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

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

(c) the person is an adult who is not the attorney or the spouse, common-law partner or child of the attorney.

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

(c) a person who is a member of a class of persons prescribed by regulation.

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

(c) act within the authority given under the enduring power of attorney.

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:

Why should you sign a Power of Attorney?

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.)

Theft by Enduring Power of Attorney for Financial Affairs

(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:

  1. 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/  >.
  2. 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.
  3. 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.
  4. 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.