Powers of Attorney – where is the owner’s manual?

By:  Charles B. Wagner¹

Usually, lawyers who draft wills for their clients also prepare a power of attorney for property and personal care.² These documents allow the client to choose who makes financial decisions or personal care decisions should the client become incapable.³ The person whose property is being managed and who signs the power of attorney is called the grantor.  The person who is appointed to manage the property or make decisions about personal care (referred to, respectively, as the attorney for property or attorney for personal care) sometimes only sees the document after the grantor becomes incapable. Problems often arise because the attorney does not know what the responsibilities and duties are. If only the document came with an instruction booklet.

Back in 2016, my friend Moe found himself in that situation and asked me where he could find a power of attorney for dummies book. He inspired my partner Greg Sidlofsky and me to write a blog entitled a power of attorney primer  https://www.wagnersidlofsky.com/power-attorney-primer/ .  That blog is a worthwhile read.  But, there is some additional material that will be helpful to both the lawyer and layperson researching this topic. There is a regulation⁴ that deals with these exact situations that is a must read. I am of course referring to Accounts and Records of Attorneys and Guardians, O. Reg. 100/96.⁵

For ease of reference let’s just call this regulation “Reg. 100”.  The regulation has four parts:

1. Application (section 1);
2. Form of accounts and records (sections 2-3);
3. Confidentiality and Disclosure of Accounts and Records (sections 4-5);
4. Retention of Accounts and Records (section 6).

Application (section 1 of Reg.100)

An attorney can be appointed in one of two ways.  While a person is capable,⁶ he/she can appoint an attorney for property through a power of attorney for property and an attorney for personal care through a power of attorney for personal care.⁷  The second way an attorney is chosen is through the court process.

The court process is set out in the Substitute Decisions Act (SDA).⁸ A court can appoint a guardian of property or a guardian of personal care once the court declares a person incapable.  When appointed by the court, the person representing the grantor is called a guardian of property (for the management of the grantor’s property) or a guardian of person (to make health related decisions).

Reg. 100 applies to an attorney appointed by the grantor or a guardian appointed by the court.⁹ Those looking for the exact wording of the regulation can access Reg. 100 in foot note 4.

Section 2 – Forms of Accounts and Records

Section 32(6) of Substitute Decisions Act (SDA)¹⁰ says, “A guardian shall, in accordance with the regulations, keep accounts of all transactions involving the property.”  This is referring to Reg. 100. Section 2 lists what the accounts being maintained should include. This is the relevant excerpt from section 2:

(a) a list of all the incapable person’s assets as of the date of the first transaction by the attorney or guardian on the incapable person’s behalf, including real property, money, securities, investments, motor vehicles and other personal property;

(b) an ongoing list of assets acquired and disposed of on behalf of the incapable person, including the date of and reason for the acquisition or disposition and from or to whom the asset is acquired or disposed;

(c) an ongoing list of all money received on behalf of the incapable person, including the amount, date, from whom it was received, the reason for the payment and the particulars of the account into which it was deposited;

(d) an ongoing list of all money paid out on behalf of the incapable person, including the amount, date, purpose of the payment and to whom it was paid;

(e)  an ongoing list of all investments made on behalf of the incapable person, including the amount, date, interest rate and type of investment purchased or redeemed;

(f) a list of all the incapable person’s liabilities as of the date of the first transaction by the attorney or guardian on the incapable person’s behalf;

(g) an ongoing list of liabilities incurred and discharged on behalf of the incapable person, including the date, nature of and reason for the liability being incurred or discharged;

(h) an ongoing list of all compensation taken by the attorney or guardian, if any, including the amount, date and method of calculation;

(i) a list of the assets, and value of each, used to calculate the attorney’s or guardian’s care and management fee, if any.  O. Reg. 100/96, s. 2 (1).

Some observations about section 2 of Reg 100 – to find out if the accounts were maintained properly, the original list of assets (and valuations) alone is insufficient.  It only shows what property existed at one point in time.  In order to protect the interests of the incapable person, one needs to determine what came in, what went out and who now has possession. But, for the reviewer of accounts to discern if something is awry there needs to be a starting point. That’s why this original statement of assets is key.

