Basics of BC committeeship

In this blog post, Rule of Law (by lawyer Stan Rule), explores the concepts and logistics behind committeeship - which in other provinces is called adult guardianship. Anyone in BC who is considering taking steps to be appointed as a committee for an aging parent should check out the article, by clicking here.

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!

When is a doctor's opinion on capacity required?

Lawyers who work in Wills and Estates are trained to test their clients for testamentary capacity, or the ability to understand and make a will. But we're not medical doctors. Sometimes the legal and the medical overlap and we need input from doctors about our clients. In this post I'll briefly touch on some of the situations in which lawyers will need or want a doctor's opinion of a client's mental capacity.

1.  At the time a will is signed:

Individuals must have the ability to understand the nature and effect of a will. Lawyers are careful to document their opinion of this ability at the time a will is signed. Mental capacity can be impaired by dementia, medications or illness, so those will be considered if they are present.

Lawyers don't request a doctor's opinion every time a will is signed, nor should they. However, there are times when the lawyer suspects ahead of time that the will of an elderly person might be opposed by someone in the family, and should strategically strengthen the client's case by getting a doctor's letter. Wills are often attacked on the basis that the testator didn't know what he or she was doing and the parties then have to try to reconstruct whether the testator had capacity at the time or not.

If, after the testator's death, the will is backed up by a memo from the lawyer and a letter from the doctor, both made on the day the will was signed and both saying that the testator did know what he or she was doing, the will is in a much stronger position.

This is usually easy to arrange because the client simply makes an appointment with his or her family doctor.

I don't know of any set form for the doctor to use. I've always requested a letter that the doctor can word any way he or she wants to, as long as it addresses the issue of capacity on a certain day. Most doctors have not charged my clients for this service, though I imagine that practice varies quite a bit.

2.  At the time a springing Power of Attorney or Health Care Directive is activated:

A Continuing (Enduring) Power of Attorney and a Health Care Directive are usually made while the donor is mentally healthy and set aside until they are needed, in other words when the donor loses mental capacity. The document will state who has to sign a declaration to activate it. The usual provision is that one doctor or two doctors must sign declarations, which must then be attched to the document itself. Once those declarations are attached, the person named under the Power of Attorney or Health Care Directive can start working on behalf of the donor.

The doctor has to examine the donor to make this declaration, which can be a problem if the donor isn't co-operative. And let's face it, not everyone is happy about having their decision-making rights taken away from them at any given point.

The declarations are usually very brief forms - not more than a paragraph - that simply contain a statement that the donor is not able to deal with his or her finances or medical decisions.

3.  At the time someone is applying to be the guardian and/or trustee for an adult:

An adult is presumed to be able to look after his or her own affairs unless it's proven otherwise. Therefore, when someone is applying to be the guardian and/or trustee for an adult, that person has to bring the court evidence that the adult's capacity is diminished. The evidence is given in the form of a medical doctor's assessment. In some jurisdictions, the assessment can be done by others as well, such as registered nurses and occupational therapists.

Again, there can be a problem with co-operation. Unlike the person who voluntarily signed a Power of Attorney and knew that one day the person might have to take over, a person who will have a guardian or trustee hasn't signed anything. They haven't usually agreed to anything.

The forms needed for an assessment for guardianship or trusteeship are set out in the legislation that applies in each province and territory. In many cases, it's a very lengthy, detailed document. Doctors and other caregivers will usually charge a fee for providing the assessment.

4.  When the court orders a capacity assessment:

Sometimes there is litigation in which the person's capacity is essential to the court's decision. For example, I once had a client in his mid 90s who was hospitalized for a broken bone. A social worker became concerned about releasing the fellow because he lived on his own. The hospital refused to release him until a guardian was appointed and this made it to court. We took the position that because he is as competent as the next person, he should be free to leave the hospital and live alone. The court wanted the opinion of a doctor. We won, but in the meantime my client had to see a geriatric specialist for a full capacity assessment (which he passed with flying colours). The assessment cost about $2,600 at the time, and was comprised of a full report with data and analysis.

