A Review of the New Power of Attorney Legislation in New Brunswick

Posted on 1 September 2020 by Tim Culbert

1. Introduction

People often make Powers of Attorney to deal with financial (property) and healthcare decisions in the event they become incapacitated by reason of age, accident or other mental infirmity. However, it is surprising how many people do not understand what a power of attorney is for and what are the repercussions creating same. Many frequently asked questions surround powers of attorney, such as: does a power of attorney continue after death?; Is a power of attorney the same as an executor under a Will? Are there different kinds of powers of attorney?

While many provinces have specific legislation related to appointing an enduring power of attorney and the attorney’s duties after appointment, New Brunswick’s power of attorney legislation only recently came into force on July 1, 2020. Indeed, it was the last province in Canada to do so. Prior to this legislation coming into force, lawyers drafting powers of attorney relied on the common law and other statutes for guidance on issues, such as: does this person have capacity to make a power of attorney?; Who can legally act as a power of attorney?; What duties does an Attorney of a power of attorney have to the Grantor?

https://www.cbc.ca/news/canada/new-brunswick/nb-power-of-attorney-legislation-1.4174868

Under the common law, a person has capacity to grant an enduring power of attorney if he or she: a. Is able to understand the basic nature and purpose of the enduring power of attorney; and b. understands the consequences of same (i.e. the Attorney of the power of attorney can make potentially all financial and healthcare decisions for that person, which could cause loss of funds, or decisions that may not be exactly what the Grantor of the power of attorney would make under the circumstances).

The duties of the power of attorney were laid out in various cases in New Brunswick. For example, in LeBouthillier Estate v. Selosse (Appeal by LeBouthillier), 2014 NBCA 68 (QL), B.R. Bell J.A. (as he then was) for the New Brunswick Court of Appeal, outlined the relevant jurisprudence confirming an attorney acting under a power of attorney has a fiduciary duty to the Grantor, meaning the attorney must act in good faith and only in the best interests of the Grantor.

Yet it is difficult to explain with clarity the concept of fiduciary duty to a client without having some specific examples and details about what a power of attorney can and cannot do. Even if the Attorney understands her duties at the time of discussion, she may find herself in trouble later on without some specific guidelines. (for example, see previous post here on misuse of Powers of Attorney).

Add to this the fact that different statutes applied to different aspects of common powers of attorney (i.e. the Infirm Persons Act for personal care provisions and the Property Act for property matters), one can easily understand why powers of attorney could go wrong in executing their duties. (see for example Trites v. Trites and Jones, 2017 NBQB 085, wherein Mr. Justice Rideout of the Court of Queen’s Bench in Moncton ordered the Applicant’s wife and daughter to return two 2016 Toyota RAV4s, which the wife purchased with funds she transferred from her husband’s bank account as his Power Of Attorney.)

2. The Enduring Powers of Attorney Act SNB 2019, c 30

The new Enduring Powers of Attorney Act (the “Act”) provides much needed guidance for legal counsel as well as Grantors and Attorneys on different aspects of creating and using powers of attorney. For example, section 2(1) sets out the required capacity for an individual to make a power of attorney:

Capacity

2(1)A person has capacity with respect to a matter or an act if the person is able to

(a) understand the information that is relevant to decisions with respect to the matter or act, and

(b) appreciate the reasonably foreseeable consequences of decisions with respect to the matter or act.

2(2)A person is presumed to have capacity unless it is determined otherwise.

Although this section essentially codifies the common law requirements for capacity, it is helpful to have this information in one location as a reference point. It is also helpful to clarify that capacity is presumed unless determined otherwise.

Section 4, dealing with the validity of a power of attorney, is one of the more notable sections in the new Act because it adds new requirements for counsel to ensure that a power of attorney is valid. This section reads as follows:

Validity

4(1)An enduring power of attorney is valid if

(a) the grantor had the capacity to make it,

(b) it is in writing and is signed and dated by the grantor or, in the circumstances described in subsection (2), by another person,

(c) in the case of an enduring power of attorney in which an attorney for property is appointed or an attorney for property and an attorney for personal care are appointed,

(i) it is signed and dated in the presence of a lawyer, and

(ii) it includes or is accompanied by a written statement by the lawyer declaring that the lawyer

(A) is a practising member of the Law Society of New Brunswick,

(B) reviewed the provisions of the enduring power of attorney with the grantor,

(C) was present when the enduring power of attorney was signed by the grantor or, in the circumstances described in subsection (2), by another person, and

(D) is of the opinion that the grantor had the capacity to make the enduring power of attorney, and

(d) in the case of an enduring power of attorney in which only an attorney for personal care is appointed, it meets the requirements of paragraph (c) or it is signed and dated in the presence of two witnesses, both of whom are adults and neither of whom is the attorney or the spouse, common-law partner or child of the attorney, and it is signed by the two witnesses.

