Alternatives to court-ordered guardianship and trusteeship for an aging parent

The legislation setting out policy and procedures for becoming a guardian and/or a trustee for aging parents is made provincially, not federally, so it differs across the country. One concept that is present in the legislation of most parts of Canada is that a full guardianship and trusteeship is a last resort. Other, less intrusive, means of helping an aging parent should be tried first, or at least considered.

The idea behind this is that taking away full control of a person's money and life is going overboard. It's like doing a major surgery when all you needed was a few stitches. The amount and type of help offered should be appropriate to the person's specific situation.

Now that we've established that looking at alternative solutions is a good idea, let's look more closely. What exactly are those alternative solutions?

Enduring (Continuing/Durable) Power of Attorney - this document allows a senior to choose the person who will make financial decisions once the senior loses the ability to do that for himself. It enables someone to do all of the things - and more - than someone could with a court appointment as trustee. It's cheaper and quicker, but best of all it allows the senior to exercise control over important decisions.

Health Care (Personal/Medical/Advance) Directive - this document allows the appointed person to make decisions about health care, medical procedures, place of residence and many more matters when the senior can no longer do that. Again, it allows the senior to choose who represents him.

Representation agreements/Supported decision making - under this kind of arrangement, the senior can choose someone to help him or her with decision-making to the extent that he or she wants help. Unlike powers of attorney or health directives, this arrangement enables the person to make decisions with the senior, rather than for the senior. This is available in one form or another in BC, Saskatchewan, Yukon and Alberta.

Informal trusteeship - this refers to an arrangement whereby a person gains legal authority over another person's pension or benefit income, to use those income sources on behalf of the person who owns them. He or she may collect the pensions, deposit them and use them to pay the owner's bills. Informal trusteeship is available for Old Age Security, Canada Pension Plan, Guaranteed Income Supplement, Spouse's Allowance, Survivor's Allowance and Veteran's Affairs benefits. I posted about informal trusteeship once before - click here to read it.

In-Home Support - (sometimes also called Aging in Place support) - this refers to any combination of medical services, housekeeping services, companionship and transportation that allows an aging person to continue living in his or her own house rather than moving to a seniors' residence. If the problems are more severe, medically speaking, the in-home care might have to be a full-time live-in caregiver.

Renovations to the senior's home - making appropriate renovations might make it possible for a senior to stay in his or her home longer, particularly when teamed with in-home support. A variation on this is to renovate the home of one of the senior's children and have the senior move in there.

Custodial bank account - this is a type of account offered at most banks that provides additional services, such as managing the investments, getting the annual tax return filed and paying bills.

Joint assets - those of you who read my blog often know that I'm not generally in favour of placing a senior's assets in joint names with anyone but his or her spouse, but from time to time it's the right solution. Placing assets in joint names gives both people a right of survivorship of the assets, so it should only be used when the senior has an opportunity to talk to a lawyer first.

What is a "custodial account"?

Banks and trust companies offer a type of bank account known as a custodial account, which more and more people are discovering to be really useful for older parents. The details of the accounts vary from bank to bank, but the general idea is that the bank or trust company manages the account on behalf of your parent.

All of the usual automated debits and credits can be run through the account. The difference is that with a custodial account, the bank or trust company will also take care of othre financial transactions, such as getting your parent's tax return prepared, investing any overage in funds, managing investments, paying bills and notifying your parent when a financial instrument matures and needs to be reinvested.

This can be a really useful solution for a parent who does not handle money well or doesn't want to handle finances. Sometimes this is because of the onset of mild memory loss due to aging, but not always. It can also be useful for someone who has perfect mental capabilities but doesn't want to take care of these matters himself or herself.

For example, a custodial account might be used when a person is widowed, and the spouse who passed away was the one who had always handled the family's finances. The surviving spouse sometimes just doesn't feel comfortable taking over that job. In fact, he or she might find it stressful or even overwhelming to try to learn how to handle the finances, when he or she is already adjusting to the loss of a spouse.

This arrangement is a good idea where a parent needs or wants a bit of help but isn't ready or willing to give power of attorney to anyone just yet. It lets the parent maintain privacy and independence.