Acting pursuant to a Power of Attorney? Know your duties and obligations!

Posted on August 21, 2020 in Wills & Estate Planning by Faith Baron

A Power of Attorney instrument is a legal document in which a person appoints another person to act on their behalf with respect to their personal, property, and/or financial affairs. There are many reasons why a person might appoint someone to act on their behalf pursuant to a Power of Attorney document.  One of the most common scenarios is where an aging parent appoints one or more of their children to assist them generally with their financial affairs and day-to-day decisions.  When acting pursuant to such an appointment, there are important restrictions, requirements, and duties to keep in mind.

In Saskatchewan, The Powers of Attorney Act, 2002, SS 2002, c P-20.3 (the “Act”) and The Powers of Attorney Regulations, c P-20.3 Reg 1 (the “Regulations”) govern the relationship between the grantor of a Power of Attorney (in other words, the person completing such document) and the appointed attorney(s).  Among other things, the Act provides certain restrictions on who can and cannot act as an attorney.  For example, an attorney must be at least 18 years old, must not be an undischarged bankrupt, and must not have any serious criminal convictions within the last 10 years (unless such convictions have been disclosed to, acknowledged by, and consented to in writing by the grantor).  Further, a person who provides care services to the grantor for compensation cannot be appointed attorney.

In order to appoint a personal and/or a property attorney, the grantor must have the capacity to understand the nature and effect of a Power of Attorney.  While this is not an extremely high standard, it is not always met if the grantor has diminished cognitive abilities due to age or some other medical condition. Getting a Power of Attorney document in place early is therefore highly recommended.  Otherwise, if that window of opportunity closes, a person wishing to deal with someone else’s property or personal care decisions would need to apply to the Court of Queen’s Bench for Saskatchewan for an order appointing them as a property and/or personal guardian.  This application process usually requires legal assistance and is much more costly than having a Power of Attorney document executed at an earlier date when the grantor still has capacity. 

A Power of Attorney document may provide that the power to act endures after the grantor loses capacity.  This is commonly referred to as an “Enduring Power of Attorney” and is the most common form of such appointments.  For this type of appointment to be valid, the document must be dated and signed by the grantor, and witnessed by either one lawyer or two adults with capacity who are neither the attorney themself or a family member of the grantor or the attorney(s). 

No matter when an appointed attorney acts, the Act requires that wherever possible, the attorney shall consider the wishes of the grantor in carrying out their duties. Further, an attorney is required under the Act to exercise their authority honestly, in good faith, in the best interests of the grantor, and with the care that could reasonably be expected of a person of the attorney’s experience and expertise.  This means that the standard applicable to any particular appointee may be different depending on who they are.  For example, a person who holds a professional position or license (e.g. a lawyer) would likely be held to a higher standard of care than most other persons.  It is also important to note that a property attorney can never make or change a will in the name of the grantor. 

In some circumstances, an attorney can charge a fee for services rendered.  Such fees must either be set out in the Power of Attorney document, or ordered by the court, or be in accordance with the fee schedule prescribed in the Regulations.  Where an attorney charges a fee, an annual accounting must be provided by the attorney to either the grantor or, if the grantor lacks capacity, to a person named by the grantor in the Power of Attorney document.  If no such person is named, the attorney must provide the annual accounting to the most immediate and available adult family member of the grantor and to the public guardian and trustee. 

Whether or not an annual accounting is required, an attorney must provide an accounting upon request by the grantor or a person named by the grantor or an adult family member of the grantor.  Where an attorney fails to provide such accounting, the public guardian and trustee may be called upon to assist with the request and, failing that, an application to court for an order directing an accounting to be provided can be obtained. 

Attorneys are generally required to provide a final accounting within 6 months of the termination of the authority of the attorney (e.g. the death of the grantor) to various persons named under the Act and to the public guardian and trustee.  There are certain exceptions to this requirement, such as where the attorney is the sole beneficiary of the grantor’s estate.  Where an attorney fails to provide the final accounting, an application to court may be made for an order directing the attorney to produce the accounting.  

Sometimes an attorney is permitted to provide a benefit to persons other than the grantor, in spite of the duty to act in the best interests of the grantor.  The Act provides that, unless the Power of Attorney states otherwise, a property attorney can act to provide for the maintenance, education, or benefit of the grantor’s spouse and dependent children.  However, making distributions out of the grantor’s estate to other people is generally restricted.  

In particular, there was an important amendment to the Act in 2014 regarding gifts made out of the grantor’s estate by the property attorney. Unless the Power of Attorney specifically permits it, an attorney must not make gifts to anyone except in very limited circumstances.  The most important restriction to be aware of is that the gift cannot exceed the amount prescribed in the Regulations.  At present, the Regulations provide that such a gift cannot exceed $1,000.00.  A simple reading of the Act and the Regulations suggest that this restriction is absolute, except where a court has ordered otherwise. 

The restriction on giving gifts exceeding $1,000.00 without a court order has produced some uncertainty in the following circumstance.  Consider the situation where a grantor has appointed one of their children to act as their attorney under an Power of Attorney document and, as the grantor ages and experiences cognitive decline, the appointed child begins acting on their behalf to help manage the grantor’s finances.  At some point, the attorney issues cheques to certain third parties out of the grantor’s estate in amounts exceeding $1,000.00 and without a court order.  After the death of the grantor, the executor of the estate learns of the distributions and questions why they were made.  In response, the attorney asserts that the grantor told them to make the distributions and further asserts that the grantor had capacity at the time the direction was made. 

Prior to the 2014 amendment of the Act, the Court of Queen’s Bench for Saskatchewan had routinely held that even though making a gift out of a grantor’s estate can generally be viewed as not in the best interests of the grantor, such gifts and/or distributions made by an attorney can be justified if the attorney is able to produce convincing and unimpeachable evidence to establish that the grantor knew and approved of the gifts (see for example, Kessler Estate v Kessler, 2015 SKQB 369, which was a case dealing with circumstances that arose before the amendments came into force).  In these cases, courts examine such evidence with care, even to the point of suspicion.  Since the 2014 amendments came into force, there are no reported judgments out of the Saskatchewan courts regarding the interplay between the common law principle expressed in Kessler, supra, and the restriction on gifts now expressly contained in the Act.  It remains to be seen whether an attorney can still justify such distributions at all. 

If you are acting or intending to act under the authority of a Power of Attorney document, it is very important to understand the duties you owe to the person granting such authority as well as the restrictions and obligations imposed by the Act and the Regulations.  First and foremost, we always recommend that attorneys take steps to document all of their actions in a comprehensive and accurate manner.  If you have questions or if you require legal representation to deal with a dispute that has arisen, our firm has experienced and knowledgeable lawyers who can assist.  Similarly, we can also assist if you are a family member or beneficiary of a grantor and you have reason to believe that an attorney may have contravened their duties and obligations to the grantor.  We also have a team of experienced solicitors who can assist you if you or a loved one requires an estate plan, including the appointment of a property and/or personal attorney. 

For more information contact:

Faith Baron
500-123 2nd Avenue S, Saskatoon, SK S7K 7E6
Telephone: 306-244-0132

The information in this guide is not legal advice. We encourage you to consult with your legal advisor for specific advice.