4(2)An enduring power of attorney may be signed and dated by a person on behalf of the grantor if

(a) the grantor is unable to sign and date the enduring power of attorney,

(b) the person signs and dates the enduring power of attorney at the direction and in the presence of the grantor, and

Section 4(1) adds the requirements for lawyers witnessing the signing of powers of attorney to include statements confirming they have turned their mind to the issue of capacity and confirmed in writing that a Grantor has the requisite capacity as set out in section 2(1). While these details should be confirmed each time a lawyer witnesses the signing of a power of attorney anyway, this section helps ensure these tasks are completed, or the power of attorney would be invalid. Section 4(2) is also interesting, as it allows a grantor of a power of attorney to appoint someone else to sign the power of attorney on his/her behalf. It will be interesting to view the future circumstances under which this section is used.

Another interesting section deals with individuals who are prohibited from acting as powers of attorneys:

Prohibited attorneys

6(1)A grantor shall not appoint the following persons as an attorney:

(a) a person who has been convicted of an offence involving dishonesty, unless the enduring power of attorney states that the grantor is aware of the conviction;

(b) a person who provides health care services or support services to the grantor for compensation, unless the person is the spouse, the common-law partner or a relative of the grantor; or

6(2)A grantor shall not appoint an undischarged bankrupt as an attorney for property.

6(3)If a person who is not an adult is appointed as an attorney, the person may only act when the person becomes an adult.

One final section worth noting is section 12, which deals with the duties of attorneys:

Duties of attorneys

12(1)An attorney shall

(a) act honestly and in good faith,

(b) exercise reasonable care, and

12(2)When making a decision on behalf of a grantor who lacks the capacity to make the decision, the attorney shall consult with the grantor, if it is reasonable to do so, and

(a) make the decision in accordance with any relevant instructions given by the grantor when the grantor had capacity,

(b) in the absence of any instructions, make the decision in accordance with the current wishes of the grantor, if the wishes are reasonable,

(c) if the wishes of the grantor cannot be determined or are unreasonable, make the decision that the attorney believes the grantor would make if the grantor had the capacity to make the decision, taking into consideration the values and beliefs of the grantor, or

(d) if the attorney is unable to determine what decision the grantor would make, make the decision that the attorney believes to be in the best interests of the grantor.

12(3)For the purposes of paragraph (2)(a), if a grantor has given instructions that are inconsistent with previous instructions, the attorney shall make the decision in accordance with the most recent instructions.

12(4)When an attorney for property is acting on behalf of a grantor who has capacity with respect to property and financial affairs, the attorney shall consult with the grantor and act in accordance with the instructions of the grantor.

This section of the Act is particularly interesting, as it requires the Power of Attorney to consult with the Grantor of the Power of Attorney prior to making decisions (if possible).

3. Conclusions

The new Enduring Powers of Attorney Act is a helpful addition to New Brunswick’s legislative landscape. It should help lawyers, Grantors and Attorneys of Powers of Attorney in the future with ensuring the Grantor’s wishes are respected. It will hopefully reduce the amount of misuse of Powers of Attorney, which has unfortunately become a common issue today. Here are some helpful links for more information on this Act:

https://www2.gnb.ca/content/gnb/en/news/news_release.2019.11.0602.html (GNB Press Release regarding Act);
https://www2.gnb.ca/content/dam/gnb/Departments/ag-pg/PDF/en/LawReform/Notes43.pdf (Law Reform Notes 43 (April, 2020), including outline keys sections of the Act);
https://www.canlii.org/en/nb/laws/stat/snb-2019-c-30/latest/snb-2019-c-30.html (link to the Act itself)

5 tips for preparing for your first meeting with your lawyer about your will

Posted on 9 June 2017 by Tim Culbert

It’s difficult to think about passing away. Many people find it almost as difficult to plan for their eventual demise prior to their first meeting with their estate lawyer. Therefore, here are some useful tips (in no particular order) for preparing for your first meeting with your lawyer about your will:

1.Primary Executor: Think about who you want to be the executor of your estate. For couples, each person usually chooses his or her spouse. However, if your spouse is struggling with dementia or poor health, it may be more prudent to name someone else as executor of your estate. This will be the person who is responsible for paying your liabilities and distributing your remaining estate assets according to your wishes. This is a very personal decision. Your executor is the “trustee” of your estate, which requires that person to act only in your estate’s best interests.

