Plan for incapacity: Protect yourself with powers of attorney

Transcript

Intro speaker:

Hello, and welcome to Matters Beyond Wealth with your host, Leanne Kaufman, president and CEO of RBC Royal Trust. For most of us talking about subjects like aging, late life and estate planning isn’t easy. That’s why we’re going to help get the conversation started on this podcast while benefiting from the insights and expertise of some of the country’s top experts. We want to bring you information today that will help to protect you and your family in the future. Now here’s your host, Leanne.

Leanne Kaufman:

Hello, I’m Leanne Kaufman and welcome to RBC Wealth Management Canada’s Matters Beyond Wealth. I’m delighted to introduce our guest today, Kimberly Whaley, founding partner of Whaley Estate Litigation Partners, to discuss the fundamentals of powers of attorney. Whaley Estate Litigation Partners or WEL Partners is a top ranking boutique trust and estate firm located in Toronto. And Kim is an experienced and well recognized expert in the field. Along with being a certified specialist in estates and trust law, she’s also a non-practicing solicitor of the Supreme Court of England and Wales. Kim is also an experienced mediator, mediating estate and trust related disputes within her practice area for over 20 years. She’s a frequent writer and presenter and a leader in the community in her elder law initiatives. She’s also an adventure traveler, and maybe another time we’ll have Kim join us just to talk about that. But today she’s here to help us understand why powers of attorney are something that matters beyond wealth. Welcome Kim. Thanks for joining us.

Kimberly Whaley:

Good morning, Leanne. Nice to be here.

Leanne Kaufman:

So to get us started, some listeners might not be aware that there’s actually two types of power of attorney that they need. Can you give us a brief explanation of the difference between a power of attorney for property and a power of attorney for care?

Kimberly Whaley:

Sure, Leanne. So more generally a power of attorney obviously is a legal document. It allows capable adults who appoint one or more individuals as an attorney and to grant powers to that chosen attorney and to provide direction in a document to the attorney to make decisions for them. So with respect to property, it permits a person chosen by the grantor to manage finances, to for example, pay bills, to manage investments, to pay taxes. And part of the responsibility includes ensuring that the finances are available for their personal care, which is a nice segue into the power of attorney for personal care. Which is also a legal document. You are able to appoint an individual who can provide consent to healthcare and treatment decisions, including health, medical care, shelter, nutrition, clothing, safety, and hygiene. And the role of the attorney is actually to arrange for care, not necessarily to provide the care. And then there’s a distinction between the power of attorney for property and a continuing power of attorney for property, Leanne. If it is a continuing power of attorney for property, it means it survives the grantors incapacity.

Leanne Kaufman:

And I think that’s really an important point because not everyone understands that if it’s a continuing power of attorney for property or depending on the language, it actually comes into effect the minute someone signs it, doesn’t it?

Kimberly Whaley:

Yeah, for sure. And we have a lot of accounting questions surrounding that. Because often an attorney though, they may have executed a power of attorney, hasn’t actually given it to the chosen attorney. And then later, as you can imagine, once the attorney starts acting and somebody asks for an accounting from that attorney, the question is, at what date or time did they start acting? Often, people who are interested in the tenure of the accounting period will say, “Well, we want accounting from the date the power of attorney was signed,” which obviously isn’t necessarily the time within which the person has acted as a fiduciary.

Leanne Kaufman:

It’s very complicated and it’s a reason why people need good legal advice when these things arise. And now, sometimes we also hear about advanced care directives or living Wills. And can you just briefly tell us how those differ from what we’ve already talked about?

Kimberly Whaley:

So in the U.S., an advanced care directive has legal status in itself, whereas in some other countries it’s just a legally persuasive document. So a living Will is an advanced directive. It allows instructions to be given for treatment. Another specific type is a power of attorney for personal care, which we’ve just talked about or a healthcare proxy. In Canada, there’s really no such thing as a living Will. A bit of a misnomer. But a person can create treatment wishes and communicate beliefs and values and directions in their power of attorney for personal care document in Canada.

Leanne Kaufman:

And now Kim, you’re a litigator, which means you take these topics to court when necessary, either to sort out matters that have been left unclear by the documents or the law, or maybe more often to resolve disputes between parties. So you know better than most the consequences when things go wrong. What happens if a person loses their capacity to deal with their financial matters either, it could be temporary because of illness, or it could be permanently from something like dementia or Alzheimer’s. And what happens if they don’t have a power of attorney for property in place?

Kimberly Whaley:

It kind of situationally depends on where they are when these decisions need to be made. So for example, if there’s a hospitalization and during that stay, the person is assessed to be incapable of managing their property, then the hospital may look to somebody, for example, a family member to find out if there’s a power of attorney. If there’s no power of attorney, and sometimes there’s no family member, there could be, what’s called a statutory guardianship. That statutory guardianship is something that happens immediately. It also happens if there’s an assessment requested under Section 16 of our governing legislation, which is a Substitute Decisions Act.

And the PGT becomes the statutory guardian of last resort. And it’s an immediate appointment. Obviously, it takes time for the PGT to become familiar with the person’s affairs and start acting, but it is an immediate appointment. Failing that, anybody, a family member, or a friend, or a relative can bring a guardianship application before the Ontario Superior Court of Justice for a guardianship appointment. There is a particular application and formalities that have to be followed and a management plan has to be filed. And although the statutory guardianship addresses property, the court appointed guardianship can deal with property, or the person, or both.

