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Wednesday, December 29, 2010

Duties of court-appointed trustee for an incapacitated adult

If you're considering becoming a trustee for an aging parent who is losing capacity or for another adult who is mentally challenged, you maybe wondering what you're getting into. In this post, I'm referring to an adult who has not prepared a Power of Attorney but has lost capacity and must have someone appointed by the court to look after their affairs.

A trustee is put in charge of money or property, or both. You are not in charge of personal decisions such health, medical or living arrangements unless you are appointed as a guardian. These roles are known by different names across the country (wouldn't it be convenient if we all called things the same?), but every province and territory has a process for appointing someone for an incapacitated adult. In some provinces, trusteeship and guardianship are rolled into one.

The role of trustee is often defined by what you can't do, but what is it that you are supposed to do? Here are the basics:

1.  You must act on behalf of the incapacitated adult at all times, even if it means going against your own interests. Be realistic - can you do that? If it's in the adult's best interest to sell the lake cottage but you've always had your heart set on inheriting it, can you still do what's best for them?

2. You must become familiar with all of the adult's assets and organize them in a way that maximizes and protects them. For example, would all of that cash lying around in a bank account be better off in an investment account? Should that vacant house be rented out, sold, renovated? Are assets properly insured? Are credit cards and debit cards secure?

3.  You must maximize sources of income, such as public and private pensions, investments, interest, GST rebates, and rental income.

4.  You must pay the adult's bills. This includes daily living expenses such as accommodation, transportation, medicine, food, clothing, insurance, cable, telephone, heat etc. It also includes occasional expenses such as furniture, vacations, home renovations, in-home care, or medical supplies such as a wheelchair. While you want to ensure that an adult is living within his or her means, you also want to make sure that an adult who can afford a nicer lifestyle has that lifestyle. Don't cheap out on the adult's accommodation or care in order to save more for an inheritance.

5.  You must protect the adult from financial predators, whether those are door-to-door scammers or family members constantly asking for money.

6.  You must ask for financial advice from a professional planner or advisor unless you are trained in that area yourself, as you are responsible for losses due to recklessness or foolishness.

7.  You must keep detailed, accurate records of all financial transactions.

8.  You must apply to the court for a review of your trusteeship or passing of accounts if the court order appointing you directs you to do that.

9.  You must see that the adult's income tax returns are completed each year.

10.  You must work with the adult to determine how much money he or she needs for discretionary spending, how much he or she can safely handle, and the best way for him or her to do that. For example, should he or she have a debit card? A credit card? Cash on a weekly basis?

11.  You must work with anyone appointed as a guardian to ensure that arrangements being made by the guardian are within the financial means of the incapacitated adult.

12.  If the adult passes away, you must stop acting on behalf of the adult. You must provide your financial records to the executor. You must pass possession of all assets to the executor.

13.  You must remember that it's not your money!

2 comments:

  1. Hello,
    I live in BC. My grandmother is now incapacitated and does not have a power of attorney. Her will appoints my aunt Executrix and Trustee. Does this only come into effect after she passes away? I read that it applies if the grantor is incapacitated. Is this true? If not, how do we get the courts to appoint a power of attorney in the Province of BC? Thank you.
    Jill

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    Replies
    1. Any provisions in a will only come into effect after a person has died, so it won't help you in this case. BC has a number of options to address incapacity, and they address the spectrum from being fully incapacitated to being partly unable to make decisions. I think a good idea for you is to read a blog by BC lawyer Stan Rule, who has one of the best blogs I've seen. He talks about Power of Attorney, as well as Representation Agreements and other relevant documents. The link to his blog is here: http://rulelaw.blogspot.ca. If you decide to hire a lawyer, he might be a good choice for you.

      Lynne

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