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Wednesday, May 20, 2020

If I appoint my sibling my POA, can the sibling's spouse claim anything of mine on divorce?

I've received an interesting question from a reader about the possibility of the spouse of his appointed POA getting access to assets on divorce from the appointed POA. I'm pretty sure I haven't discussed this before on this blog, so thanks to the reader for bringing up such an interesting angle. Here arethe question and my remarks:

"I am planning to assign Power of Attorney to my sibling, but my sibling is in the middle of separation/divorce. If my sibling becomes the POA for my property, can their spouse come and fight for my property and ask for a share of it since my sibling is the POA of it? Will making my sibling the POA give their spouse any chance in making connection with my property and in turn benefit the spouse in any way or shape or form?"

I'm really glad to see people asking questions before simply signing paperwork that creates legal relationships and transfers significant legal authority to other people. It's a much better idea than signing something first and not questioning it until a problem hits you in the face. Even if you would have been safe signing the paperwork, it is worthwhile to ask the questions to gain peace of mind.

You haven't specifically said that the POA you are contemplating is an enduring type of POA, but I'm going to answer your questions as if you had said so. This is because an enduring POA is by far the most common document that my clients make, and therefore is more likely the type you are probably talking about. Also, it is a more far-reaching document than a simple, business POA so it is, again, more likely the type you are interested in having prepared.

In your case, the short answer to all of your questions is "no".

When you appoint someone as your attorney under your POA document, you are granting them access to your assets. You are granting them a lot of power to deal with them. But this is not done in a legal vacuum; there are rules and laws that exist to govern that legal authority, even if the document itself doesn't spell them out. The nature of the power of attorney role is not one of ownership; it's one of access, trust, and agency. In other words, the person acting for you may only use your assets for YOUR purposes and for YOUR benefit.

Because your sibling will not become an owner of anything of  yours, his or her spouse does not become entitled to claim anything. You are not the one getting divorced so your assets are not eligible in any way to be split in someone else's divorce.

I'm assuming, of course, that your sibling will do things properly and legally. A big mistake that your sibling could make, and that could tangle up the question of whether their spouse can enter the picture, is putting his or her name on your assets. If that occurs, the whole picture may change.

There is, and should continue to be, a strict separation between your assets and those of your appointed attorney. Your sibling should never mix your assets with theirs. Ever. No joint accounts. No putting the sibling's name on your property of any kind. If the bank suggests that a joint account would be easier, your sibling should refuse. When there is a POA in place, there is no need whatsoever for the sibling's name to be put on any assets of yours because the POA document provides the access your sibling needs.

A power of attorney document has limits on what an appointed attorney may do. One of the rules built into the role is that a person acting under a POA may not benefit from the role in any way other than what is specifically allowed by the document. The vast majority of POA documents do not contemplate any benefit at all going to the attorney, including payment for their time and effort. Therefore, the sibling/attorney's spouse could not successfully argue (in my opinion) that there was some hidden financial benefit to the sibling/attorney under the document to which the spouse was entitled to divide on divorce.

Some suggestions for your document might be to state outright that your appointed attorney may not benefit from the role, and to name an alternate attorney in the event that your sibling cannot continue to act as your attorney for any reason.

As long as your appointed attorney (your sibling) is careful and makes no mistakes with the ownership of your assets, you should have no worries about your sibling's spouse being involved in any way.

Sunday, May 17, 2020

On the death of the title-holding spouse, the matrimonial home may not go to the surviving spouse

Recently I seem to be receiving a lot of questions about matrimonial homes and what happens to them after one spouse passes away. This issue is particularly important when only one half of the married (or common law) couple's name is on the property.

There are lots of reasons why only one name might be on the property. It could be because one half of the couple owned the property before the marriage and it was just never changed. It could be because one half of the couple needed creditor protection or couldn't qualify for a mortgage. In any event, there are plenty of couples in this situation. What if the one who owns the title is the one who passes away first? What happens to the title then? Of course couples want to plan ahead so that the home is retained by the surviving spouse if the home-owner passes away.

When the property is not held in joint names and the intention is for the surviving spouse to own it, I strongly recommend preparing a will that leaves the property to him or her. If the plan is different, say, to leave the home to the children of the home-owner's first marriage, then the will should state that intention. However, even with a will in place, the home might be subject to matrimonial rights that cannot be extinguished by a will. Whether that is the case will depend largely on where you live, as all provinces have different laws.

In the province where I practice (NL), a surviving spouse would automatically be entitled to own the matrimonial home upon the death of his/her spouse, but that right can be waived in writing. In ON, there is no such corresponding right, and the property is treated no differently from other assets in the estate. In MB, the spouse can live in the home for the rest of his/her life but never owns the title. In some provinces (BC, AB) the spouse can stay for a matter of months.

This is something you should discuss with a lawyer local to you. Find out what the law says in your province and find out what would work for you.

I also suggest that you pick up a copy of my book called The No-Nonsense, Real Life Guide to Estate Planning in Canada. It covers matrimonial property in some detail, including a detailed chart that describes the right of the surviving spouse in every province and territory. It covers a lot of other good stuff too, such as beneficiary designations, issues arising with particular situations such as blended families, disabled children, and estranged children, and lots of information about probate. You can find it on my website, on lulu or on Amazon.

