Fiduciary Duties of Attorneys Under Powers of Attorney
With the Canadian population reaching ages in excess of their predecessors, we are seeing an increase in the numbers of powers of attorney as well as the activation of such powers of attorney.
There are typically two forms of powers of attorney: (1) power of attorney for management of property, which gives the grantee the power to deal with the financial matters of the person granting the power of attorney; and (2) power of attorney for personal care, which gives the grantee the power to deal with the personal care matters of the person granting the power of attorney.
You may have been named as an attorney under a power of attorney. What you may not have known is that an attorney has a very high standard of care in exercising powers known as fiduciary duties. A fiduciary is like a trustee, and has a high duty to act primarily for the benefit of the grantor of the power of attorney. Diligence, scrupulous good faith, honesty and integrity are mandatory. A breach of fiduciary duty would make the attorney liable to the grantor for any damage caused by such breach. There are typically prohibitions against the investment of funds in investments that are speculative or otherwise imprudent.
Intensive record keeping and a detailed checklist are imperative if you are going to act as an attorney under power of attorney. Also, note the following:
1. You must be at least 18 years of age.
2. Ensure that the grantor had the capacity to sign the power of attorney.
3. If the power comes into effect only upon incapacity, ensure that the grantor lacks the capacity to make his or her own decisions.
4. Review the power of attorney very carefully to determine:
(a) whether it is a continuing power of attorney;
(b) whether the power is not limited in duration;
(c) when the power comes into effect;
(d) whether the power is exercised solely or with other(s).
5. Know that you cannot change the Will and Last Testament of the grantor.
6. Know that you should examine the Will and Last Testament of the grantor to ensure that you do not do anything that contravenes the wishes expressed in the will.
7. Make sure that you exercise your fiduciary duties diligently, honestly, with integrity, in good faith, and in the best interests of the grantor, while also taking into account the grantor’s well-being and personal care.
The above list is far from exhaustive. Be especially aware that certain forms of estate planning may result in a breach of fiduciary duties.
If you are asked to be named as an attorney under power of attorney, you ought to consider such a request cautiously and seriously. If you are going to exercise the powers of an attorney, you should ensure that you consult with a lawyer before so doing.
All these publications are general discussions, and you should not rely on them as legal advice. If you require legal advice, we would be pleased to discuss with you the issues raised by these publications in the context of your particular circumstances.