mental capacity Archives

My parents have dementia – how can I help them?

Posted on January 13, 2020March 22, 2023 By admin

If a parent becomes or may become mentally incapable of managing their own affairs, there are a few options to consider. The following information may be helpful if your parent(s) have been diagnosed with dementia or are experiencing the early onset of this disease. Please note that this article gives general information for provinces other than Québec. For information regarding Québec, please see the article “Incapacity Planning in Québec”.

Appointing a Power of Attorney for Property (POAP)

The role of someone appointed under a POAP is to step into the shoes of an incapable individual for the purpose of making financial decisions that they can no longer make for themselves. The purpose of a POA is to protect the interests and welfare of the individual who appointed the attorney.

An individual who has been appointed under a POAP can manage the grantor’s financial affairs and make legal decisions with respect to physical assets. Unless the grantor restricts these powers, the attorney will be able to do almost anything that the grantor can do concerning finances. They can sign documents, start or defend a lawsuit, sell property, make investments and purchase things for the grantor. However, under a POAP, an individual cannot make or change an existing Will, change beneficiaries on a specific insurance product or transfer their duties under the POAP to someone else.

Appointing a Power of Attorney for Personal Care (POAPC)

A POAPC is a legal document that gives an individual (the attorney) the power to act on someone else’s behalf by making personal care decisions. If an attorney has been appointed, they will be legally capable of dealing with the affairs of someone who is incapable of making their own such decisions. Unless the attorney’s powers are restricted, they will be able to make almost any decision pertaining to the incapacitated individual’s personal life, including choices as to medical treatment, housing, food, and other care. The PAPC will come into effect only when an individual is deemed mentally incapable of making their own personal care decisions.

It is possible that an incapacitated parent has already created a POAPC without the knowledge of one or more of their children. Inquiries should be made to legal advisors to determine whether a POAPC has been signed. If there is no pre-existing Power of Attorney, it may still be possible for a parent who is experiencing the early onset of dementia to execute one, so long as there is still sufficient mental capacity to do so.

If an individual becomes incapable of making personal care decisions, and they have not appointed an attorney for personal care, a family member will automatically have the right to make decisions on the individual’s behalf, unless someone else is appointed. A Court may appoint a guardian to make decisions on behalf of an incapable person for some or all aspects of personal care.

Become a guardian

If a parent becomes or may become mentally incapable of managing their own affairs, there are a few options to consider. The following information may be helpful if your parent(s) have been diagnosed with dementia or are experiencing the early onset of this disease. Please note that this article gives general information for provinces other than Québec. For information regarding incapacity planning in Québec, please see the article “Incapacity Planning in Québec”.

Appointing a Power of Attorney for Property (POA)

The role of someone appointed under a POA is to step into the shoes of an incapable individual for the purpose of making financial decisions that they can no longer make for themselves. The purpose of a POA is to protect the interests and welfare of the individual who appointed the attorney.

An individual who has been appointed under a POA can manage the grantor’s financial affairs and make legal decisions with respect to physical assets. Unless the grantor restricts these powers, the attorney will be able to do almost anything that the grantor can do concerning finances. They can sign documents, start or defend a lawsuit, sell property, make investments and purchase things for the grantor. However, under a POA, an individual cannot make or change an existing Will, change beneficiaries on a specific insurance product or transfer their duties under the POA to someone else.

Appointing a Power of Attorney for Personal Care (PAPC)

A PAPC is a legal document that gives an individual (the attorney) the power to act on someone else’s behalf by making personal care decisions. If an attorney has been appointed, they will be legally capable of dealing with the affairs of someone who is incapable of making their own such decisions. Unless the attorney’s powers are restricted, they will be able to make almost any decision pertaining to the incapacitated individual’s personal life, including choices as to medical treatment, housing, food, and other care. The PAPC will come into effect only when an individual is deemed mentally incapable of making their own personal care decisions.

It is possible that an incapacitated parent has already created a PAPC without the knowledge of one or more of their children. Inquiries should be made to legal advisors to determine whether a PAPC has been signed. If there is no pre-existing Power of Attorney, it may still be possible for a parent who is experiencing the early onset of dementia to execute one, so long as there is still sufficient mental capacity to do so.

Become a Guardian

A ‘Guardian of Property’ (also known as a “Trustee” in some provinces) is a person who is appointed to manage the financial affairs of an individual who is mentally incapable of doing so themselves. A Guardian may be appointed one of two ways:

(1) By a provincial Public Guardian and Trustee, or

(2) By a Court.

