Mea Very Culpa ... Estate Planning

You know it's bad when ...

Even I can't believe that I have only posted once since February. And this after promising to post on Nova Scotia's new guardianship representation legislation for the past seven months.

Hence: Mea Very Culpa

When it comes to the promised post(s) about the new Adult Capacity and Decision-Making Act, in my defence, there's a fair bit to digest there and the fact that takes time is somewhat problematic, especially when you have actual client files demanding your attention. That being said, I am working on a representation application at the moment and once I have walked through the process myself, I will be in a much better position to pass on what you need to know.

I'm happy to say that I have done a fair bit of work on the new Nova Scotia  Legal Representation Kit, but that, too, will benefit from having actual practical experience with the new legislation to work from.

In the interim, to appease the masses and remind you that proper "estate planning" involves more than just a Will, I offer you this quick reference estate planning chart courtesy of the Legal Information Society of Nova Scotia (a highly-recommended resource lovingly known as LISNS).

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 ~

Practical Applications - The Standard of Competency Required for a Power of Attorney

Many have inquired why an individual with a disability couldn't simply sign a Power of Attorney (POA) appointing a parent (or whomever) as the person to handle some of or all of their affairs. As opposed to the messiness which is guardianship, the "taking away" of the individual's rights, to say nothing of the exorbitant cost involved.

Which is a very good question. Although, unfortunately, I think my answer will not only be lengthy (there are many points to consider) but also not what many would prefer to hear. At any rate, I have decided to break this issue down into a few posts.

In this first part, we will examine the standard of competency required to execute a valid POA.

The first thing to consider is that the donor (the person granting the POA) must be high functioning enough to be competent to make one.

When is it too late to give a power of attorney?

A - It is too late to give a power of attorney if you are not mentally competent. Competency is sometimes an issue where the person wishing to give a power of attorney is suffering from progressive dementia. In this situation, it may be necessary to get a medical opinion as to whether the person is competent.

Although written from the point of view of the more or less typical person, this excerpt still makes the point.

In my opinion, if a person is capable of executing a valid POA then they probably don't need (or at least wouldn't qualify for) guardianship in the first place. Meaning that, the way I see it, the law would take the view that if they are legally capable of executing a valid POA, they are legally competent to manage their own affairs.

But although I am fairly confident that the standard of competency required to execute a POA is the similar to the legal standard of competency to be able to enter into a contract, for example, I have come across a few lawyers who seem to think otherwise, that as long as the person has the ability to understand what they are signing, it is okay. Which would mean, if correct, that creating a "simplified" POA (simplified to the ability of understanding of the donor) would be effective.

READ MORE

Beating An [Almost] Dead Horse

You don't have to spend much time around here to realize that I consider guardianship to be an important option to be seriously considered by parents of adult children with disabilities.

Many, of course, feel differently on the subject. Many, in fact, feel strongly differently.

Which has led to many a conversation on the subject in which I heard expressed people's concerns and confusion. On everything from the philosophical to the eminently practical, including the query of how necessary guardianship is and whether it's even available in the case of a higher functioning individual and what, if any, other options to guardianship might be available.

I have often been asked, for example, whether a person with a disability could simply execute a Power of Attorney (POA) in favour of the parent instead of the parent having to go through the guardianship process. For the past few days I've been working on a blawg post which tried to cover all the issues inherent in that particular question. This evening I realized there are simply too many points to simply throw into one post.

So. Time for Plan B.

I am going to try to respond to some as many of the issues surrounding guardianship (including the relationship between guardianship and a POA) as I reasonably can in a multi-part series of posts over the next over little while.

So far, the issues I hope to cover include

1. What options, other than guardianship, are available in Nova Scotia to transfer or support the decision-making power of an adult with a disability
2. What rights, exactly, are "taken away" from the person with a disability if guardianship is granted and what are the practical effects of this
3. In the case of higher functioning adults, whether guardianship is
• a legally-available option; or
• even necessary
4. The many issues involved in deciding between a Power of Attorney as opposed to guardianship, which include
• the level of competency that is required in order to execute a valid POA
• potential issues surrounding the revocation of a POA
• which decision-making powers are transferred with a POA
• what other documents might be required to transfer other decision-making powers not covered by a POA
• using a POA to open a RDSP on behalf of another individual
5. What other provinces have done around the issue of guardianship for persons with disabilities
6. Realistically, what options currently are or might in the future be available for a parent seeking guardianship of their adult child other than the traditional option of hiring a lawyer

So there you have it. My plan, at least for the moment.

Unless, of course, you, dear reader, would care to throw some additional questions/issues on the subject into the mix. In which case, drop me a comment or an email and let me know over the next few days week.

In the meantime, stay tuned. And watch this space.