2. Alternate Executor: Plan for an alternate executor, should your first choice predecease you or for some other reason become unwilling or unable to act. I often recommend someone who lives reasonably close to you, making it easier for that person to administer your estate.

3. Inventory: Prepare a basic list of your estate. In other words, think about “what is my stuff?” and write down your major assets, including your properties, most prized possessions, cash, banking information, RRSPs, etc. and have an estimated value of these properties. This process makes it easier for your executor to distribute your estate after your passing. This does not need to be (nor should it be) a detailed list of everything you own, but rather a basic outline of your most important assets. Oh, and don’t forget your debts!

4. Detailed Lists?: Most estate lawyers recommend that the will not be too detailed regarding every asset you own (i.e. my grandmother’s teacups to x, my collection of table and chairs to y). However, it is sometimes helpful to create a more detailed list or memo to leave with your will for your executor. This is not necessarily legally binding on your executor, but will certainly assist your executor in giving effect to your wishes

5. Communicate with your executor: It’s important to have a discussion with the person you plan on naming as your executor. I was once approached by an executor that expressed that he had no idea that he was named as his friend’s executor. Unfortunately, relationships can become strained; it can be awkward if the person you have chosen to be your executor has not seen you for many years and did not know that s/he was going to be named as your executor. There is nothing wrong with speaking with your executor in private and saying “I am thinking about naming you as my executor. Are you okay with this? Do you have any questions or concerns?”

7 Reasons You Should Make a Will (no matter how old you are)

Posted on 24 February 2017 by Tim Culbert

Sometimes the universe presents me with topics to write on. This was one of those weeks. Over the past week, I have spoken to 3 or 4 different people separately about the importance of doing a Last Will and Testament. During one conversation, a colleague and I pondered the reasons why so many people avoid doing their wills. My theory is people simply do not want to think about death and thinking about a will means they must think about death. It’s not a pleasant topic, I admit. But the fact of the matter is that we are all going to die! Yes, that is a little dramatic, but it is true. The old adage is that the only things that are certain in this life are: death and taxes. With that said, here are seven reasons why you should think about doing a will, no matter what your age:

7. Peace of mind: If you do your will now, you will be providing yourself with peace of mind, just by knowing that you have something written down in case you pass away. There are few things more tragic than seeing close family members upset after the loss of a loved one. Add to that the stresses of trying to figure out what documents are needed, funeral arrangements, what to do with property, etc. Having a will does not solve all of these problems, but it is the foundation for your total estate planning package and will alleviate some unnecessary stresses on your family.

6. Costs: Similar to my comments in a previous article about why a Power of Attorney is important, doing a will now can save costs to you and your estate. If you pass away without a will, you are what’s called “intestate” and a statute called the Devolution of Estates Act (in New Brunswick) kicks in to guide the process your family must go through to have someone appointed to represent your estate (pay your bills, sell your property, gift certain properties to others). This process can be more costly in the long run than probating (proving) a will.

5. Guardianship for you children: You could include a provision in your will to appoint a guardian or guardians for your children should something happen to you. Only you know your children and who you trust to watch over them the most. A will is an effective way of expressing your wishes for your children as well.

4. Protecting your business: Through the process of drafting a will, people often begin thinking about a succession planning for their business. This might include transitioning your business to a family member. Also, your lawyer and accountant can assist you in thinking about estate freezes and/or family trusts, which can maximize the tax potential of your transition.

3. Complexity: People seem to build up the process of making a will in their minds into something greater than it really is. In most cases, making a will is not a complex process. You will have to attend your lawyer’s office one or two times (maybe more depending on complexity) and discuss your property, your family and your wishes. Then you will attend your lawyer’s office to sign your will. It is not that difficult, but I recently heard someone say that when she told her workmates that she was going to a lawyer’s office to make a will, one workmate asked: “oh, why, what is wrong with you?”

2. Family Fighting : We have all heard or experienced horror story scenarios with family members fighting over their parent’s properties. While a will cannot guarantee that your family will not be fighting over your property or money, it will certainly reduce the possibility of disagreements. It is more difficult for family members to contest your intentions when they are written clearly in “black and white” in your will.