A Guardian of Property can do almost anything the incapable person could do in relation to their property. This may include collecting and depositing income, paying bills, making purchases and looking after legal matters. However, a Guardian of Property cannot make or change a Will.

A ‘Guardian of the Person’ (also known as a “Committee” in some provinces) is an individual authorized by the courts to make personal decisions for someone who is mentally incapable of doing so themselves. Generally, a Court will not appoint a Guardian of the Person if someone has been appointed under a Power of Attorney for Personal Care.

For legal advice with respect to becoming a Guardian of Property or a Guardian of the Person, please contact a TEP.

Other Options

Another option to consider under certain circumstances is a limited ‘trusteeship’. The administrators of some government benefits such as Canadian Pension Plan or Old Age Security can appoint a “trustee” to manage income on behalf of a recipient who has been deemed mentally incapable. This option is not appropriate for a recipient who also receives income from other sources, or has assets or legal matters that require management.

For further information and help planning for family members with dementia please consult a TEP.

Power of Attorney for Property

Posted on January 13, 2020March 22, 2023 By Joanna Pegum

A Power of Attorney for property (POAP) is a legal document that allows an individual (called the “grantor”) to appoint someone (called the “attorney”) to act on their behalf to make decisions about legal and financial affairs.

This article provides an overview of the law in provinces and territories other than Quebec (for information regarding incapacity planning in Québec, please see the article “Incapacity Planning in Québec”). Since each province and territory has separate legislation governing the creation of a POAP, appropriate legal advice should be sought in the relevant province.

Types of Powers of Attorney for Property

A POAP may be a general POAP, which allows the attorney to deal with all decisions regarding finances and property, or it may be a limited POAP, which allows the attorney to make decisions for a specific purpose or time (for example, to complete a particular transaction).

An ‘enduring’ or ‘continuing’ POAP remains in effect once the donor loses capacity. If the POAP is not specifically designated as enduring or continuing, it ceases to be effective when the donor loses capacity to manage property.

Normally, a POAP takes effect when it is signed. A ‘springing’ POAP only takes effect after a certain event or trigger (such as if the donor becoming incapable of making decisions).

Who can I name as my attorney?

When choosing an attorney, consider whether the person named is someone who can be trusted with handling money. They should be able to understand the affairs of the grantor, and be able to pick up managing them at whatever stage. An attorney must be 18 years of age or older. Some provinces have additional requirements, such as conditions that the attorney cannot be mentally incompetent, or bankrupt.

More than one person can be named as an attorney under a POAP. If multiple attorneys are named, the POAP should be clear as to whether attorneys must act together (jointly) or may act independently (jointly and severally). If there are more than two named attorneys, a POAP should be clear as to whether a majority of them may act.

While it is generally possible to appoint an attorney from another jurisdiction from a legal perspective, many practical and other issues may arise. For example, residents of the USA may not be permitted to give trading instructions on the investment account of a Canadian resident in certain situations. It is important to consult with a TEP prior to designating an attorney or attorney(s) to ensure that they are appropriate for this role.

Creating an Enduring or Continuing Power of Attorney for Property

Anyone who is 18 years of age or older and who has the necessary level of mental capacity can create an enduring or continuing POAP. Mental capacity, in this situation, requires that a grantor:

Knows what property they have and its approximate value;

– Is aware of their obligations to people (if any) who depend on them financially;

– Understands what they are giving an attorney the authority to do;

– Understands that the attorney is required to account for the decisions they make about the grantor’s property;

– Understands that, as long as they have mental capacity, they can revoke (cancel) the POAP;

– Understands that if the attorney does not manage the grantor’s financial assets properly, their value may decrease; and

Understands that there is always a chance of the attorney misusing their authority.

To create a valid enduring or continuing POAP, the document must:

– Be called an ‘Enduring’ or ‘Continuing’ Power of Attorney for Property (as appropriate) or say explicitly that it allows an attorney to continue acting if the grantor becomes mentally incapable;

– Name one or more persons to act as an attorney for property;

– Be signed and dated by the grantor; and

– Be signed by two valid witnesses who witness the document (in some provinces, it may be possible to have only one witness where that witness is a lawyer or notary public).

In certain jurisdictions, additional witnessing requirements may be in effect. For example, in British Columbia it is generally required that the attorneys execute certain documents acknowledging that they are aware of the POAP and consent to act.

Once the POAP is executed, it should be stored in a safe place where the attorney can access it quickly if needed. A POAP can also be stored with a trusted third party (such as the drafting lawyer), with specific instructions regarding when to release it.

