"Cherish your visions and your dreams as they are the children of your soul, the blueprints of your ultimate achievements."
~ Napoleon Hill

Sunday, December 6, 2009

Practical Applications: Limitations on Powers of Attorney

Continuing our discussion of the issues involved in a person with a disability executing a Power of Attorney (POA) in favour of the parent instead of the parent having to go through the guardianship process, I offer a few more thoughts on the limitations of a POA.

First of all, as was mentioned in passing before, it must be remembered that if a person is capable of granting a legally valid POA, they are equally capable of revoking it. Which means that you, as the parent, need to be beware that down the road, your child would be allowed to legally change his mind and revoke the POA. As long as you recognize and are prepared for that possibility, then it's okay.

BUT. Big BUT here, before you think you are comfortable with that possibility, that either it wouldn't happen or you would be able to sit down and convince your child not to do this, consider this.

Our adult children who are relatively high functioning, who might be able to get away with signing a POA, are also the ones at the most risk of being taken advantage of others. Because they are higher functioning, they will be out in the more community more, involved in some form of work and leisure activities, and they could be a prime target for unscrupulous individuals who want to take advantage of them. Who could, perhaps, convince them that their parents are interfering with their Independence, are treating them like a child and not an adult, and that they are more than capable of handling their own life and business. And if that person happens to be of the opposite sex, you can throw a dose of hormones into the mix. Which raises the risk of your POA being revoked and your adult child "managing his affairs" with the help of a not quite so honest 'friend'.

Secondly, since a POA only covers financial matters, if a person were to go this route, they need to consider whether they child should sign some form of personal directive, as well. [See this discussion as to the distinction between what is authorized under a POA as opposed to a personal care directive. And you can find the Personal Directives Act here.] This would allow the parent to make decisions for their child around issues of medical and personal care. Although keep in mind, that the same standard of competency as would be required to execute a POA (whatever that might ultimately be) would also be required to execute a valid personal directive.

My last thought (for today anyway) on the possible limitations of a POA, involve the Registered Disability Savings Plan (RDSP). If one of the reasons you want a POA in order to open a RDSP for your adult son or daughter, remember this. Since this wouldn't be a guardianship situation, that means the RDSP will be opened in the name of the adult child. Which raises the question of whether a person holding a POA can just walk into a financial institution and open a RDSP on behalf of another. Perhaps they can.

Although I would hope that a financial institution might require a bit more than that. Like actually wanting to see (or at least speak with) the person with the disability. Which, if that were required, would be fine as long as the disabled person appeared high functioning enough to not cause the bank any concerns. But if they come across as too challenged, a savvy bank rep is likely going to question both their competency to open the RDSP and the validity of your POA.

As I said, I'm not sure how much of an issue this might actually be in practice. Particularly as I hear some anecdotes of how some financial institutions are handling (or not handling) the process of opening RDSPs. Still, I think it's something to keep in mind.

That being said, I would be remiss not to point out that the whole issue of the need for guardianship around RDSPs is being looked at by both the federal government and PLAN with the intent of to eventually come up with a solution that would allow parents to be plan-holders for their adult non-contractually-competent children. And that, in the interim, at least some banks are accepting the argument that if the person has assigned the parent to be his representative for dealing with the Canada Revenue Agency (a process easily done), that will qualify as "a guardian, tutor, or curator of the beneficiary, or an individual who is legally authorized to act for the beneficiary". Which, it appears that at least some Canada Revenue Agency representatives appear willing to accept this situation for the moment.

None of which the lawyerly part of me would recommend. That some banks are willing to fudge the rules at the moment and that the Canada Revenue Agency appears willing to turn a blind eye to that just doesn't inspire confidence in me. Even though I do believe that the Canada Revenue Agency is committed to the RDSP and making it work and are most likely acting in good faith in what they are doing, it still makes me nervous. But then again, I could be just a little anal. It's most likely the lawyer part of me.

~ With thanks to Audrey, who inspired much of this post with her comments ~


Audrey said...

BTW, what the heck is a "tutor, or curator of the beneficiary", as opposed to a guardian?

Thank you for your clear thinking and cautions -- your scenario of the circumstances under which an adult child might revoke POA previously given to a parent is exactly the sort of thing I fear my son could be susceptible to.

Also, if the Attorney dies, then the person would need to either act for himself, or appoint another attorney. I assume that if a guardian dies, the courts will appoint another guardian, since they have already recognized the person's non-competence. Either scenario could be scary, really.

MMC said...

Black's Law Dictionary defines a "curator" as "a temporary guardian or conservator appointed by the court to care for the property or person or both of an incompetent, spendthrift or a minor" and "tutor" appears to have a legal meaning similar to "guardian", as well. So I would say that they basically seem to be using these other terms to refer to various forms of court-ordered guardianship.

And, if push came to shove and the matter ever ended up in court, a court would likely use the meaning of these other words to help interpret what the Legislature meant when they used the phrase "an individual who is legally authorized to act for the beneficiary". Which, in my view, again moves the interpretation much closer toward some sort of formal judicial process/appointment than the mere fact that a person who is considered legally incompetent signed a form allowing another person to act as their agent in dealings with the CRA.

As to a sitatuion where a guardian dies, I wouldn't expect that the court would automatically appoint another guardian for the simple reason that chances are the court wouldn't even be aware of the guardian's death. That being said, if someone else stepped forward in that scenario to apply for guardianship, I would think that they should be able to rely on the previous guardianship order to prove the person was already found to legally incompetent at some point in the past.

But since it's possible for a person to be temporariily incompetent, depending on the evidence accepted by the court at the first guardianship hearing (was it accepted that this was a permanent condition?), it might be necessary for the new applicant (guardian) to provide some evidence that the person remains incompetent.

Nothing is ever too simple, is it?