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Saturday, July 24, 2010

What is informal trusteeship?

Informal trusteeship is a practical, low-cost way of putting an individual in charge of handling finances for a person who doesn't have the mental capacity to deal with his or her own finances. It's suitable for a person who doesn't have much in the way of assets, but does have income from a government pension or program.

For example, an elderly person who has very few assets but receives CPP and OAS benefits might need an informal trustee just to deal with those benefits. The elderly person doesn't have real estate or investments to be managed so doesn't really need a full court-appointed trustee, and would have trouble affording that. The elderly person just needs someone to help with receiving the government benefits and paying the bills with the benefits.

The federal government programs that allow for informal trusteeship are Canada Pension Plan (CPP), Old Age Security (OAS) and Department of Veteran's Affairs. You would have to contact each one separately. In Alberta, the provincial programs that allow for informal trusteeship are Assured Income for Severely Handicapped (AISH), Alberta Seniors Benefit, and Employment & Immigration. Other provinces allow informal trusteeship for their programs that are similar to these Alberta programs.

Putting an informal trusteeship into place is nothing like putting a court-appointed trusteeship into place. A court application is not required and there is no cost involved. The arrangement is put into place by contacting the government program in question and filling in their requested documents.

However, the responsibilities of the trustee put in charge are very much the same as they apply to the income stream that the trustee manages. The trustee is still managing money on behalf of another person and must act in the best interest of that person. For example, a person who is made an informal trustee may not use the money for his or her own purposes and may not make loans to him/herself with it.

It's important for anyone who is, or is planning to be, an informal trustee to understand the limitations of his or her authority. He or she can only deal with the benefit paid by the government department that has appointed him or her. An informal trustee CANNOT:
- sell the elderly person's home or car
- look after any investments
- look after any bank accounts except the one that receives the benefits
- handle any sums of money (e.g. inheritance, gift, lottery winnings, insurance pay-out) that are payable to the elderly person
- sell or give away the elderly person's personal and household belongings
- sign any contracts on behalf of the elderly person.

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