The newly expanded Power of Attorney Act (the “Act”) came into force on September 1, 2011. It brought several important changes to the law governing Enduring Powers of Attorney (“EPOA”), which are those that remain or become effective after the maker of the EPOA (known as the “Adult”) becomes mentally incompetent. Generally speaking, Powers of Attorney that were made prior to the legislative amendments will still be valid. However, it is worth considering whether making a new EPOA may be beneficial for you.
Prior to the new Act, EPOA’s provided considerable potential for financial abuse by unscrupulous attorneys. By tightening the rules for the granting and use of an EPOA the Act has given them new “teeth”. The potential for financial abuse is thus reduced. For example, the bar has been raised for the mental capacity required to make an EPOA. An Adult must now know and understand the nature and extent of the value of his or her property and financial affairs and be capable of performing the acts authorized by the EPOA for the attorney to perform.
Further statutory changes to the Act which reduce the potential for abuse include:
Section 18 which prohibits the appointment of paid caregivers as attorneys unless they are the child, parent or spouse of the Adult. This helps to protect vulnerable Adults from being taken advantage of by those who may be in a position of influence.
Section 19(1)(d) which creates a new requirement for the attorney to keep and produce financial records, which are defined in section 2 of the regulations as “a current list of assets and liabilities, invoices, bank statements, and other records as required to provide a full accounting of receipts and disbursements, income and capital”. This addresses the lack of record-keeping requirements under the previous legislation.
Section 19(3) which codifies the common law requirements of the attorney to:
- act honestly
- exercise the care, diligence and skill of a reasonably prudent person;
- act within the authority granted by the EPOA;
- act with the Adult’s best interests in mind, considering his or her values, wishes and directions;
- prioritize the Adult’s financial affairs over health and personal care;
- invest in accordance with the Trustee Act, unless the EPOA states otherwise;
- not to dispose of property that is left as a specific gift under the Adult’s Will;
- foster independence and encourage the Adult’s involvement in decision-making, to the extent reasonable;
- keep the Adult’s personal effects at his or her disposal, to the extent reasonable.
These provisions create a much more rigorous oversight of an attorney’s actions by the courts. The optional standard form for EPOA’s provided by the Province of BC contains several very useful optional provisions which can be used to customize the document and give more control over the powers granted to the Attorney. These include (but are not limited to) the power for the Attorney to:
- make gifts or loans from the Adult’s property in keeping with the Adult’s customary habits. The Act limits the total value of all gifts and loans in a year to $5000 or 10% of the Adult’s taxable income for the previous year, whichever is the lesser.
- transfer the Adult’s property to himself or herself;
- access the Adult’s safety deposit box(es);
- deal with pension-related health benefit matters (such as making changes to pensions or re-directing pension payments);
- disperse the Adult’s property or assets prior to his or her death (for example, if the Adult is no longer able to live in his or her home);
- compensate him or herself for acting on the Adult’s behalf. This provision can include a method of determining the rate of compensation.
If you have an existing Power of Attorney document, it is a good idea to review it to ensure that the information is still correct, it is still valid, and it fits your current needs.