INCAPACITY, TRUSTEESHIP, GUARDIANSHIP, AND POWERS OF ATTORNEY Presentation to the Law Society of Nunavut September 18, 2017 Paul W. Taylor & Kathleen McDormand BORDEN LADNER GERVAIS LLP

AGENDA Powers of Attorney for Property Trusteeship Abuse by the Attorney or Trustee Guardianship

What is a Power of Attorney for Property? A Power of Attorney (“POA”) is a legal document granting the person appointed (the “Attorney”) the power to act on behalf of the person who granted the POA (the “donor”) within the terms of the POA document. This authority may be general in nature, or limited to specific acts. Purpose: A POA can permit an Attorney to conduct business on the donor’s behalf. Once a POA is effective the POA’s signature will be recognized by third parties as legally binding on behalf of the donor. In estate planning, a POA is generally used in contemplation of possible future loss of physical or mental capacity that may render the donor incapable of making decisions.

Governing Law in Nunavut Common Law At common law a POA terminates when the donor loses capacity The Powers of Attorney Act Under the Act, a donor may make an Enduring Power of Attorney, which survives the incapacity of the donor An Enduring Power of Attorney is effective immediately upon signing unless it is a “springing” POA and there is a triggering mechanism in the document. Note: it should not be assumed that a recognized POA in Nunavut will constitute sufficient authority for the attorney to deal with property located in other jurisdictions. It is therefore often worthwhile to obtain a POA in each jurisdiction where one has property (or to confirm the Nunavut POA will be recognized).

POA for Property Regular – can only be used while the donor is capable Enduring – can be used while the donor is capable and continues while donor is incapable Springing – only takes effect when donor becomes incapable Limited – can only be used for a specific purposes or time

Relationship between the Attorney and the Donor A fiduciary relationship exists between the Attorney and the donor. The Attorney has a duty to account to the donor and to anyone who may have a present or future interest in the donor’s estate in certain circumstances (e.g. if the donor is incapable). A POA may be revoked at any time by the donor so long as he/she has the mental capacity to revoke the POA. Death of the donor will automatically revoke the POA and the Attorney will cease having any authority. On death of the donor, the Executor or Administrator will have authority to act on behalf of the donor’s estate.

Duties of an Attorney Must stay within the scope of the authority delegated; Must exercise reasonable care and skill in the performance of acts done on behalf of the donor (if acting gratuitously, the attorney may be held to the standard of a typically prudent person managing his or her own affairs; if being paid the attorney may be held to the standard applicable to a professional property or money manager); Must not make secret profits; Must cease to exercise authority if the POA is revoked; Must not act contrary to the interests of the donor or in a conflict with those interests;

Duties of an Attorney Must account for dealings with the financial affairs of the donor when lawfully called upon to do so; Must not exercise the POA for personal benefit unless authorized to do so by the POA, or unless the attorney acts with the full knowledge and consent of the donor; Cannot make, change or revoke a Will on behalf of the donor; and Cannot assign or delegate his or her authority to another person, unless the instrument provides otherwise. Certain responsibilities cannot be delegated. NOTE: concerns regarding joint accounts and beneficiary designations on investments.

Test for Capacity: Decision, Time and Situation Specific Capacity is a legal determination. A person may be capable with respect to some decisions, at different times and under different circumstances Decision-specific: each decision has its own specific capacity test or factors to consider in its determination Time-specific: legal capacity can fluctuate over time Situation-specific: under different circumstances, an individual may have differing capacity

Capacity to Give/Revoke POA The Powers of Attorney Act sets out the requirements to grant a POA: Donor has attained the age of 19 The donor is able to understand: The nature and value of the donor’s property; The donor’s obligations to dependants; The sweeping powers of the Attorney; The Attorney’s duty to account; The donor’s ability to revoke the POA; The property may decline in value unless managed prudently by the Attorney; and The possibility that the Attorney may misuse the authority granted under the POA

Springing POA A springing POA may appoint one or more persons to determine whether the contingency springing the POA has been occurred. If the POA specifies a contingency such as physical or mental incapacity, the Attorney may seek a declaration by two medical professionals that the contingency springing the POA has occurred

Court Appointed Trustees of Property Under the Guardianship and Trusteeship Act, a person may apply to the Court to be a Trustee of Property for a person who is incapable of managing property. If no person applies or if the person proposed as the Trustee is not suitable to be appointed, the Court may appoint the Public Trustee.

Obligations and Duties of Trustees Trustees have similar duties as Attorneys for Property. They are set out in detail in the Guardianship and Trusteeship Act, and include: The fiduciary obligation to exercise his or her powers and perform his or her duties diligently, honestly, and in good faith; Involving the incapable person in decision-making to the extent possible; Keeping accounts and records; Providing an inventory of the assets of the incapable person to the Court within 6 months of being appointed; and Filing accounts with the Court every 2 years.

Standard of Care Under the Guardianship and Trusteeship Act: A Trustee who does not receive compensation for managing the estate of the represented person shall exercise the degree of care, diligence and skill that a person of ordinary prudence would exercise in the conduct of his or her own affairs.  A Trustee who receives compensation for managing the estate of a represented person shall exercise the degree of care, diligence and skill that a person in the business of managing the property of others is required to exercise. 

