A message from David Christianson, personal finance columnist: Through both professional and personal experience, I have come to know how important it can be to have a proper enduring power-of-attorney document in place when it is needed. To properly explain these, and to clearly delineate the authorized activities of an "attorney," I asked Cynthia Hiebert-Simkin, LL.B., a lawyer at Taylor McCaffrey who specialized in wills, estates, trusts and elder law. So, please welcome our first ever guest columnist.
Enduring powers of attorney are powerful documents that allow you to appoint someone to help manage your financial affairs in the event that you are unable to do so yourself. The person doing that job using the power of attorney is known as the "attorney," which in this context does not mean "lawyer."
There are many circumstances where the power of attorney might be used, ranging from the attorney helping out with banking while you maintain control of your financial affairs, to the attorney having to take complete control due to a mental incompetence.
While there are many attorneys who are doing their job honourably, there is increasing concern about the financial abuse of vulnerable seniors who have entrusted their financial wellbeing to the wrong person.
There are many horror stories of family member or close friends who have taken financial advantage of seniors. However, there are forms of financial abuse that are commonly committed by attorneys who may have no idea they are doing something wrong. I regularly hear stories of people using the power of attorney in ways it was never intended and which ultimately creates difficulties for the donor (the person who signs the enduring power of attorney), the attorney and for family members.
In no particular order, here are several things to consider when acting as an attorney:
1 The attorney is powerful because he or she manages the affairs of someone who may be unable to speak for themselves. Balanced with that is the obligation to put the interests of the donor ahead of the attorney's. So, if it comes down to what is right for the donor or what is right for you, choose what is right for the donor.
If you can't do that, you shouldn't be the attorney.
2 Read the document carefully. Your powers are limited to what is in the enduring power of attorney itself and what is in The Trustee Act. If you want to do something and the power isn't in the document or in the act, then you may be able to apply to court for permission to do what you need to do. You don't get the power simply because you think it's something you should do.
3 Even if the donor is incompetent and doesn't need the money, you are not allowed to give money to yourself or to anyone else. It doesn't matter if the people would get the money anyway once the donor has passed away. It doesn't matter how much money the donor has or how much someone else needs it. It isn't allowed.
Some enduring powers of attorney may have a power that allows an attorney to make gifts to third parties or charities or may allow support to be paid for someone who is financially dependent on the donor. This is not the same thing as you and your siblings taking an advance on your inheritance.
4 You are going to have to show someone what you have done. Manitoba's Power of Attorney Act has an accountability provision that many provinces don't have. Either you must report to the nearest relative on an annual basis or the donor can appoint someone to ask you for an accounting. You also will have to report to the personal representative of the estate. If you also are the personal representative, you will have to report to the residuary beneficiaries. You will be held accountable if you can't produce the records. You will have to pay back money that hasn't been used appropriately. Keep receipts and records in order and be ready to report when required to do so. Treat it like a business.
5 You are not allowed to name yourself or anyone else as a joint owner of the donor's accounts or investments, nor are you allowed to name anyone as a beneficiary on life insurance policies or accounts such as an RRSP, RRIF or TFSA. The exception is when an RRSP must be converted into a RRIF, where you are allowed to maintain the same beneficiary designation.
This is not a complete list of the things an attorney should be considering. It can be a lot of work being an attorney but guidance is available. You are permitted to consult professionals. The Public Trustee of Manitoba also has an Enduring Powers of Attorney Guidebook on its website.
Helping someone who is unable to help themselves can be satisfying and is a duty worth undertaking. Just make sure you know the rules.
Cynthia Hiebert-Simkin is a lawyer at Taylor Mc-Caffrey specializing in wills, estates, trusts and elder law. She can be reached at firstname.lastname@example.org