These are your role and responsibilities.
Your friend or loved-one (the “donor”) has bestowed upon you (the “attorney”) one of the most esteemed badges of trust. They have appointed you in their Power of Attorney.
In most cases, you don’t take on your role the day the donor signs the document – most commonly the Power of Attorney document will be held in safekeeping, and provided to you when the donor actually needs your help. When that time comes, don’t make these mistakes:
- assuming it’s an easy job that won’t require too much time, effort, or diligence
- assuming you now can do whatever you darn well please with the donor’s assets
Roles and Responsibilities
You have now been given the power to act on the donor’s behalf, for all financial and legal matters.
However, you are charged with acting honestly and in good faith, and must exercise the care, diligence and skill of a reasonably prudent person. You are held to the highest standard known at law, the “fiduciary duty”. If you fail to meet that duty, you can be found personally liable for damages or harm that results. If you are someone who is fairly lackadaisical over your own finances, you need to step up your game as attorney – you may have to do a better job with the donor’s affairs than you would do over your own.
The law sets out the basic requirements the attorney must follow (to the extent reasonable):
- meeting the personal and healthcare needs of the donor comes first – preserving the estate for the benefit of eventual beneficiaries does not;
- when managing and investing the donor’s assets, meet the standard of a “prudent investor”;
- foster the independence of the donor, encouraging his/her involvement in any decision making where possible and appropriate;
- don’t sell or give away assets that are specifically mentioned in the donor’s Will;
- keep the donor’s personal effects/household possessions available for the donor’s use and enjoyment;
- maintain records, which can be inspected by the donor or the Public Guardian and Trustee of B.C.[1]; and
- if the donor still has capacity, you must take into account their stated wishes and beliefs – but if the donor’s capacity is uncertain, or if the donor is being pushed into something by another person, you have to act to safeguard the donor’s assets. If you have to walk that fine line, make sure you get legal advice.
Specifically, what can an attorney do/not do?
The power given to the donor is not carte blanche – there are some limitations:
- must not co-mingle or combine any of the donor’s assets or money with the attorney’s own – assets must always be kept separate;
- cannot change any designated beneficiaries on assets such as insurance policies, RRSPs, and TFSAs;
- may only gift away the donor’s cash or property to maximum of $5,000 per year (if the donor would ordinarily have made such a gift);
- the attorney cannot pay him/herself a wage, or help him/herself to the donor’s assets in compensation for efforts – the attorney is not entitled to remuneration unless the Power of Attorney document itself specifically provides for it; and
- may not make a new Will for the donor or change the donor’s existing Will.
Do I have to act? How long does it last for?
No one can force you to accept this position. Knowing what you know now, you may not want to get involved. It can be an onerous job, and you can face scrutiny and be asked to justify your actions. If you decide to decline, do not sign the document accepting the appointment. If you have already started to exercise authority, and want to resign, see a lawyer for advice about how to resign.
When the donor dies, the Power of Attorney is no longer of any force or effect, and at that point the personal representative of the estate (i.e. the executor) takes over. If the attorney is the spouse of the donor, then the Power of Attorney would also end if the spousal relationship ends.
If you are acting as an attorney, and you encounter any of the matters we describe here, seek advice and become informed about your legal duties, before you act.