The Power of Attorney Act was silent on the attorney’s duties to the person who appointed the attorney. This is not to say that the attorney did not significant responsibilities before these amendments. He or she did. But we relied on the common law, which requires an attorney to act in the best interest of the person who appointed him or her.
When the new legislation comes into effect, section 19 will set out an attorney’s duties as follows:
Duties of attorneyI will address a couple of these matters in this post.
19 (1) An attorney must
(a) act honestly and in good faith,
(b) exercise the care, diligence and skill of a reasonably prudent person,
(c) act within the authority given in the enduring power of attorney and under any enactment, and
(d) keep prescribed records and produce the prescribed records for inspection and copying at the request of the adult.
(2) When managing and making decisions about the adult's financial affairs, an attorney must act in the adult's best interests, taking into account the adult's current wishes, known beliefs and values, and any directions to the attorney set out in the enduring power of attorney.
(3) An attorney must do all of the following:
(a) to the extent reasonable, give priority when managing the adult's financial affairs to meeting the personal care and health care needs of the adult;
(b) unless the enduring power of attorney states otherwise, invest the adult's property only in accordance with the Trustee Act;
(c) to the extent reasonable, foster the independence of the adult and encourage the adult's involvement in any decision-making that affects the adult;
(d) not dispose of property that the attorney knows is subject to a specific testamentary gift in the adult's will, except if the disposition is necessary to comply with the attorney's duties;
(e) to the extent reasonable, keep the adult's personal effects at the disposal of the adult.
(4) An attorney must keep the adult's property separate from his or her own property.
(5) Unless the enduring power of attorney states otherwise, subsection (4) does not apply to property that
(a) is jointly owned by the adult and the attorney as joint tenants or otherwise, or
(b) has been substituted for, or derived from, property described in paragraph (a).
Where I think some attorneys under powers of attorney who otherwise do a good job fall short is in record keeping. I have seen disputes among family members, particularly siblings, over how one of them is handling or has handled a power of attorney. One sibling may accuse another of improperly taking or spending a parent’s funds while acting as an attorney under the parent’s power of attorney. These disputes may arise during the parent’s lifetime, or after the parent’s death. If the parent is incompetent, the Public Guardian and Trustee may be asked to investigate, and the attorney will need to produce good records showing that he or she acted properly. After the parent’s death, the attorney is accountable to the executor of the parent’s will, or if he or she is also the executor, then to the beneficiaries. This will be difficult without proper records of expenditures or other financial transactions. No matter how conscientious you are when acting as an attorney under a power of attorney, you must keep good records in case anyone questions what you have done.
Subsection (4) clearly spells out that if you are acting under a power of attorney, you cannot commingle the assets belonging to the person for whom you are acting with your own. For example, if you are the attorney for your parent under a power of attorney, you must not change your parent’s accounts into joint accounts with you even if that may appear more convenient. Instead you may use your power of attorney to access your parent’s funds to use them as required for your parent’s benefit.
But subsection (5) sets out an important exception that will often apply to spouses. If, for example, you and your spouse hold title to your house as joint tenants, and have joint bank or investments accounts, you are not required to sever the joint ownership if you start using your power of attorney to act on behalf of your now incapable spouse. If you decide to sell the residence that your spouse and you own together as joint tenants, and buy another residence using the sale proceeds, you may register the new residence in both of your names as joint tenants. The new residence will be substituted property for the residence you held together as joint tenants, and subsection (5)(b) will apply.