While the word voucher is not mentioned in section 2, everyone who reviews the accounts wants proof that the expenses claimed are legitimate. What happens when the attorney pays cash?  An adverse inference may be drawn if the trustee fails to retain receipts supporting substantial cash withdrawals or expenses charged against the incapable person’s property and that attorney can be held personally liable for the unsubstantiated withdrawals.¹¹

Litigation often begins where one child was appointed as attorney for property and his/her siblings distrust the honesty of the attorney and worry that he/she has stolen money from the grantor/parent.  The siblings go to court and ask the judge to order the attorney to provide an accounting. A formal accounting shows the statement of assets received at the beginning of an attorney’s stewardship, the flow of assets under his/her administration of the property and the quantum and status at the end of the stewardship. In the horse trading between lawyers and judges in a lawsuit dealing with an accounting, one lawyer often suggests that in order to keep costs down, that only an informal accounting be conducted. But, that term can mean anything.  In one case of mine I suggested to the judge that I would agree to the other party performing such an informal accounting as long as the format complied with section 2 of Reg 100.¹² My argument was that Reg 100 is not a suggestion to the attorney.  It’s not a request.  It is a legal obligation describing what the form of accounts and records have to look like.

Just like section 32(6) of the SDA requires the attorney for property to maintain records in the manner set out in the regulations, section 66(4.1) requires the attorney for personal care to keep records of the decisions made on the incapable person’s behalf in accordance with the regulations.¹³

Section 3 of Reg 100 deals with the Accounts and Records an attorney for personal care is legally obligated to maintain:

3.(1) The records maintained by an attorney under a power of attorney for personal care and a guardian of the person shall include,

(a) a list of all decisions regarding health care, safety and shelter made on behalf of the incapable person, including the nature of each decision, the reason for it and the date;

(b) a copy of medical reports or other documents, if any, relating to each decision;

(c)  the names of any persons consulted, including the incapable person, in respect of each decision and the date;

(d) a description of the incapable person’s wishes, if any, relevant to each decision, that he or she expressed when capable and the manner in which they were expressed;

(e) a description of the incapable person’s current wishes, if ascertainable and if they are relevant to the decision;

(f)  for each decision taken, the attorney’s or guardian’s opinion on each of the factors listed in clause 66 (4) (c) of the Act.  O. Reg. 100/96, s. 3 (1).

(2) An attorney under a power of attorney for personal care and a guardian of the person shall also keep a copy of the power of attorney for personal care or court order appointing the attorney or guardian, a copy of the guardianship plan, if any, and a copy of any court orders relating to the attorney’s or guardian’s authority or the incapable person’s care.  O. Reg. 100/96, s. 3 (2).

Some comments about the obligation to keep these medical records – a novice will look at this regulation and conclude that the failure to keep these types of records would automatically result in court sanction. That’s a mistake.  It’s the starting point of the discussion. Judges consider first and foremost the best interests of the incapable person and wear those glasses when considering whether to sanction or ignore any failures by the attorney for personal care.  But, regardless of whether there will be sanctions, it is still a good idea to comply with Reg. 100.

Setting up the medical information in the way required by Reg. 100  helps organize the documents and facilitates an easier decision making process.  If a doctor challenges the decision of the attorney for personal care, it is now easier to reference the incapable person’s current wishes and those made when the person was capable. That impacts on the decision making process.

Confidentiality and Disclosure of Accounts and Records

Section 4 prohibits the attorney for property to make disclosure with four exceptions:

(a) as required by section 5 or permitted by section 6;

(b) as required by a court order;

(c) as required otherwise under the Act or any other Act; or

(d) as is consistent with or related to his or her duties as attorney or guardian.  O. Reg. 100/96, s. 4.

Section 5 indicates that the attorney for property must give a copy of the records to any of the following people requesting it: the incapable person or the incapable person’s attorney for personal care, or the Public Guardian and Trustee or the incapable person’s spouse.

