The first of two major legislative changes to the Estates practice area, both slated for 2011, has come into effect at the time of the publication of this post. At some point later this year, we have been told to expect the radical overhaul embodied by the Wills, Estates, and Succession Act (WESA); but today, we will have comprehensive changes to the Power of Attorney Act, the Representation Agreement Act, and more. Why do I consider these part of the Estates practice area?
Generally speaking, Wills and Estates lawyers are the lawyers who deal with powers of attorney and representation agreements.
Before continuing, I must emphasize that all of the interpretation and discussion in this post is based directly and indirectly on Bill 29 as passed, which revises the laws I discuss here. I presume in my discussion here that the revised versions of these laws will be consistent with what is contained in Bill 29. If there are differences, then my discussion may need to be edited as I further review the revised laws and the literature dealing with them.
It is critical for lawyers practising in this area, and for our clients, to understand some of these changes. In the following paragraphs, I will give an overview of some of the paradigmatic shifts occurring in the new laws.
Before I continue, I would like to clarify that the term “attorney” as used here refers to someone to whom a power of attorney is granted, and it does not refer to a lawyer.
Power of Attorney abuse is, according to reports in national news magazines and local newspapers, rampant. The problem is not with a standard power of attorney, but with an enhanced form called an “enduring power of attorney.” The difference between the two is critical to an understanding of the legislative overhaul.
Power of attorney authorizes one person (the attorney) to sign or act on behalf of another person (the donor), with the understanding that the attorney can only do those things that the donor could do if he or she were present. Just as a wild card in Poker cannot represent a card that does not exist (there is no five-of-a-kind even with a wild card), an attorney cannot act for a person who lacks the capacity to act.
An enduring power of attorney contains an extra clause, indicating that the power granted in the power of attorney document shall continue notwithstanding any mental incapacity. In other words, it allows the attorney to continue to act even once the donor has lost capacity.
For example, an aging parent who is concerned that Alzheimer’s may set in may give an enduring power of attorney to their adult child, allowing the child to sign documents, pay bills, sell the house, and act on other financial matters once the disease has diminished the parent’s capacity to do these things for him- or herself.
Without much oversight or even record-keeping requirements in these matters, abuse was possible, and according to the news reports, it became increasingly common.
The new laws seek to curb abuse by creating elaborate requirements for the attorney who has been granted an enduring power of attorney. The revised Power of Attorney Act is significantly longer than the old one, and also has appended to it a set of regulations. The added parts and regulations create significant responsibilities for attorneys to whom are granted enduring powers of attorney. They must have accurate knowledge and maintain accurate records of the donors’ finances, and their actions are constrained to prevent fraud and abuse.
The distinction between standard powers of attorney and enduring powers of attorney is made much more explicit, and requires more than the addition of a clause or two. Essentially, the enduring power of attorney created pursuant to Parts 2 and 3 of the Power of Attorney Act is a new animal.
While it is true that existing powers of attorney contained the enduring clause and executed prior to September 1, 2011, are grandfathered and remain effective, the cautions and precautions embodied in the revised act should not be dismissed as extra hoops to jump through for those not lucky enough to have executed simpler documents earlier. From a wider perspective, the lucky ones could be said to be the ones who grant powers of attorney under the revised law, as they are far better protected. If you have granted an enduring power of attorney under the previous rules, it would be wise to consult your lawyer and obtain advice as to whether you should revoke the old document and replace it with the more protective new form of enduring power of attorney.
I mentioned that the new for of the enduring power of attorney is a new animal, but that’s not entirely true.
It is, in fact, very closely related to what was called a “section 7 Representation Agreement.”
The Representation Agreement Act differentiates between two types of representation agreements: those created pursuant to section 7, and those created pursuant to section 9.
Prior to Sept. 1, 2011, a slew of certificates of legal advice and other procedural confirmation was required for either s.7 or s.9 representation agreements. Under the revised Representation Agreement Act, those certificates will only be required for s.7 Representation Agreements. Previously, a s.7 representation agreement included rights to represent someone in routine financial matters, and a limited range of health matters. A s.9 representation agreement included everything in s.7 and added to it a broader range of health and medical authorizations, as well as a all of the powers in a power of attorney.
Both contained financial authorizations.
Under the revised Representation Agreement Act, a s.7 representation agreement will continue to include the right to manage routine financial matters, but will be further restricted in what health and medical authorizations it contains. Specifically, s.7 representation agreements will be restricted from granting authority to withhold lifesaving treatment, as before, but will also be restricted from granting authority “to physically restrain, move or manage the adult, or authorize another person to do these things” if the person objects.
S.9 representation agreements are referred to as “non-standard”, and there is no explicit reference to routine financial matters, as there is under s.7. S.9 does allow, however, for the power, if made explicit in the agreement, to “give or refuse consent to health care… [including] health care necessary to preserve life.” (s. 9(1)(b)(vii) and s.9(3)).
The certificate from the representative will only be required for representation agreements created under s.7. It is believed that s.9 agreements, which will no longer include the financial aspects of s.7, and will no longer include the power of attorney included in the old s.9, will not require the same onerous paperwork.
It appears to be there will be no single document that covers everything. Under the previous law, a s.9 representation agreement included full health care powers and a power of attorney. It also was accompanied by onerous paperwork and execution responsibilities.
The revised structure of the law is this:
To grant full health care authority, but only health care authority, a s.9 representation agreement will be the appropriate document, and it will be much simpler than the previous version.
To grant full financial affairs authority that will continue notwithstanding a loss of capacity by the donor, a new enduring power of attorney, complete with the new protections and responsibilities, will be the appropriate document.
These two documents separate health care and financial matters in a manner that makes practical sense: the s.9 representation agreement will be read by a health care practitioner; the enduring power of attorney will be read by a financial worker.
S.7 representation agreements seem to fall now into an intermediate category. While they don’t grant full financial power, they grant enough to manage the routine financial matters for an adult who is incapacitated, likely temporarily. While they don’t grant full health care authority, they grant enough to manage health care in situations that are below certain thresholds.
It is critical to discuss these legislative changes with your lawyer, and if you are a lawyer practising in this area, it is critical to gain familiarity with the new legislative architecture for adult guardianship, which makes a great deal of sense when you look at the statutes together.
Loading ...