What does it mean if a Guardian or Trustee for a parent is in a conflict of interest?

The laws governing guardianship and trusteeship of aging parents are provincially made, and vary across the country. Many of them state that a person who wants to be a guardian and/or trustee for another person must not be in a position of conflict with that person. Even where this is not specifically stated in the law, conflict situations can create legal issues and should be avoided.

Being in a position of conflict means that there is something about you or your relationship to the assisted person that could mean that now or at some time in the future, you might have to choose between your duty to the assisted person and your own best interests.

A person in a conflict position is not a good choice as guardian or trustee because it is only human nature to look out for your own interests, whereas the assisted adult needs and deserves someone who will wholeheartedly look out for him or her.

It's important to understand that being in a conflict of interest doesn't necessarily mean that there is a problem existing right now. A person could have no issues at all with the assisted adult right now, but still be in a conflict position if there is potential for conflict in the future. For example: A man owns a farm which he intends to leave equally to all three of his children when he dies. The man has a son who wants to own the farm himself, and who has asked his father a number of times to sell the farm to him. Even though the father and son may get along well otherwise, the son could be in a conflict position in the future if he is made his father's trustee and has to decide whether or not to sell the farm. The conflict arises because the son will have to decide between what his father wants and what he wants.

Some relationships, by their very nature, may put the person in a conflict of interest. For example, a person whose livelihood is earned by providing personal care for a fee should probably not be the one who decides whether the assisted adult should have that kind of personal care. A business partner of the assisted adult may also be in a conflict of interest because if he or she has to choose what is best for the assisted adult, this may not be what is good for the business.

Some relationships are specifically mentioned in the law as NOT automatically giving rise to a conflict of interest. For example, simply being a family member of the assisted adult does not automatically mean that you are in a conflict position. It is possible, of course, for a family member to be in a conflict position but the family relationship alone is not enough to cause it.  For example, a woman might have lent her son $50,000 expecting him to pay it back when he is able to. Just the fact that he is her son doesn't put him in a conflict position should he become trustee. However, the fact that he owes her a significant amount of money is a potential conflict. His best interest (not repaying the money) would be in direct conflict with her best interest (repaying the money).

If your family is thinking about who would be a good guardian or trustee for your parent, you should think carefully about how your life and that of your siblings interconnects with your parent's life to determine whether someone's personal interests could create a conflict.

(This post is excerpted from my book, Protect Your Elderly Parents)

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.

Will I have to manage my parents' finances?

Ted Rechtshaffen discusses steps you can take now to ease the transition into looking after your aging parent's finances, particularly when the one who handled the finances has passed away. Click here to read this article in today's Globe and Mail.

Protect your aging parents from financial fraud

I suggest that anyone who is dealing with aging parents who are beginning to lose their capacity to deal with finances should read this article in Forbes.com. It's very practical and down-to-earth (always my favourite kind of article) and doesn't pull any punches about what's really going on with elderly folks and those who take advantage of them.

(Photo attached is also from that story in Forbes.com).

Answering your question - adult guardianship forms

I've been asked a couple of times now where people can find the forms they need to apply for guardianship or trusteeship of their aging parents. This is the subject of my book, Protect Your Elderly Parents, which contains a CD with all of the forms needed for every province and territory in Canada. It also includes sample forms for record-keeping and passing of trustee's accounts, as well as chapters on guardian's duties, trustee's duties, limitations on those roles, and how those legal appointments come to an end. Updates for Alberta are underway and will be available to those who buy the book at no extra charge. Click here to see more about the book. The feedback I've received is that it's very easy to use.

Another source you can look at is the webpage for the Office of the Public Trustee and/or Public Guardian for your province or territory.

Who should be guardian for your elderly relative?

Guardians for aging adults who need help with personal decisions are usually chosen from among that person's spouse, children, siblings, parents or close friends. The best choice for any individual will depend on who is available, who is suitable and who is willing to take on the job.

