This Blog was written by: Tony Cariati, Estate and Trust Consultant, Scotia Wealth Management
In the past few years, the realities brought about by the COVID-19 pandemic have highlighted the importance of having a Continuing Power of Attorney for Property; someone can manage your financial affairs in the event you are ill or suffering from long-term health complications. Equally as important is naming an attorney for property (“AFP”) who will not only look after your financial interests, but also try to include you in the decision-making process. Unfortunately, I have seen more than my share of occasions wherein an AFP thinks “I can do whatever I want with [insert family member]’s accounts and property, after all, they named ME as the attorney for property!”
While, at first glance, it may seem like a straightforward responsibility, many AFPs are not fully aware of their duties, including the need to engage with the now-incapable grantor. Obvious circumstances aside (i.e. a grantor is in a coma, suffers from severe/advanced dementia, etc.), a grantor that is unable to manage their property should still be consulted and encouraged to participate in the process of managing their finances.
The Substitute Decisions Act (“SDA”), which is the governing legislation in Ontario setting out the duties and obligations of AFPs, specifically addresses the need for the AFP to not only act in the best interests of the grantor, but also to not exclude the grantor in the process.
With that, the SDA mandates that an AFP shall:
- consider whether any decision will have an effect on the incapable person’s personal comfort or well-being, and whether the decision is for the incapable person’s benefit;
- manage the grantor’s property in a manner which is consistent with decisions made by the person or persons who have the authority to make decisions for the grantor’s personal care;
- explain to the incapable grantor the attorney’s powers and duties;
- encourage the incapable person to participate, to the best of their ability, in the attorney’s decisions about the property;
- arrange and facilitate regular personal contact between the incapable grantor and supportive family members and friends of the incapable grantor;
- consult with supportive family members and friends of the incapable person who are in regular contact with the incapable person, and; those who provide the incapable person with personal care.
- keep accounts of all transactions involving the grantor’s property, in accordance with applicable regulations;
- make reasonable efforts to determine if the incapable grantor has a will, and if so, the provisions of the will;
- make necessary expenditures from the incapable person’s property for the person’s support, education and care; the support, education and care of the incapable person’s dependents, and; to satisfy the incapable person’s legal obligations.
While carrying out the above noted duties, the AFP will be held to a standard of care based on whether or not they are receiving compensation. The SDA dictates that an AFP who does not receive compensation for managing the property of the grantor shall “…exercise the degree of care, diligence and skill that a person of ordinary prudence would exercise in the conduct of his or her own affairs.” In contrast, the standard of care for AFPs who are receiving compensation “…shall exercise the degree of care, diligence and skill that a person in the business of managing the property of others is required to exercise.”
So, before exercising their power under a Continuing Power of Attorney for Property, an attorney for property would be wise to ensure they are fulfilling their obligations to the grantor; both in terms of financial decisions, and in trying to include the grantor in the decision-making process.
 With respect to the duties of the AFP as mandated through legislation, sections 32, 33, 33.1, 33.2, 34, 35.1, 36, 37 (collectively referred to as “ss. 32-37”) and 38 of the SDA set out the applicable statutory duties. While ss. 32-37 pertain to the duties of guardians of property, section 38 of the SDA specifically incorporates and applies the listed duties “with necessary modification” to attorneys acting pursuant to a Continuing Power of Attorney for Property. In this regard, section 32 (1) explicitly indicates that a guardian for property is “…a fiduciary whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit.” Consequently, an AFP under a Continuing Power of Attorney for Property is likewise a fiduciary and owes a fiduciary duty to the grantor of the Continuing Power of Attorney for Property.