Leanne Kaufman:

And I know that there’s a similar court appointment process in all of the provinces across Canada for, it may not be called a guardianship, but certainly the process is quite similar. So in the Ontario context, which again, I think would apply equally across the country, how long might that process expect to take if you’re having to go that court appointed guardian route?

Kimberly Whaley:

It does depend, if it’s not contested and the person is served and there’s proper evidence of incapacity. Because the court actually has to make a declaration of incapacity for a substitute decision maker to be appointed. So if all the stars align, it can be fairly quick. Notice period has to be in accordance with the rules, but I’m going to say it is possible within two to three months. If it is contested, however, it will take a lot longer. It could take years. And obviously could be if contested, very emotionally challenging for everybody involved, including the alleged incapable person and obviously very costly.

Leanne Kaufman:

So even in the context of something that’s not contested, two to three months can be a really long time for someone to be kind of without a decision maker, if they have somehow lost their capacity. So it just draws to your attention how much easier it is just to have this power of attorney document in place already, rather than leaving it to this process.

Kimberly Whaley:

It is really important too, I think these days, to go to a lawyer and get the power of attorney document done. We know that we can print the document off the Ministry of the Attorney General site, but in the era of success of powers of attorney, where one is done one week and one is granted to another the next month, where we have these predatory situations, it really is better to get it done by a lawyer who can assess capacity in accordance with the legislation at the time, and also be witness to the instructions.

Leanne Kaufman:

That is an important point. And then along those lines, the selection of who one names his attorney is quite important too. So given your experience in the courts, can you give our listeners two or three tips of things to consider when naming an attorney. Maybe things that are good to look for in characteristics and maybe things to avoid.

Kimberly Whaley:

For sure, it should be somebody that’s trusted implicitly. So the person must have honor and integrity, all those things that the legislation sets out. But if you don’t trust the person implicitly, you have to know that there is a lot of risk carried with these documents, and property can be misused and abused, and personal care can be neglected and not properly addressed. So I often hear clients say, “Well, I wanted to appoint everybody equally. My children equally. I didn’t want to play favorites.” But this isn’t a situation where you want to appoint somebody just because you want to appease them. You really have to think long and hard about who that should be. And really if it should even be a family member at all. Because often the best attorneys are professional attorneys or professional guardians, like I know RBC provides those services, Leanne.

Leanne Kaufman:

And I know that sometimes these things do go a little bit sideways. And I know you spend a lot of time concerned about abuse of powers of attorney and the financial abuse that can follow for the incapable person. What are some of the more common things that you end up seeing go wrong in this area?

Kimberly Whaley:

So we do see financial abuse and misuse of a power of attorney where an attorney takes over, for example, transfers property to themselves or into their joint name, or sets up joint accounts or accounts in their own name, or simply steals money. And so this happens, I’m going to say more frequently than it should. And some of it happens through misunderstanding, but a good portion of it happens just as a result of pure theft. And so we do have criminal code sections that address theft under power of attorney. Often those don’t result in charges, but most probably we’re faced with civil proceedings where we’re asking an attorney to account for something that they have appropriated or misappropriated. And that happens a lot. And with the power of attorney for personal care, there’s neglect and failure to provide the necessaries of life.

Leanne Kaufman:

And you make an important point that it’s not always malicious intent. It’s sometimes just a lack of an understanding or awareness of the role. So again, another reason why it’s so important to get advice from someone that practices in this area when the time comes. So Kim, if you hope listeners can really only remember one thing about the topic of powers of attorney, generally, if they’re new to this area entirely, what would that one thing be?

Kimberly Whaley:

Concentrate, focus on the choice of the attorney. You don’t want to appoint somebody who doesn’t get along with their siblings, who’s fiscally irresponsible, who maybe can’t even manage their own affairs, or is in a different country, or under disability that prevents them from acting in a manner that’s prudent. So I think the best takeaway would be the choice of the attorney, but also to communicate to the attorney that you are appointing that person, and get their agreement to act. And then maybe sit down with the family to say, “Hey, this is what’s going to happen in the event that I should be unable to manage my affairs. This is the person I’ve chosen. This is why.” And make it as straightforward as possible and give as many whether they be oral or written directions or instructions to the attorney to help them succeed in the role that you’ve appointed them in.

Leanne Kaufman:

That’s great advice. As you mentioned, this is an area where RBC can also help. So thanks so much, Kim, for joining us today and for sharing such important information about why powers of attorney are something that matters beyond wealth.

Kimberly Whaley:

Thanks so much.

Leanne Kaufman:

You can find more about Kim and her firm at welpartners.com. She’s also on Twitter, @WELPartners, on LinkedIn at Whaley Estate Litigation. And she’s on Instagram @whaleyestatelitigation. Until next time, I’m Leanne Kaufman. Thank you for joining us.

Outro speaker:

Whether you are planning for your own estate, the needs of your family or business, or you’re an executor for a loved one’s estate, we can help guide you simplify the complex and support your life’s vision. Partner with RBC Royal Trust and ensure your legacy will thrive for generations to come. Leave a legacy, not a burden^MT. Visit rbc.com/royaltrust.

Thank you for joining us on this episode of Matters Beyond Wealth. If you would like more information about RBC Royal Trust, please visit us at our website at rbc.com/royaltrust.