When does a POAP take effect?

An enduring or continuing POAP takes effect immediately upon being signed and witnessed, unless the document states otherwise (i.e., unless it is a springing POAP). If the POAP is to take effect only after the grantor has become mentally incapable of managing their finances, the document must be clear about that limitation.

When does my Enduring or Continuing POAP end?

An enduring or continuing POAP ends when:

– The named attorney(s) die or become mentally incapable;

– A Court appoints a Guardian of the Property for the grantor;

– The grantor signs a new POAP while still mentally capable (this is not the automatic result of signing a new POAP in all provinces. Accordingly, the new POAP should be clear with respect to whether or not it is intended to revoke existing POAPs);

– The POAP is revoked while the grantor is still mentally capable; or

– The grantor dies (on the death of the grantor, attorneys will no longer be able to deal with bank accounts or other assets).

Will my POAP be recognized abroad?

A Canadian POAP may be valid in foreign jurisdictions, although third parties in other countries will likely require a court order to validate the POAP. To avoid any delay or minimize any concerns associated with the validity of a Canadian POAP while abroad, individuals are generally encouraged to execute Powers of Attorney in each foreign jurisdiction where property or money is situated.

In the event that arrangements have not been made to create a Power of Attorney in the foreign jurisdiction, a Canadian POAP may be acceptable. Some jurisdictions have specific wording and signing requirements for foreign POAPs to be valid. Anyone affected by this situation should seek advice from legal professionals in those jurisdictions. A TEP can direct inquiries to trusted advisors in their international TEP network.

What if I don’t have an Enduring or Continuing POAP?

A guardian (or trustee) may be appointed by the Court for individuals who become mentally incapable of managing property without a valid enduring or continuing POAP. A family member or friend may apply to a Court to be given permission to manage the individual’s assets. If family or friends do not want to be burdened with this role, they may ask a trust company to apply to the Court to be a statutory guardian. If no one else has been appointed, the Public Guardian and Trustee of the jurisdiction of residence may take on this role.

For further information or help preparing a POAP, please consult a TEP.

What is a Power of Attorney?

Posted on January 13, 2020March 25, 2020 By Joanna Pegum

A Power of Attorney (or “POA”) is a legal document by which an individual gives someone they trust (the “attorney”) the right to make decisions on their behalf if they are no longer capable of looking after their own matters. This authority may be general in nature or limited to specific actions and situations.

This article focuses on the general options available for creating a POA in Canada for provinces other than Québec. For information regarding Québec, please see the article “Incapacity Planning in Québec”. The specific rules for each province vary; please contact a TEP to discuss the rules in your province of residence.

Why have a Power of Attorney?

In personal and estate planning, a POA is generally executed when contemplating the possibility of future physical and/or mental incapacity that renders the grantor incapable of making his or her own decisions. While creating a POA is voluntary in that there is no law mandating that everyone must create one, all individuals over the age of 18 who are competent to grant a POA should consider executing one. In the event of unexpected incapacity, a POA will ensure that a person’s wishes are respected, and that carrying these wishes out is easier and less expensive for their families.

Types of Power of Attorney

Generally, there are two main types of POAs:

A continuing or enduring Power of Attorney for Property (POAP) covers financial affairs, such as managing investments, granting gifts, or borrowing money. For more information, see “I have been given Power of Attorney. What does that mean?”
A Power of Attorney for Personal Care (POAPC) (also known as a “Personal Directive”) covers personal decisions, such as housing and health care. For more information, see “I have been given Power of Attorney. What does that mean?”

How to properly execute a Power of Attorney

The law does not require the use of a lawyer’s services to create a POA. However, individuals with even modestly complicated affairs are generally advised to consult a lawyer to ensure that the POA is neither too broad nor too specific, and that the document is executed properly. A POA can be created in a few different ways:

A lawyer can draft a POA; or
A grantor can use online forms provided by reputable sources (such as forms made available by the Attorneys General for the applicable province).

Generally, a valid POA must:

Name the person the grantor has chosen to act on their behalf;
Be signed and dated by the grantor; and
Be signed and dated by two witnesses who saw the grantor signing the document.

The witnesses to a POA typically cannot include:

A grantor’s spouse, partner, child or someone treated by the grantor’s child;
The person the grantor is naming as attorney or the spouse of that person;
Anyone under 18 years of age; or
Anyone who is incapable of making their own property or personal care decisions.

Generally, there is also no requirement that these documents be registered. However, it is important to ensure that the people who need to know about the document – especially the attorney(s) – have a copy of the POA or know where to get one if needed.