Regulation 100 – Case law

There is a dearth of case law on Reg. 100.¹⁴  It remains to be seen whether a court will remove an attorney for personal care for not maintaining proper records or refusing to disclose them in accordance with Reg. 100.

Conclusion:

For the drafting lawyer

Some general comments about drafting a power of attorney – a grantor should be told that the person named as a substitute decision maker may choose not to accept the appointment (i.e. renounce).  Accordingly, it’s good practice to name alternates in the event their child or children renounce or are unable to act.

Also, if the grantor has assets outside of Canada, like a US/vacation property, the grantor may wish to limit the scope of the Power of Attorney to assets in Ontario and get legal advice in the jurisdiction where the foreign property is situated about appointing a local resident to deal with assets outside of Ontario.

You might ask why the lawyer who drafted the power of attorney didn’t prepare an instruction manual for the attorney. The simple answer is the grantor – not the attorney – was the lawyer’s client. While that explains why the lawyer did what s/he did, it still doesn’t help the attorney who has to figure out what to do on the job.  I suggest that the drafting lawyer should consider doing a memo to the appointed attorney as well as providing a copy of Reg. 100.  Not doing so is surely not negligent, but the grantor would appreciate any assistance in giving the person appointed as attorney a road map of the responsibilities and obligations that come with the job.

For the Litigator

Justice Brown’s comments in the Abrams case colour my view of this area of the law and stick with me:

Proceedings under the SDA are not designed to enable disputing family members to litigate their mutual hostility in a public court. Guardianship litigation has only one focus – the assessment of the capacity and best interests of the person whose condition is in issue. This court, as the master of its own process and as the body responsible for protecting the interests of the vulnerable identified by the Legislature in the SDA, should not and will not tolerate family factions trying to twist SDA proceedings into arenas in which they can throw darts at each other and squabble over irrelevant side issues.¹⁵

Justice Brown’s analysis underscores that siblings often use elderly parents’ vulnerability to settle old scores.  It’s doubtful that the failure to maintain proper records was a purposeful act to deny siblings access to records.  In the many decades I have been in practice, I do not recall any attorney for personal care maintaining the records as called for by section 3 of Reg. 100.  Nonetheless,  Reg 100’s requirements of attorneys for personal care are fundamentally important.  The statutory and regulatory requirements are not requests or suggestions – they are a legal mandatory obligation.  So, for the litigators representing disgruntled family members being denied access to medical records, I suggest you review Reg 100 to determine if your client is one of the parties to whom the records must be disclosed.  If your client is the spouse of the grantor or the attorney for property, then Reg. 100 entitles your client to obtain a copy of the medical records.  Denial of that right is a breach of the Regulation.

But, even if one proves that the attorney for personal care did not comply with Reg. 100’s obligation to maintain proper records and even if that attorney refuses to disclose the records as required, that may not be the end of the story.  The court will always be asking what is in the best interest of the incapable person. Remember, despite what Reg. 100 says the court has inherent jurisdiction and under section 77(3) of the SDA a judge may give such directions as the judge considers just. That does not mean a rogue attorney for personal care can just ignore Reg. 100.  It just means that proving a breach of Reg. 100 is just the first step.

When confronted with the attorney who refuses to disclose, remind the attorney/guardian of personal care of the fiduciary duty they have under the statute and common law to maintain these records.  It may be in a family case conference with the hospital social worker or with the attorney for personal care’s lawyer who is denying your client access to medical records.  In these instances, ask whether the attorney for personal care complied with his/her obligation to maintain proper records. Often, they have not and will be on the defensive. Caution the reluctant attorney for personal care that your client will proceed to court should they fail to comply with their duty. Finally – remind the attorney for personal care of his/her duty under the SDA to consult with supportive family members and friends of the incapable person about how getting any meaningful input is only possible if those family members and friends have access to relevant medical information.¹⁶ But, before relying too heavily on this section as a ground for removal or sanction of the attorney of property it behooves us to remember that the courts are interested in the best interests of the incapable person and their privacy. So, if the courts are persuaded that this was the reason for failure to consult they will not remove an attorney for a technical breach of this section.¹⁷