The start of a new year is a good time to review your estate planning goals and it is a good time to make necessary provisions in the event of your incapacity or death. Such planning not only enables you to take control of your financial and health care matters, it also communicates your wishes to your family and friends so they are not left wondering how to handle your affairs.
On September 1, 2011, amended legislation came into effect with respect to powers of attorney, representation agreements, and advance directives.
ENDURING POWERS OF ATTORNEY
Changes to the Power of Attorney Act as of September 1, 2011 set out certain requirements for enduring powers of attorney (“EPOA”). An EPOA is a power of attorney whose authority continues after the adult becomes incapable.
It is important to understand that a capable adult may still manage his or her own financial affairs when the EPOA is in effect; an EPOA does not take away the adult’s ability to act.
The following is an overview of some of the rules and requirements for EPOAs (note: this is not intended to be exhaustive; for detailed information or legal advice you should consult a lawyer).
- • To have the requisite capacity to make an EPOA, the adult must understand all of the following:
- the property the adult has and its approximate value;
- the obligations the adult owes to his or her dependants;
- that the attorney will be able to do on the adult’s behalf anything in respect of the adult’s financial affairs that the adult could do if capable, except make a will, subject to the conditions and restrictions set out in the EPOA;
- that, unless the attorney manages the adult’s business and property prudently, their value may decline;
- that the attorney might misuse the attorney’s authority;
- that the adult may, if capable, revoke the EPOA;
- any other matter prescribed by law.
Who may act as attorney
• A person must be at least 19 years of age in order to act as an attorney; however, there are further restrictions. The adult may not appoint the following as an attorney:
a person who
- provides personal care or health care services to the adult for compensation, or
- is an employee of a facility in which the adult resides and through which the adult receives personal care or health care services,
unless that person is a child, parent or spouse of the adult.
• The EPOA must be signed by the adult and two witnesses, all present together at the same time; if the witness is a lawyer or a notary public, only one witness is required.
• Before the attorney may exercise the authority granted under the EPOA, the EPOA must be signed by the attorney and two witnesses, all present together at the same time; if the witness is a lawyer or a notary public, only one witness is required. The attorney is not required to sign in the presence of the adult.
• There are restrictions as to who may act as a witness. The following persons may not act as a witness:
- a person named in the EPOA as an attorney;
- a spouse, child or parent of a person named in the EPOA as an attorney;
- an employee or agent of a person named in the EPOA as an attorney, unless the person named as an attorney is
a) a lawyer;
b) a Notary Public of British Columbia;
c) the Public Guardian and Trustee; or
d) a financial institution authorized to carry on trust business;
• An EPOA is effective on the latest of:
- the date when the EPOA has been signed by both the adult and the attorney;
- the date specified in the EPOA as being the effective date; and
- the occurrence of an event described in the EPOA, in which case the EPOA must state how and by whom the event is to be confirmed.
Duties of attorney
• An attorney must:
- act honestly and in good faith;
- exercise the care, diligence and skill of a reasonably prudent person;
- act within the authority given in the EPOA and under any applicable laws;
- to the extent reasonable, foster the adult’s independence and encourage the adult’s involvement in the decision-making;
- not dispose of property the attorney knows is subject to a specific testamentary gift in the adult’s will, unless the disposition is necessary to comply with the attorney’s duties;
- unless the EPOA states otherwise, invest the adult’s property only in accordance with the Trustee Act;
- to the extent reasonable, keep the adult’s personal effects at the adult’s disposal;
- keep the adult’s property separate from the attorney’s own property, except for property that is jointly owned by the adult and the attorney;
- make a reasonable effort to determine and make a list of the adult’s property and liabilities as of the date on which the attorney first exercises authority on the adult’s behalf;
- keep the following records in relation to the period for which the attorney is acting:
a) a current list of the adult’s property and liabilities, including an estimate of their value if it is reasonable to do so;
b) accounts and other records respecting the exercise of the attorney’s authority;
c) all invoices, bank statements and other records necessary to create full accounts respecting the receipt or disbursement, on behalf of the adult, of capital or income.
Maximum amount of gifts and loans
• Unless the EPOA states otherwise, the maximum total value of all gifts, loans and charitable gifts made by an attorney in a year must not exceed:
- 10% of the adult’s taxable income for the previous year, or
- $5 000,
whichever is less, provided the adult has sufficient property remaining to meet the adult’s needs and legal obligations, and the adult made gifts or loans of that nature when capable.
Access to adult’s will
• If the adult does not wish the attorney to access the adult’s will, the adult must provide instructions to that effect to the lawyer or notary public holding the will, or include such instructions in the will itself.
• If the adult wishes to compensate the attorney, the EPOA must expressly authorize the compensation and set the amount or rate.
Resignation of attorney
• If the person named as an attorney has signed the EPOA and is unable or unwilling to act, he or she must give written notice of the resignation to the adult and to the other attorneys named in the EPOA; if the adult is incapable at the time, the resigning attorney must also give written notice to the adult’s spouse, near relative or close friend.
• If the person named as attorney has not signed the EPOA, notice of resignation is not required.
Changing or revoking EPOA
• A capable adult may change or revoke an EPOA and must give written notice of the change or revocation to each attorney. The adult should also give written notice to any institutions or other third parties where the EPOA was previously delivered or used.
Report to the Public Guardian and Trustee
• Any person who has reason to believe that the adult made the EPOA when incapable or under undue pressure, or that the attorney is abusing or neglecting the adult, may make a report to the Public Guardian and Trustee.
The complexity of the EPOA has increased due to the amendments to the Power of Attorney Act. You must comply with certain rules in order for the EPOA to be valid. However, you may still tailor the terms of your EPOA to your own circumstances, thus ensuring your attorney has the authority to manage your financial affairs in the manner you have chosen.
Contact Jennifer Chew of DuMoulin Boskovich LLP for your legal needs.