What happens if there is no Power of Attorney?

In the event that an individual who does not have a valid POA is or becomes incapacitated, a family member has the right to make health care decisions or apply to become the “guardian” of their person and/or property (the person occupying this role is also known as a “trustee” or a “committee”, depending on the jurisdiction). In certain cases, someone else, such as a close friend, could apply to act for the individual in these matters. The only time the provincial government, through the office of a Public Guardian and Trustee, will act, is in situations where there is no suitable person able or willing to act on behalf of the incapacitated person.

For further information or assistance in preparing a POA please consult a TEP.

How do I make decisions for my disabled child?

Posted on January 12, 2020March 27, 2023 By Louise Polcaro

The ultimate responsibility to look after and care for a child up until the legal age of adulthood falls with the child’s parents. The age of adulthood in Canada is generally considered to be 18 or 19 years of age, depending on the province of residence.

The age of majority is 18 in six provinces: Alberta, Manitoba, Ontario, Prince Edward Island, Quebec, and Saskatchewan. The age of majority is 19 in four provinces and the three territories: British Columbia, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, and Yukon.

When an individual attains this age of majority, they are presumed to be capable and competent to make decisions about their own health and well-being, as well as finances. While many adults with disabilities can manage their own affairs independent of parental assistance, others cannot. In the event that a disabled adult child is incapable of making decisions for themselves, there are a number of options available to parents who wish to make decisions on their child’s behalf.

The starting point for a disabled person and/or their parent is to assess each need for a decision individually and determine whether the child is capable of making a decision themselves. In addition, provinces have enacted legislation regarding what may happen if and when an individual is incapable of making certain decisions about their finances and/or personal care.

Provincial law governs the procedures by which a decision-maker may be appointed for a mentally incapable person. Such procedures depend on the type of decision the person is incapable of making. One set of rules applies when a person is incapable of making decisions about their property or finances and another set of rules applies if the incapacity relates to personal care decisions. A person who makes decisions on behalf of another may be referred to as a ‘substitute decision-maker’.

Decision-Making for Property/Finances

If an adult is incapable of making decisions relating to their property or finances, there are three ways by which a decision-maker may be appointed:

Enduring or Continuing Power of Attorney: Written authorization by an individual specifying a particular decision-maker of their choice. This must be made before the person becomes incapable.
Statutory Guardianship: This process only occurs if a person has not made a continuing power of attorney concerning all of their property and is assessed as incapable. In such instances, the statutory guardian of property will be the provincial Public Guardian and Trustee unless a family member or other authorized person applies to assume this role.
Court-Appointed Guardian of Property: An individual can be appointed and authorized by a Court to act on another person’s behalf with respect to decisions about property and finances. Provincial legislation describes the material that must be submitted to the Court and outlines who may be appointed and under what circumstances. The title of this person varies by province, including Guardian of Property or Trustee.

Decision-Making for Personal Care

If an adult is incapable of making personal decisions, there are two ways in which a decision-maker may be appointed:

Power of Attorney for Personal Care: Written authorization by an individual specifying a particular decision-maker of their choice. This must be made before the person becomes incapable. This document allows the appointed individual to make decisions about a multitude of issues such as medical treatment, day-to-day living, and admission to long-term care facilities.
Court-Appointed Guardian for Personal Care: An individual can be appointed by a Court to act on another person’s behalf in relation to decisions about personal care. The Court may delegate all personal care decisions or specify which decisions are to be made by the person and which decisions are to be made by the individual for themselves. The title of this person varies by province, including Guardian of Property or Custodian.

The chief distinction between attorneys and guardians is that an attorney’s right to act on behalf of another individual must be given while the individual is still mentally capable. A guardian, on the other hand, is appointed by a third party after the person whose affairs are to be managed has become mentally incapable. An experienced professional should be consulted to consider the available options and help determine the best solution for a given situation..

For additional information or assistance with ensuring that your disabled child is cared for, please consult a TEP.

Making gifts during your lifetime

Posted on January 12, 2020March 22, 2023 By Joanna Pegum

It has become increasingly common for parents to give gifts to their children during their lifetime rather than leaving it in a Will. Whether motivated by a desire to view the recipient enjoy the benefits of the gift during the lifetime of the giver, or by the circumstances of the recipient (e.g., a child needs to move out, buy a house, or attend university), gifts made during the lifetime of the giver warrant specific consideration.

Inter vivos vs. testamentary gifts

Gifts made during the lifetime of the giver are called “inter vivos” gifts. Gifts made by Will are referred to as “testamentary” gifts.