Thursday, May 14, 2020

A smile to lighten the load a bit

Everyone is stressed out right now, so I thought I'd lighten the mood a bit. Watch this little video and I guarantee you will smile, if not laugh out loud. Enjoy.

Wednesday, May 13, 2020

What Canadian lawyers are charging their clients in 2020

Each year, Canadian Lawyer Magazine does a survey of its readers to find out what lawyers across the country are charging, on average, for certain work. I like to pass along some of the results of the survey (those that are relevant to my practice areas) to the readers of this blog. The 2020 survey results are in, and here are some excerpts from it:

The cost of a civil trial (which includes preparation for the trial and matters leading up to it), where the trial is 7 days long is, on average, $34,999 in western Canada, $32,728 in eastern Canada, and $55,000 in Ontario. That leads us to a national average of $48,431 for a 7-day trial. That is for one lawyer, so presumably each party to the lawsuit is paying more or less the same amount for his or her own counsel.

By way of contrast, the cost for a mediation of up to 3 days is, on average, $13,391. Normally, the cost of mediation is shared by all parties to the mediation so the cost per person would depend on how many parties there are. So, when I remark on this blog that mediation is cheaper than litigation, there's your proof.

The cost of having having a will prepared was included in the survey. The cost of having a simple will done for a single person is $493 in western Canada, $717 in eastern Canada, and $506 in Ontario. The cost of having a complex will done in western Canada is $963 for an individual and $1156 for a couple. In eastern Canada, the cost of a complex will is $1228 for a single person and $1038 for a couple (that seems odd). The cost of a complex will in Ontario is $996 for a single person and $1211 for a couple. This does not include any other documents such as Enduring Powers of Attorney or Healthcare Directives.

Legal fees to obtain probate are, on average, $3225 in western Canada, $2513 in eastern Canada, and $2881 in Ontario. That of course would not include any contested matters.

There are differences, even within geographic areas, between various firms depending on the number of lawyers in the firm. Small firms (1 to 4 lawyers) are in almost every category less expensive than lawyers in larger firms. Sometimes the difference is small but in other cases it is quite a bit bigger. My own analysis of the numbers indicates that the differences are small when there is a set task such as will preparation, incorporation of a company, etc, but is larger when litigation is involved.

The final set of statistics that I thought would be of interest to readers is the average hourly rate being charged by lawyers in Canada. It varies depending on the amount of experience each lawyer has gained, as well as geographical area. Here are the stats from the survey:

Average hourly rate for lawyer with 1 year or less experience:
National: $332
West: $215
East: $374
Ontario: $446

Average hourly rate for lawyer with 2 to 5 years experience:
National: $427
West: $281
East: $457
Ontario: $573

Average hourly rate for lawyer with 6 to 10 years experience:
National: $580
West: $362
East: $647
Ontario: $789

Average hourly rate for lawyer with 11 to 20 years experience:
National: $681
West: $455
East: $641
Ontario: $909

Average hourly rate for lawyer with 20+ years of experience:
National: $1616
West: $475
East: $648
Ontario: $2939 (I know, right?)

This survey is published so that we lawyers know what our competitors are charging and so that we can keep an eye on pricing trends. For example, the cost of trials has gone down in the last few years. I'm publishing these results here even though many of my readers are not lawyers because I hope that having this information will help inform people who are shopping for legal services.

What I personally take from this survey is that I am charging about half of the average hourly rate for my area and level of experience, and less than a quarter of the national average for my experience level. However, I believe that no matter what this survey says, each business owner - whether lawyer or not - is sensitive to the market in his or her own town or city and will adjust accordingly. I don't plan to raise my hourly rate in the near future.

Thursday, May 7, 2020

Don't assume you know the answer to a legal dilemma

Often, my office receives calls from members of the public who ask the price of Enduring Powers of Attorney, wills, guardianship or other services. We certainly welcome those calls, but in most cases the callers don't reveal why they want the item they are requesting. My staff, as the recipients of the calls, have to assume that the customers know what they need.

Yesterday an assistant in my office took a call from a potential customer who had asked the price of getting an Enduring Power of Attorney prepared for a family member. Because she went on to ask about the logistics of having the document signed in extremely challenging circumstances, the call was put through to me. I asked the caller why she wanted the Enduring Power of Attorney for her family member and she said she had been told by personnel at his care facility that it was needed. I then asked her to describe for me why it was needed - what assets the family member owns, what financial arrangements needed to be made, etc.

As it turns out, the family member has nothing but a CPP pension that needs to be received and then used to pay bills.

An Enduring Power of Attorney is not needed in this case. All the caller needed was to fill in forms for CPP and arrange for her to be registered with CPP as her family member's limited trustee. If we had simply quoted her a price, she would have hired us or some other lawyer to prepare an Enduring Power of Attorney and attempt to jump a dozen or more extraordinary hurdles to get it signed. And that is assuming we were able to establish mental capacity for a person whose illness renders him without speech and who can only sign with an X.

In any event, I found the form online while speaking with the caller and put it in the mail to her. It cost her nothing. It was a simple solution already available.

This is why I have many times on this blog encouraged readers to talk to their lawyers about what they are trying to accomplish - the goals, needs, and challenges. Rather than go in assuming you know the answer to a legal question and assuming you know the available solutions already, be prepared to hear other possible ways of dealing with things. Tell the whole story. It just might save you a lot of money and a lot of frustration.

There is another take-away for readers here too. That is, don't accept legal advice from people who are not lawyers.

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