The events of life can be precipitous. In 2007 at 59 years of age I had sudden open heart surgery which sidelined me from my law practice for three months. Ten years later at Daytona Beach Shores I suffered a serious fall from my bicycle (my heart stopped) which kept me at Halifax hospital for almost a month. My next casualty may not be so lucky.
While I am a member in good standing of the Law Society of Upper Canada (what is now called the Law Society of Ontario) I am not entitled to practice law because I no longer pay E&O insurance. What follows is idle rumination only, not legal advice.
Commonly one addresses the elderly when touching upon the subject of aging. By contrast my objective herein is to enlarge upon the prudent steps to be taken by young people who must inevitably carry the torch for their expiring companions (who are more often than not their parents) in this relay called living.
The metaphor of relay is appropriate for the simple reason (as my father was wont to remark), “Money doesn’t disappear; it just changes hands.” In short it is inevitable whether by the natural effuxion of time or by the affect of sickness, incapacity or death that younger people must assume the reins. There may be an incremental transition from one elderly person to another before the younger generation steps in but the amendment is inescapable. There are some useful preparations to be undertaken by youth in this regard.
There are three levels of transition of affairs of the elderly; viz., preferred abandonment, incapacity and death. Death is the most critical (in the sense of demonstrable) change. For purposes of this limited instruction I assume the deceased has a last will & testament. In that case, the executor has carriage of the property of the deceased (including the disposition of the remains – which means any prearranged burial details while normally respected are technically not binding on an executor because “there is no property in a corpse” and an executor has dominion over and management of all assets of the deceased by virtue of the testamentary trust (aka, last will and testament). To be blunt, the executor is the boss and his or her decisions are paramount as long as they are otherwise in accordance with the will.
If the elderly person hasn’t the courtesy to die then the transition of management of his or her affairs can become an issue for the reasons mentioned (that is, by choice or by necessity). Note that a Power of Attorney (POA) does not necessarily take effect upon the donor becoming incompetent. In business for example a POA is often employed as a convenience while the main party is traveling. The donor may simply tire of managing his or her own affairs.
The governance of the elderly aside from being promoted by desire or incapacity is split into two realms; namely, personal care (such as health care or accommodation) and property management (such as banking, investment management or bill payments ). The management of the two can be combined. Most often it is the oldest chid who lives nearby who assumes carriage of one or both of those needs. The applicable document in these instances is called a power of attorney. The word attorney does not mean lawyer (who is properly called an attorney-at-law). Rather attorney merely means agent; that is, someone empowered to act on behalf of another. The agent can be for medical or financial purposes or both. In this context the agent is also a trustee; that is, a person acting in what is commonly called a fiduciary capacity for the benefit of the donor or the agency and trust. The term trustee also applies to an estate administrator who is often called an executor and trustee. The trustee is a representative acting for the benefit of another. Note however that if the donor of a POA has for example a history of giving money to children or grandchildren, the attorney can probably continue to do so on behalf of the donor without violating the strict rule of trusteeship which usually means only doing only what is for the direct benefit of the donor. It is the attorney’s job to familiarize himself or herself with the business of the donor on a broad level.
I don’t recommend sharing the contents of a will with anyone other than to advise the name of the lawyer where the will (and POA) are kept. A will can be changed at any time. If a person was advised in advance that he or she is a beneficiary, and if the will is then changed, it can provoke serious challenges to the new will. It is a good idea to ensure (by asking the lawyer) that the witnesses to the will have signed an affidavit declaring they did so. Witnesses (often legal assistants) can move or die. If probate is required, the affidavit of the witnesses can be crucial to the application to the court.
Whoever is appointed as Power of Attorney (POA) my first and strongest recommendation BEFORE DOING ANYTHING ON BEHALF OF THE DONOR is to see a lawyer. The attorney needs an INDEPENDENT lawyer representing him or her. Do not necessarily choose the former lawyer of the donor. While the former lawyer may press that he or she has greater knowledge of the affairs of the donor, it is I believe a superior interest of the attorney to acquire his or her own knowledge and to be independently represented. Further the attorney may be obliged to handle the affairs of the donor for a long time. Choose a lawyer near your own age, not a friend because controversy can arise between you and the lawyer necessitating uncomfortable decisions or even litigation. Avoid undertaking an action as POA unless first fully advised by a lawyer because once you start (sometimes even the smallest most insignificant step) you may be stuck and obliged to continue to act or take steps through a court of law to extricate yourself and remove your legal obligations and possible exposure to liability. As a general rule, check (by asking the lawyer) that the POA has named an alternate attorney in the event that the first choice wishes to renounce or resign. The same detail is applicable to a will.
Very often the attorney doesn’t already have an independent lawyer. If so, get one. And in the process ensure you (the attorney) have your own last will and testament and POA. Don’t assume that because of any longstanding personal relationship you may have with another entitles you to benefit from that involvement or legacy of that person. Clarify your intentions in a legal will or POA. The attorney, if he or she is engaged as attorney for an elderly person, then has the added weight of another’s affairs on top of his or her own. In this circumstance the affairs of the attorney (say a child) can quickly translate into complicated business.
The duties of an attorney can prove onerous and burdensome. The attorney is entitled to be compensated for his or her work. The payment is best defined as “in accordance with time, care and trouble” although there are some standards such as 1.5% of assets under management, 1% of payments made, 1% of income received. I recommend keeping a running ledger of services performed (date, brief detail of service and time required). Because the attorney is in a position of trust, he or she must act (and be seen to act) with the utmost of good faith (which can include accountability not only to the donor but also to his or her prospective beneficiaries). Having the assistance and direction of the attorney’s own lawyer will help to insulate the attorney from common complaints of prospective residual beneficiaries of the donor. Family feuds are common especially when prospective beneficiaries are far removed from the donor or testator.
While the general rule is “delegatus non potest delegare”; that is, “he who is delegated (the attorney) may not delegate further”, I strongly recommend the engagement of not only a lawyer but also (depending upon the scope of involvement and steps to be taken) a qualified financial advisor, appraiser, auctioneer and accountant to preserve the attorney’s distance from any accusation of impropriety from those having a direct or inheritable interest in the affairs of the donor. The attorney must however maintain close control of management of all assets to avoid violating the “delegatus” rule.
In most places the law governing property and civil rights (which embraces wills and POAs) is the province or state where the person or his or her assets are located. It is generally considered unadvisable to have a person outside the jurisdiction of the donor or deceased involved in the administration of affairs. For example an American (resident or citizen) executor of a deceased in Canada would likely be obliged to submit to special suretyship or court management to ensure protection of governance of Canadian law (such as capital gains tax liability). For this reason the preferred administrator (attorney or executor) is local. This means a child living nearby is preferred; just as, in the case of assets such as a winter home or foreign investments the proper manager should be a person (often a corporate trustee) in that foreign jurisdiction. In the latter case it is also advisable to have a will or POA drawn by a local lawyer to ensure the documents meet the local standards. If there are different wills designed to cover assets in different jurisdictions, each will should specify the limitation of application to a specific jurisdiction otherwise the will is open to misinterpretation.
Created by an act of the Legislative Assembly in 1797, the Law Society of Ontario governs Ontario’s lawyers and paralegals in the public interest by ensuring that the people of Ontario are served by lawyers and paralegals who meet high standards of learning, competence and professional conduct.