2) The compensation may be taken monthly, quarterly or annually.
Amounts taken monthly or quarterly could be divisions of a calculated "annual" amount, but this provision contains no element requiring equal divisions. Regardless of how the property guardian takes compensation, any payment is subject to court approval. Clients applying for guardianship should always be advised specifically of this point: if the court later disagrees with the compensation taken, the guardian may have to repay such amounts. This holds true even where the Management Plan pursuant to which the guardian is managing the incapable person’s property authorizes the compensation the guardian has taken.
This raises another important consideration for lawyers in the application for guardianship stage. Any compensation taken, or claimed later on a passing of accounts, should not be inconsistent with the provisions of the Management Plan. Because the right to compensation is statutory, as are the prescribed percentages (though subject to discretionary reduction by the court), there is no need to declare an intention to take compensation in the Management Plan. But if the Management Plan contains a provision disclaiming compensation, for instance, no compensation should be taken during the guardianship.
Have a great day,
Christopher M.B. Graham – Click here for more information on Chris Graham.
A recent decision by Brown, J. heralded good news for the Estates Bar.
The applicant wished to issue a guardianship application under sections 22 and 55 of the SDA in the Toronto Region Estates Office. The guardianship application was in respect of her son who was injured in a car accident in 1997. The applicant and her son lived together in Bradford, Ontario. The applicant’s counsel wrote to Brown J. asking for directions as to whether the application could be commenced in Toronto.
In his Endorsement [not yet reported], Brown, J. noted that an informal policy existed in the Toronto Region Estates Office that it would only accept applications under the SDA where the supposed incapable person resided in Toronto notwithstanding the fact that no statute or rule imposed such a limitation. In fact, Rule 13.1.01 of the Rules of Civil Procedure provides that a “proceeding may be commenced in any court office in any county named in the originating process” unless a “statue or rule requires the proceeding to be commenced, brought, tried or heard in a particular county.”
Brown, J. noted that neither the SDA nor any statute or rule specified the place of commencement for an application under the SDA. Brown, J. therefore held that the applicant was permitted to commence her guardianship application in Toronto and directed the Toronto Region Estates Office to accept her application for issuance.
With this decision in hand, it is now possible for counsel to commence a guardianship application where they see fit and as appropriate. This is good news indeed.
Pursuant to Section 3 of the Substitute Decision Act, the court may direct the PGT to arrange for legal representation for a person whose capacity is in issue in a proceeding under the SDA. The SDA further states that the person so represented shall be deemed to have capacity to retain and instruct counsel. However, section 3 counsel’s position and role remains somewhat murky. In Banton v. Banton, the court considered the import of an incapable person being deemed capable to retain and instruct counsel.
The court recognized that the position of section 3 counsel is “potentially one of considerable difficulty”. However, the court did not believe that section 3 counsel was in the position of a litigation guardian with authority to make decisions in the incapable person’s interest. According to the court, counsel must take instructions from his/her client and “must not act if satisfied that capacity to give instructions is lacking”. A very high degree of professionalism may be required in borderline cases where it is possible the incapable person’s wishes may be in conflict with his/her best interests and counsel’s duty to the court. The phrase offers precious little guidance to section 3 counsel, but does sound a cautionary note. In the circumstances, perhaps the best advice is for section 3 counsel to fully explain the situation to the court and ask the court’s advice and direction.
Finally, as an aside, the Ontario Government has now introduced legislation that would allow people to apologize with impunity. In other words, an apology will not be held against you in court. The hope is that “The Apology Act” will go a long way to defusing a contentious situation before litigation results. Sorry may, in fact, go a long way.
As always, thanks for reading.
Pursuant to section 79 of the Substitute Decisions Act, the court has discretion to order a capacity assessment of an individual if the person’s capacity is an issue in a proceeding under the SDA. The court must also be satisfied that there are reasonable grounds to believe that the person is incapable.
Where a capacity assessment has already been obtained, the court will be reluctant to order a further capacity assessment of an individual, unless the court has, for example, concerns about the lack of detail or objectivity within the assessment that has already been obtained.
In Forgione v. Forgione, the court was concerned about the adequacy of the assessment carried out by a medical doctor. The court did not know what background information the doctor had or what, if any, influence anyone other than one family member may have had on the process. The report was very brief and consisted largely of conclusions without analysis. There were a number of facts and conflicting versions of facts which, in the court’s view, warranted further examination because they raised questions about the capacity and vulnerability of the incapable. A second assessment was ordered.