As an attorney appointed under a Power of Attorney (POA) document, you have been appointed to manage an individual’s legal and financial affairs. This is an extremely important responsibility, which requires the utmost care.
The attorney has a fiduciary duty to the donor (the individual who named you) and an obligation to act in their best interests. Personal interests cannot conflict with this obligation.[1] Acting as an attorney requires the highest commitment of good faith, loyalty and trust.[2]
When dealing with a donor’s assets, there are many things you need to be aware of.
Benefiting the Donor
As an attorney, everything you do must be for the benefit of the donor. This means that you cannot profit from your appointment in any way, such as borrowing money from the donor or “purchasing” their vehicle for below fair market value. It also means that you cannot manage the donor’s affairs to benefit anyone else.
Preserving the Donor’s Assets
Part of your fiduciary duty and acting in the best interests of the donor means preserving their assets. This may mean cancelling their newspaper subscription if they no longer use it or changing the Autopac coverage on their vehicle if they cannot drive.
Realty, Management & Sale of Property
In most power of attorney documents, a clause is included which grants the attorney authority to take possession, rent, sell, manage and improve their real estate. The attorney is able to do these things provided that it is done in the best interests of the donor.
Another clause is often included which provides the attorney with the authority to manage all their real and personal property (which includes their home, vehicle, and personal possession). The attorney has the authority to make repairs, pay expenses and to deal with the donor’s property as the donor would themselves. The attorney should ensure that the attorney’s personal property is safe and kept in a secure place and that proper insurance is maintained.
Any income received or expenses incurred need to be properly documented. If a property is rented or sold, the funds are to go directly to the donor. Any property of the donor that is sold is to be at fair market value.
Gift Giving
In order to give gifts on behalf of the donor, a specific clause setting out this authority must be included in the Power of Attorney. Gift giving includes but is not limited to giving children/grandchildren birthday or other gifts, donations to their church and to any other individual or charitable organization. The attorney has a duty to keep the gift giving in a manner that is consistent with the donor’s previous gift giving.
Keeping Assets Separate
It is integral that you keep your assets separate from those of the donor. If you own assets jointly with the donor (other than if the donor is your spouse or common-law partner), it may be advisable to remove yourself from the asset, so it is solely in the donor’s name.
Compensation
A provision is often included in the Power of Attorney document which sets out whether the attorney should be compensated.
Courts have generally held that if the document does not address the matter of compensation or if there is no evidence that there was an intention for the attorney to be compensated, they will not receive compensation.[3]
Compensation also affects the standard of care of the attorney. In accordance with The Powers of Attorneys Act, an attorney who does not receive compensation for acting as an attorney shall exercise the judgment and care that a person of prudence, discretion and intelligence would exercise in the conduct of his or her own affairs.[4] An attorney who receives compensation for acting as an attorney shall exercise the judgment and care that a person of prudence, discretion and intelligence in the business of managing the property of others is required to exercise.[5]
There are many things that an attorney may do that might entitle them to remuneration. If the donor owns a house, the snow still needs to be shoveled, the grass needs to be cut and the outside of the home might need to be repainted if it is peeling. In these situations, it is likely that the attorney is entitled to remuneration for their time spent managing and improving the realty. It is important to remember that these things must be reasonable. It is probably not reasonable to install a pool in the backyard, but it might be reasonable to repair the broken stairs that lead into the house.
It is important to note that unless specifically stated in the Power of Attorney document, a donor cannot charge their professional rate for their time spent on managing the donor’s affairs. For example, if you are an accountant, you cannot charge the donor your hourly rate for your accounting services for cutting the grass; you are only entitled to a reasonable fee. This could mean what it would cost to hire someone else to do the work.
It would be prudent for you to keep accurate records of time spent administering the donor’s affairs.
Accounting
As an attorney, you should be keeping a detailed accounting of the donor’s assets. If a Recipient of Accounts is named in the Power of Attorney document, they can, at any time, request from the attorney an accounting of all the expenses and income (if applicable) of the donor.
Further, under The Powers of Attorney Act, the court has the jurisdiction to make an order requiring the attorney to provide the court with an accounting of the donor’s assets.[6]
Death of Donor
Upon the death of the donor, your responsibilities, obligations and rights as the donor’s attorney cease and this power now belongs to the executor of the donor’s estate. This means that you are no longer permitted to deal with any of the donor’s assets.
As a bottom line, you should be caring for the donor’s assets for their sole benefit, keeping an accurate accounting of their assets and keeping your own assets separate from those of the donor.
[1] Krawchuk v Krawchuk, 2017 MBQB 47 at para 18.
[2] Krawchuk v Krawchuk, 2017 MBQB 47 at para 18.
[3] Colvin Estate, Re, 2006 MBQB 229
[4] The Powers of Attorneys Act, s 19(2)
[5] The Powers of Attorneys Act, s 19(3)
[6] The Powers of Attorney Act, s 24(1)