Abuse by the Attorney or Trustee Elder Abuse includes: 1. Financial abuse 2. Physical Abuse 3. Sexual Abuse 4. Emotional Abuse 5. Neglect *Abusers are usually close family members *Usually more than one form of abuse

Abuse by the Attorney or Trustee Likely that a high number of attorney-inflicted abuse cases go unmonitored or unnoticed Scenarios in which the procurement or use of POA or Trusteeship can go awry: donor grants a POA while incapable of doing so; POA is fraudulently-procured from a vulnerable or physically dependent donor by an individual with improper motives, as a result of exertion of undue influence, or in a situation of suspicious circumstances, for the sole purpose of abuse, exploitation, and personal gain; POA or Trusteeship is fraudulently or imprudently used, for the sole purpose of self- interest of the Attorney and/or used in a way that constitutes a breach of fiduciary duty; Attorney or Trustee makes unauthorized, questionable or even speculative investment decisions, or investments lacking in diversity; Attorney or Trustee inappropriately deals with jointly held assets or accounts; Attorney or Trustee misappropriates the donor’s assets; Under a Joint or Joint and Several POA, one of the Attorneys acts without knowledge, approval, or acquiescence of the other(s).

Options Where Concerned About Possible Abuse by Attorney or Trustee Police The police will investigate allegations of elder abuse where there is a relationship of trust/dependence between the victim and their abuser Public Trustee The Public Trustee helps to protect mentally incapable adults who are suffering, or at risk of suffering, serious harm, including serious harm of financial exploitation. Anyone may contact the Public Trustee to express concerns about a person who may be incapable and at serious risk The Public Trustee will conduct an investigation if no alternative solution can be found. This is not an immediate, emergency crisis response service

Options Where Concerned About Possible Abuse by Attorney or Trustee 3. Application to Court for Directions If there are concerns that a Trustee or a person exercising a POA is mismanaging an incapable person’s money, anyone can ask the Court to review the matter. The Court may give directions on any question arising in connection with the exercise of a POA or Trusteeship Order upon application from the Attorney, the Trustee, a dependant of the represented person, the Public Trustee, or any other person with leave of the Court The court may give such directions as it believes are for the benefit of the individual and her or his dependants, and as are consistent with the applicable statutes

Options Where Concerned About Possible Abuse by Attorney or Trustee 4. Application to Pass Accounts An application may be made to the Court to have part or all of the property accounts of the Attorney or Trustee passed. Such an application may be made by the Attorney, the donor, a dependant of the donor, the Public Trustee, or any other person to whom the Court grants leave. 5. Contacting Relevant Financial Institution Can attempt to contact the Financial Institution of the donor to alert them of a potential misuse of the POA or Trusteeship Order.

Guardianship The Court may order additional reports Where an individual is incapable about making decisions about his or her own health care, personal care, and well being, any interested person may apply to the Court under the Guardianship and Trustee Act to serve as Guardian The Application requires a report from a qualified medical practitioner discussing: the individual’s needs, the capacity of the individual, whether a guardianship would be of substantial benefit, and whether the individual expressed a preference as to the person to be appointed. The Court may order additional reports

Guardianship The proposed Guardian must show proof of friendly, personal contact during the 12 months prior to the application The application must be explained to the person (to the extent possible) and a copy must be provided to: The person, The nearest relative of the person who is not the applicant, The person in charge of the residence where the person lives, The Public Guardian, Any Trustee or, if none, the Public Trustee, and Any one else directed by the Court

Capacity The Court will make a Guardianship Order where it is satisfied that the applicant has met the applicable requirements and the person for whom the Order is made: Is an adult Is in need of a Guardian because he or she: Is not able, by him- or herself or with assistance, to understand information relevant to making a decision concerning his or her own health care, nutrition, shelter, clothing, hygiene or safety; or Is not able, by him- or herself or with assistance, to appreciate the reasonably foreseeable consequences of decision or lack of decision in respect of the above. Will substantially benefit from the Guardianship Order

Capacity The Court will not make the Order where there is an option that is less restrictive of the decision-making rights of the person that would provide comparable benefits

Who May Serve as a Guardian Any adult resident of Nunavut who consents to act who: Had friendly personal contact with the incapable person during the 12 months prior to the application; Will act in accordance with the Act on behalf of the incapable person; Is not in a position where his or her interests conflict with the incapable person’s (being a beneficiary of their estate is not sufficient for a conflict); Will be easily accessible to the incapable person; Is a suitable person and is able to act as guardian of the person The Public Guardian The Court will consider the closeness of the relationship of the applicant as well as any wishes of the incapable person. The Court may also appoint an alternate Guardian to serve where the primary Guardian is no longer able to do so

Review of Order The Guardianship Order is to be reviewed every 3-5 years (as set out in the Order).

Temporary Order The Court may appoint a temporary guardian where the person is in need of a guardian and there is a risk of physical or mental abuse, neglect, or deprivation of liberty or personal security (the Order may be made ex parte) A temporary order shall not last more than 3 months, but may be extended for another 3 months

Powers of Guardian To be set out in the Order, and may include (among other items): Where and with whom the person is to live; With whom the person is to spend time and the nature of social activities; Matters relating to work and training; Legal proceedings not involving the person’s estate (i.e. assets); Consent to health care; Withdrawal of or withholding life support; Day-to-day decisions such as diet and dress Decisions are to be made in the incapable person’s best interests and, to the extent possible, with their consultation

Paul W. Taylor, TEP Senior Associate ptaylor@blg Paul W. Taylor, TEP Senior Associate ptaylor@blg.com Kathleen McDormand, TEP Partner kmcdormand@blg.com