Is there a tax on gifts in Canada?

There is no tax on gifts in Canada, either to the giver or to the recipient. However, there may still be tax consequences to making gifts. The most common consequence is that when an asset – such as stock, real property, or even art – is gifted, the item is deemed to have disposed of by the giver at fair market value. Tax will apply to the increase in value, if any, of the asset. In general, the giver of the gift will be liable for tax on half the value of the increase at their marginal tax rate.

One potential advantage to an inter vivos gift is that, generally, any further appreciation of the asset is deferred until the beneficiary disposes of the asset. An inter vivos gift may be appropriate as part of estate planning in situations where the asset is likely to increase further in value.

To avoid adverse tax consequences property should not be sold to the recipient at a price below fair market value. This may result in double tax as the giver’s sale price will be based on fair value whereas the recipient will have a low tax cost equal to the price paid.

Inter vivos gifts as a means to avoid probate fees

Consider the motivation behind making inter vivos gifts carefully. While such gifts are appropriate when made out of a genuine desire to permit the recipient to have the asset, they may not be appropriate as a means to avoid probate fees. Gifting assets during the lifetime of a testator or setting up joint accounts as a means of avoiding probate fees may have unintended results, complicate the administration of an estate, incur unwanted taxes, and/or result in a disproportionate distribution of assets. Also, commencing in 2023, it may also require compliance with the new “trust reporting rules”. It should be noted that there has been a great deal of litigation regarding gifts made to avoid probate, which is time consuming and expensive, so any attempts to reduce probate fees should be planned and documented appropriately.

For further information or to plan appropriately for inter vivos gifts please consult a TEP.

I have been given Power of Attorney. What does that mean?

Posted on January 10, 2020March 22, 2023 By admin

Outside of Québec, the role of someone appointed under a Power of Attorney (POA) is to step into the shoes of an incapable individual for the purpose of making financial decisions and/or personal care decisions that they can no longer make for themselves. The purpose of a POA is to protect the interests and welfare of the individual who appointed the attorney.

For information regarding incapacity planning in Québec, please see the article Incapacity Planning in Québec.

The duties of the attorney are outlined in the POA legal documents. Generally, the attorney will be able to do everything that the grantor can do with respect to their personal matters, unless they are explicitly restricted from doing so.

The nature of the role will depend on the type of POA which has been executed. Generally, there are two main types of POA appointments:

Power of Attorney for Property (POAP)

Power of Attorney for Personal Care (POAPC) (also known in some jurisdictions as a personal care directive)

Appointed as Power of Attorney for Property (POAP)

An individual will be able to assume responsibilities under a POAP as soon as it is signed and witnessed, unless the document says otherwise. An attorney is required to keep the grantor’s financial information confidential and should respect the grantor’s privacy unless: (1) the grantor specifically authorizes them to disclose information by saying so in the POAP; or (2) they need to disclose this information to carry out their duties or to abide by the law.

When carrying out their obligations under a POAP, an attorney is generally entitled to take payment from the grantor’s funds at a rate specified by law, which varies by province, unless the grantor states otherwise in the document. An attorney is also required to provide the grantor with a full accounting whenever asked.

Appointed as Power of Attorney for Personal Care (POAPC)

An individual appointed under a POAPC is responsible for managing the personal care and health care decisions of the grantor. With regard to personal care, they may make decisions pertaining to housing, diet, personal hygiene and social life. With respect to health care, they may make decisions regarding medical treatment or the withholding of such treatment. Under a POAPC, the attorney can only make decisions about those aspects of personal care that the grantor cannot make themselves.

Unlike a POAP, a POAPC may only be used during a time that the grantor is mentally incapable of making their own personal care decisions. The attorney is typically responsible for deciding whether the grantor is mentally incapable, with a few exceptions (such as if specified otherwise in the PAPC).

An attorney appointed under a POAPC is also required to keep the grantor’s personal information confidential. As with a POAP, the grantor’s privacy should be respected unless: (1) the grantor specifically authorizes them to disclose information by saying so in the POAPC; or (2) they need to disclose this information to carry out their duties or to abide by the law.

In some instances, a grantor may include “advance directives” in their POAPC. Advance directives are more commonly known as “wishes” and they serve to provide personal instructions to attorneys about the grantor’s personal preferences regarding personal care and health care. An attorney is legally obligated to follow these wishes, if possible.

If you have been appointed under a Power of Attorney and/or have any additional questions please consult a TEP.