estates | Purvis Culbert Law

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.

(why you should choose your Power of Attorney wisely)

Rise in Power of Attorney Theft

There has been a rise in the financial abuse of the elderly in recent years. Here are some recent articles from the Toronto Star and McLean’s. In mid-September, 2014, a Belleville, Ontario woman who held a power of attorney for property was charged for misappropriating $10,000 from her elderly parents. Here is an article from Niagra this week regarding this story.

Not only is misuse of a power of attorney a breach of the attorney’s duties to the donor, but it is illegal under section 331 of the Criminal Code of Canada., which states as follows:

Every one commits theft who, being entrusted, whether solely or jointly with another person, with a power of attorney for the sale, mortgage, pledge or other disposition of real or personal property, fraudulently sells, mortgages, pledges or otherwise disposes of the property or any part of it, or fraudulently converts the proceeds of a sale, mortgage, pledge or other disposition of the property, or any part of the proceeds, to a purpose other than that for which he was entrusted the power of attorney.

Regardless of these laws, police have noted that power of attorney theft is underreported. (see “Power of attorney theft underreported, police say”, CBC news , text available here . There are many reasons why this is likely the case:

For the most part, people holding a power of attorney are unsupervised.
A donnee of a power of attorney is likely acting when the donor is mentally incompetent. This creates an inherent potential for mismanagement and abuse (see Ann Soden, Advising the Older Client, Markham: LexisNexis Canada, 2005) at 112 & 113.
Power of attorney theft is complicated and difficult to explain to authorities (more difficult to prove than straightforward theft).

Protection from Misuse of a Power of Attorney

How can people protect themselves from misuse of a power of attorney for financial affairs? Here are some general suggestions:

The grantor of the attorney should pay close attention to the donnee’s personal characteristics. According to Ontario estate lawyers, Kimberly Whaley, Amy Cull and Ian Hull, the most important characteristics are honesty, integrity and accountability. (“Financial Abuse, Neglect and the Power of Attorney” (paper delivered at the Canadian Conference on Elder Law / World Study Group on Elder Law 2010, October 28, 2010),online: Whaley Estate Litigation <http://whaleyestatelitigation.com/blog/2010/10/financial-abuse-neglect-and-the-power-of-attorney/ >.
It is important to have conversations with your attorney while you are healthy about your financial wishes and the decisions you would normally make regarding your financial affairs.
The donor may wish to choose a power of attorney that has not previously filed for bankruptcy or is not currently an undischarged bankrupt. In some jurisdictions, an undischarged bankrupt is disqualified from acting as a power of attorney (Manitoba, Saskatchewan). If someone has shown struggles with financial management, this may be a red flag that the individual is more likely than others to run into difficulties while using a power of attorney.
It may be helpful for the donor of a power of attorney to express his/her wishes to other family members, who may act as a “check and balance” for the attorney.

Conclusions

A donee of a power of attorney has a duty to carry out your wishes according to your instructions. If you have not given instructions, then the donee must act reasonably and in your best interests. The donee has a duty of utmost good faith (fiduciary duty) to act in your benefit. Therefore, appointing an attorney is a decision not to be taken lightly. After all, a donee of a power of attorney becomes your “agent” and goes out into the world and makes decisions for you.

Should you have any specific questions regarding your situation or for legal advice, contact us.

Tag: estates

The 2015-16 NB Budget and seniors

Theft by Enduring Power of Attorney for Financial Affairs