Guardianship is an interactive role. It's not a case of signing papers occasionally and never seeing the aging person. When considering candidates for guardianship, consider geographical distance. The guardian can't make day-to-day decisions in the aging person's best interests if the aging person has no opportunity to voice concerns or express preferences. Geographical distance can be the deciding factor if, for example, there are two chidlren who are both willing to be the guardian of their parent, while one of the children lives in the same town as the parent and the other child lives hundreds of kilometres away. The ultimate deciding factor is what's good for the parent, not what his or her children want.

Some questions other than geographical distance to consider when deciding who would be a good choice as guardian for an aging relative are:

• Is the guardian frequently unavailable because he or she is away on business or pleasure trips?


• Is the guardian already overwhelmed with other duties such as parenting or working?


• Is the guardian accessible to the aging relative in emergencies or times of stress?


• Is the guardian trustworthy?


• Do the aging relative and the guardian already have a compatible relationship?


• Is the guardian able to make important decisions without being unreasonably swayed by other family members?


• Has the aging relative ever expressed a preference as to who the guardian should be?

These notes were excerpted from my book called "Protect Your Elderly Parents".

Does your aging parent need a trustee?

About a month ago, I posted about how to tell if your ageing parent needs a guardian and promised to follow up with a post about how to tell if your parent needs a trustee. So here I am, keeping the promise.

When I talk about trusteeship, I am referring to a court-ordered person who will be legally responsible for looking after the parent's finances and property. Trusteeship does not give anyone legal rights to make personal decisions such as health care.

If your parent has a valid Enduring Power of Attorney (also called Continuing Power of Attorney), then it is unlikely that a court-ordered trusteeship will be needed. An attorney under Power of Attorney has similar duties and responsibilities, so you could also use the following list as a way of deciding whether an Enduring Power of Attorney needs to be invoked.

Some indications that your ageing parent might need a trustee to make financial decisions are that he or she:

- has been taken advantage of financially by scam artists, strangers or family members

- answers the door to strangers and is susceptible to being taken advantage of by them financially

- is making irrational changes to his or her will

- is transferring assets to friends or family members for no apparent reason, such as selling property to them for less than market value or placing bank accounts in joint names

- forgets to pay bills, resulting in essential services such as phone, heat or water being disconnected

- forget that he or she has already paid bills and pays them repeatedly

- misplaces money, pension cheques, bills or important paperwork

- cannot manage small financial transactions such as store purchases or restaurant meals that he or she used to be able to manage

- forgets to complete tax returns or is unable to do them on his or her own

- does not know how to live within his or her means

- makes irrational, unnecessary purchases such as buying cans of dog food when he or she does not own a dog

- makes large cash withdrawals for which there is no corresponding purchase or bill payment and cannot recall where he or she spent the money

- has made a recent friend - usually of the opposite sex - who seems to exert a lot of influence on him or her

This list is condensed from a chapter of my book called "Protect Your Elderly Parents". If you recognize your elderly parent or other relative in this list, make sure that you work with the parent's doctor to determine whether capacity is beginning to diminish. If you are not a doctor, it is difficult to know what these behaviours mean or why they are occurring.

Unfortunately, some people try to control the decisions made by elderly parents when those parents make decisions that the adult children don't like. Adults don't need the approval of their family members to spend their money or otherwise use their assets, and neither do your ageing parents. Plenty of us have friends who choose to use their money for gambling, risky investments or expensive leisure equipment and we don't interfere. It doesn't mean those people have lost mental capacity. Everyone has the right to spend his or her own money in ways that may look odd to other people. The same attitude should be extended to your ageing parents. It's only when the parent's ability to make decisions is affected by memory loss, disorientation or the influence of other people that their decisions should be called into question.

Look out for us! Solutions Magazine, Spring 2009 Issue

Lynne Butler has a four page spread in the Spring 2009 issue of Solutions Magazine!

Entitled, "Planning ahead makes all the difference", Lynne outlines the powers of a guardian/trustee and talks about the various options you have, if a loved one can no longer take care of themselves in a legal capacity.

For more on this article, visit Solutions Magazine or your local bookstore!