1. Control: If you are like me, there are likely very few items that are important enough that they should be passed on to specific people. However, if something ever happens to me, I have some sentimental items that I would like certain people to have. It is difficult to ensure that your few important items are distributed as you wish without a will. A will is the best way to ensure that you maintain control over what little you have on this earth.

Why should you sign a Power of Attorney?

Posted on 24 November 2016 by Tim Culbert

A Power of Attorney is a legal document by which one person grants another the right to act on his/her behalf after the donor no longer has the capacity to make decisions. A Power of Attorney can be a useful estate planning tool, especially as we begin to age and become more concerned about our capacity to make decisions. It can take two main forms: 1. Financial – allowing someone to make key financial decisions for you (pay bills, sell property, etc) and/or 2. Personal Care – allowing someone to make health care decisions on your behalf (medications, treatments, residential care arrangements). In honour of November being National Alzheimer’s disease awareness month in the United States, here are some additional reasons why you may wish to consider signing a Power of Attorney:

1. Costs – It is far more cost effective to sign a Power of Attorney while you have the capacity to do so than for your family members to apply to a court to be appointed as guardians of your estate (similar to Power of Attorney) (hundreds of dollars versus thousands of dollars);

2. Time – It is quicker and easier to sign a Power of Attorney (one or two meetings with your counsel vs. many months of meetings and waiting for your family to apply to a court if you do not have a power of attorney );

3. Flexibility – A Power of Attorney can be as flexible or specific as you wish. It is often used for specific purposes over a specified period of time, such as allowing someone to sign property deeds in your absence if you have moved away or are away on vacation when your home sells.

4. Control– The Alberta Law Reform Institute notes that Enduring Powers of Attorney allow people to plan for their incapacity by choosing who they wish to make their decisions:

An EPA (Enduring Power of Attorney) enables people to plan for their own incapacity, giving them the freedom to choose someone whom they feel is most likely to act in their best interests. This sense of control over one’s life after incapacity promotes self-determination and autonomy, and enhances personal dignity. It also helps ease some of the anxiety which people feel knowing they soon lose the ability to manage their own affairs.

– Alberta Law Reform Institute, Enduring Powers of Attorney (Report for Discussion No 7, 1990) at 19-21, cited in Ann Soden, Advising the Older Client (Markham: Lexis Nexis Canada, 2005) at pages 112-113.

As always, you should consult your lawyer for specific questions regarding whether a Power of Attorney is right for you, as there are risks to choosing the wrong person to act as your POA (see my post on theft by enduring Powers of Attorney here.)

The 2015-16 NB Budget and seniors

Posted on 27 April 2015 by Tim Culbert

Many senior clients have asked us questions about how the recent provincial budget will affect them. Before analyzing how the proposed changes may affect seniors, it’s important to understand the current system in New Brunswick. The amount a senior pays per month for nursing home care is based on “net annual income”. When a senior applies for assistance for nursing home care, under the Contribution Regulation, NB Reg 2009-75 under the Nursing Homes Act, the Minister of Social Development looks first at the person’s net annual income.

“Net Annual Income” is defined under the Regulation as “the annual income of an applicant or recipient and his or her spouse or common-law partner as calculated under section 7 less the deductions as calculated under section 8.” The calculation of net annual income includes income from several sources including pensions, old age security, war veteran’s allowance, EI payments, family assistance, long-term disability, income from property, and so on. The deductions under the Regulation include income taxes, health insurance premiums, comfort and clothing allowance, etc.

After calculation of income under a formula attached to the Regulation, an applicant to a nursing home pays what the Minister decides the person can afford and then the government subsidizes additional monthly expenses the person cannot afford. This is defined as “income testing.” This is contrasted with a “means test”, which would include a senior’s family home, assets and income into account.

In its 2015-2016 budget, the New Brunswick Government announced it would still exempt a senior’s family home from the assessment of ability to pay, but would no longer exempt liquid financial assets such as savings or investments. This is a change from the current status, where the definition of net income does not include savings or investments, unless the senior is drawing income from these sources.

The recent budget removes a $113 cap on the daily amount seniors pay for nursing home care and moves towards the true cost of daily care to $233 per day. Finally, the budget may increase payments for seniors covered under Medavie Blue Cross.

Exactly how changes to the contributions regulation will affect seniors depends on how the legislation defines “liquid assets” to be considered in the contribution formula. One thing is certain: a person’s contributions for nursing home care will likely increase if that person has savings and investments. Additional costs will likely lead people considering nursing home care to look for ways to shelter funds from the equation.