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Friday, April 9, 2010

Can my parent still give to charity if he or she has lost capacity?

Whether or not a person with diminished capacity can continue to give to his or her charities or church of choice will depend on a couple of factors.

First of all, what is the extent of the loss of capacity? For many elderly people, loss of capacity may start with some memory loss or confusion and progress from there. Progression is faster in some people than in others.

Capacity matters because if a person is struggling with financial transactions because of memory loss or confusion, this makes them vulnerable to unscrupulous individuals and they may need help from a family member or trust company to handle their money.

This leads us to the second factor. What kind of legal arrangement is in place?

There are different levels of help available, as discussed in detail in an earlier blog post. If the arrangement that is put into place is a supported decision-making or co-decision-making arrangement, or representation agreement, the elderly person still has the ability to decide (with some help) how his or her money is to be spent. He or she can continue on the same pattern of giving as before the loss of capacity.

On the other hand, if there is a more advanced loss of capacity, the legal arrangement put into place could be an Enduring Power of Attorney. This generally means that the elderly person no longer has the legal right to make financial decisions.

Being an Attorney under an Enduring Power of Attorney automatically places restrictions on what an Attorney can do with the elderly person's money. Many people don't realize that the Attorney is not allowed to give away the elderly person's money, even to charities. The exception to the rule is that if the Enduring Power of Attorney specifically says that charitable giving can continue, then it is perfectly fine to keep up the previous pattern of charitable giving.

This is one of many, many reasons why estate-planning documents are never fill-in-the-blanks type of documents. They need to be responsive to individual situations. When you or your parent discuss Enduring Powers of Attorney with your lawyer, you should be asked whether there are situations (such as the desire to give to charities even after loss of capacity) that would require special clauses in your document.

If there is no Enduring Power of Attorney and the loss of capacity is severe or complete, the legal arrangement may be a trusteeship. Unless there is specific authority to make charitable donations, such donations usually have to stop. In provinces where trustees are required to file Trusteeship Plans with the court, they can build charitable donations into the Plan. In this way, they ask for the judge's consent for charitable giving to continue.

Summary: an elderly person can still give to charities after loss of mental capacity as long as the right legal documents are in place to authorize the person's helpers to make those donations.


  1. How do you fill out an executor of an estate without a will to the courts regarding how much is beneficiaries share when my brother died owing a huge amount of money to the creditors? There were no beneficiaries but I know any left over money (after debt) would go to his 10 and 11 year children who he has been estranged from for years. My brother owes 100,000 debt but after six months to date I have just been told (in secret) my brother is entitled to a 250,000 death benefit from his company. His company doesn't want me to know as I am not the executor. I was thinking there wasn't any money at all. Now I have to apply to be the executor of the estate without a will Anne Marie

    1. You have to apply to be the administrator. That's what it's called when there is no will. You are the one to apply if your brother did not have a spouse. His children are too young. If you have other siblings, they have to sign off in writing that you have their consent to go ahead.

      I don't know why you think there are no beneficiaries. Every province has intestacy law that says who the beneficiaries are in the absence of a will.

      I suggest you consult a lawyer because you're making a few assumptions and statements that suggest you're operating without quite enough information and guidance. It's not easy to do on your own.


  2. My mother recently passed away in a nursing home. She had no debt, no assets, no monthly financial obligations other than her rent to the nursing home which are all paid up at her death. She had enough pension income to pay all of these obligations but nothing left over(she didn't need anything else anyway). My brother is the executor of her will and he and I are the beneficiaries of a 10K life insurance policy. He wants to deposit the 10K in her savings account in the event that she might owe CRA two or three hundred bucks income tax next April. I say this will now become part of her estate and may be subject to probate, etc. Am I correct? Should he not just divide the 10K as per her policy? There is absolutely nothing else in her estate, she owes nothing and he thinks he is liable out of his own pocket as executor to pay this potential 2 or 3 hundred bucks. Is he creating a legal problem where there isn't one?

    1. He's creating all kinds of issues. He should not be putting the insurance money into the estate. He should not be handling the insurance money at all. If the insurance policy was payable to you and your brother then there should be cheques going directly to the two of you from the insurance company.

      He is not liable for her income tax, if there is any. But if he wants to assume responsibility for it, let him use his part of the insurance money and leave you out of it.



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