The test applied to the conduct of the attorney depends on whether the grantor is capable or incapable.  As long as the grantor is capable, the attorney is an “agent” of the grantor and can act accordingly; if the grantor is incapable, the attorney is a fiduciary whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit.

 

An attorney acting under a continuing PoA when the grantor is incapable must focus on the best interests of the grantor.  The attorney is not entitled to make decisions based on what is good for the attorney, or to consider or act for the beneficiaries of the grantor when the grantor dies.  All of the attorney’s actions should be in the best interests of the grantor of the PoA.

Standard of care

 

The standard expected of any attorney (for instance, with respect to investments) depends on whether the attorney is being compensated or not.

 

An attorney who does not receive compensation for managing the property is held to the standard of the degree of care, diligence and skill that a person of ordinary prudence would exercise in the conduct of his or her own affairs.  An attorney who is compensated must exercise the degree of care, diligence and skill that a person in the business of managing the property of others is required to exercise.

 

 

Mandatory expenditures

 

The attorney shall make the following expenditures from the grantor’s property:

1. The expenditures that are reasonably necessary for the grantor’s support, education and care.
2. The expenditures that are reasonably necessary for the support, education and care of the grantor’s dependants.
3. The expenditures that are necessary to satisfy the grantor’s other legal obligations.

Guiding principles

 

In determining the amounts of expenditures, the attorney shall consider

• The value of the property, the accustomed standard of living of the incapable person and his or her dependants, and the nature of other legal obligations shall be taken into account.
• Expenditures under paragraph 2 may be made only if the property is and will remain sufficient to provide for expenditures under paragraph 1.
• Expenditures under paragraph 3 may be made only if the property is and will remain sufficient to provide for expenditures under paragraphs 1 and 2.

 

Optional expenditures

 

The attorney may make the following expenditures from the incapable person’s property:

1. Gifts or loans to the person’s friends and relatives.
2. Charitable gifts.

 

 

Guiding principles

 

The following rules apply to optional expenditures:

1. They may be made only if the property is and will remain sufficient to satisfy the requirements for mandatory expenditures.
2. Gifts or loans to the incapable person’s friends or relatives may be made only if there is reason to believe, based on intentions the person expressed before becoming incapable, that he or she would make them if capable.
3. Charitable gifts may be made only if,
4. the incapable person authorized the making of charitable gifts in a power of attorney executed before becoming incapable, or
5. there is evidence that the person made similar expenditures when capable.
6. If a power of attorney executed by the incapable person before becoming incapable contained instructions with respect to the making of gifts or loans to friends or relatives or the making of charitable gifts, the instructions shall be followed, subject to paragraphs 1, 5 and 6.
7. A gift or loan to a friend or relative or a charitable gift shall not be made if the incapable person expresses a wish to the contrary.
8. The total amount or value of charitable gifts shall not exceed the lesser of,
9. 20 percent of the income of the property in the year in which the gifts are made, and
10. the maximum amount or value of charitable gifts provided for in a power of attorney executed by the incapable person before becoming incapable

 

 

Personal comfort and well-being

 

The attorney should consider the grantor’s personal comfort or well-being and manage the grantor’s property in a manner consistent with decisions concerning the person’s personal care made by the grantor’s attorney for personal care.

 

Explanation, Participation and Consultation

 

The attorney should explain to the grantor the attorney’s powers and duties. The attorney should encourage the grantor to participate, to the best of the grantor’s, in the attorney’s decisions.

The attorney should foster regular personal contact between the grantor personally and supportive family members and friends of the grantor, and the attorney should consult from time to time with,

(a) supportive family members and friends of the grantor who are in regular personal contact with the grantor; and

(b) the persons from whom the grantor receives personal care.

 

The grantor’s Will

 

The attorney is obliged to review and consider the grantor’s will, and to this end the attorney is entitled to receive a copy of the grantor’s will.

The attorney should not dispose of any property that the attorney knows is subject to a specific testamentary gift in the grantor’s will.

The right to compensation

 

Unless the PoA excludes compensation, an attorney for property is generally entitled to compensation at the following rates:

• 3% of income and capital receipts
• 3% of income and capital disbursements
• 6% per year of assets under management.

Note, however, that an attorney who receives compensation is held to a higher standard of care than one who does not.

Keeping Accounts & Records

 

An attorney must keep detailed accounts and records of all transactions involving the property of the grantor.  This includes detailed records of all assets, all income, all expenses and dispositions of assets.  The attorney must maintain these records until relieved of the obligation – usually by Court order, or, by giving the records to the trustee of the estate of the grantor after the grantor’s death.

 

Many attorneys fail to keep proper records.  This exposes them to liability and creates unnecessary ill-will.  An attorney should avoid cash transactions, always get and retain receipts, and ensure that there is a well-documented and properly organized paper trail for the entire period that they were the attorney.

 

 

PASSING ACCOUNTS

 

Passing accounts is the process of formally submitting accounts to the Court for approval.  This is the most common method of airing and resolving disputes about the actions of an attorney.  Similarly, attorneys who think that they have been unfairly accused of improper conduct use a formal passing of accounts to secure Court approval of their accounts.

 

An attorney may voluntarily choose to pass their accounts, or, may be required to pass their accounts.  For instance, the trustee of the estate of a deceased grantor may require an attorney who acted under a PoA prior to the death to pass their accounts.

 

If, the attorney acting under a PoA prior to death is the same person as the executor under the will, the beneficiaries of the estate may, on leave of the Court, require the attorney (now executor) to pass their accounts for the period when the attorney acted under the PoA.   This is separate and distinct from the obligation of the executor to prepare, and potentially pass, the executor’s accounts.

 

A passing of accounts is a formal Court proceeding governed by the Rules of Civil Procedure.  Mandatory rules govern every aspect of these proceedings, including form and content of the accounts, the process for initiating a passing of accounts, the parties who must be served and how, the rights of the various parties to submit evidence and argument and contest the attorney’s accounts, and the right of various participants to reimbursement of some or all of their legal fees.