Petley-Jones & Co Law Corporation

Ralph Petley-Jones

Nanaimo Lawyer

Ralph Petley-Jones  B.Comm.  LLB
5732 Hammond Bay Road, Nanaimo
British Columbia, Canada V9T 5N2
250 758.7370
fax 250 758.8703
 

ACTIVATING A POWER OF ATTORNEY

You might have agreed to be a friend’s or loved one’s attorney under a power of attorney. Several years or decades later the grantor of the power of attorney starts acting erratically or ends up in the hospital. You feel you should start taking responsibility under the power of attorney. What should you do?

  1. First, you need to ascertain that you have a valid legal power of attorney or financial representation agreement. If it is a general power of attorney prepared by a lawyer or notary public in British Columbia, it is likely valid and will continue into the grantor’s incapacity. If the document is specific, conditional, prepared, and signed in another jurisdiction, or hand-drawn, the document might not be valid for the purposes intended, and you might not have authority to act under the power of attorney.

    If there is any question, you need to obtain legal advice. When you have no authority to act and do act, you can incur substantial liability. At this stage, if the power of attorney is invalid, you should investigate turning the matter over to the Public Trustee or applying to become a committee of the individual.
  2. Second, determine if there is a living Will or health care representation agreement. Health care decisions have to be made in consultation with the person appointed under the health care representation agreement or the substitute decision maker authorized under the Health Care (Consent) and Care Facility (Admission) Act. Often the health care representative under the health care representation agreement and the financial representative under a power of attorney are one and the same person. The selection of a care facility is probably both a financial and a health care issue.
  3. Third, you need to ascertain the assets in the estate and safeguard the assets. Are the assets properly insured? Unfortunately, the elderly could be financially abused. You should check past financial transactions to make sure no one has gained access to financial documents, cheques, bank accounts, the house, etc. Locks should likely be changed. Debit and credit cards using PIN numbers should likely be destroyed.
  4. Fourth, begin keeping good records of your activity, especially with regard to financial matters. If you take on the job of the attorney (yes, you can refuse to do so), you could be liable for negligent actions such as failure to properly insure a house. You could be called to account by such people as the public trustee, the executor of the person’s estate, or, if the grantor becomes mentally capable, the grantor himself or herself.

    You need to keep proper financial records in writing. It is suggested that you do not use a debit card to obtain cash from the donor’s bank account. It is more prudent to make all transactions from a separate chequing account for which you receive the returned cheques. You are able to reimburse yourself for reasonable and necessary expenses.

    If the grantor is still mentally capable but wishes you to act due to ill health, you need to devise a scheme in which you have some control of the financial assets but, at the same time, the grantor also has some access. Perhaps a separate account that the grantor can access for some spending money.

Change of Grantor Capacity

You should be aware that a person’s capacity or lack thereof is a fluid thing. If the grantor has been on his or her own for a number of years, not eating properly and in declining health, health could actually improve upon entering a care facility where he or she gets their medication regularly and three square meals a day. Wherever possible, and depending upon the health of the grantor (which should be reviewed with health care professionals) the grantor should be advised of the situation and should be part of the decision-making process. In fact, they might now wish to fire you, though this can lead to some issues concerning their legal capacity to revoke the power of attorney.

Dealing with Family

It is wise to communicate with other family members concerning the grantor's status, what you are doing, and why you are doing it. Many family problems in these situations come about due to failure to communicate properly. Remember that this is a stressful time for all.

If you are acting under a power of attorney, you need to act in the grantor's best interest, which might not be in the interest of a potential beneficiary. For example, if better care costs more money, it is the grantor's money and it should be spent on the grantor, not tucked away for the future use of beneficiaries. If you are a beneficiary, you need to avoid being in a conflict of interest. You cannot transfer real property to yourself unless there is specific authority to do so within the document.

On the other hand, it is wise to check the Will for who the ultimate beneficiaries are so you do not act in conflict with the estate plan. For example, don't inadvertently delete RRIF beneficiaries by changing financial institutions. If specific items are to be given to specific family members or friends, these assets should be preserved so they can be given away upon the grantor's death.

If there is little family communication, or even hostility, it is important that you seek professional advice and make sure decisions in the health care, financial, and legal venues have the backing of experts. For example, you could be held responsible for an improperly managed portfolio or not getting an appraisal before selling an asset. You might also have to justify why you paid for the better health care. If you are in any doubt as to your course of action, you need to get legal advice.

As you can now appreciate, taking on the position of attorney under a power of attorney can be a difficult job. Unless it is specified in writing that you are paid, it will probably be a volunteer position. Some lawyers or trust companies will do the work for a fee established in advance. If you are asked to take on the job, it is wise to have some discussions with the grantor at the time you agree to become the attorney. That way you would at least have some direction from the grantor as to how he or she feels about some of the issues discussed above. You could also better appreciate the situation in which you find yourself when you invoke the power of attorney. If you think the duties are too onerous, then it is better to refuse while the grantor has the legal capacity to appoint someone else.

Back to Powers of Attorney