The Superior Court of Québec rendered a decision worth considering at the beginning of 2012 in the matter of R.B. v. F.B. In that case,1 a father, age 72, (the "Applicant"), acting as the attorney under a power of attorney for his son who became incapable of managing his own affairs, applied to the court for authorization to create a trust for his son's sole benefit and to transfer nearly all his son's property to the trust by way of a tax rollover. The Applicant was worried about the consequences, and the possibility of the public curator's intervention in relation to his son's property, if the Applicant should die or become incapable of acting. It should be noted that the power of attorney given in anticipation of the Applicant's son's incapacity only provided for one substitute attorney, the son's uncle, in the event of the Applicant's death or inability to act. This uncle had just been diagnosed with cancer and, furthermore, resided a distance of more than 750 km from the Applicant's son's residence. The Applicant's goal was therefore to ensure the continuity of the administration of his son's property by creating a trust, with the Applicant and Desjardins Trust as trustees. The substitute attorney, the uncle, did not object to the Applicant's application.
Therefore, the issue the court had to determine was whether an attorney appointed under a power of attorney given in anticipation of the principal's incapacity has the power to create a trust for the benefit of his principal and to transfer the property administered by him to the trust. The court answered in the negative and dismissed the Applicant's motion for the following reasons:
1) The attorney's obligation is a personal one which is intuitu personae, meaning that the attorney must personally fulfill the power of attorney given to him, unless the principal has authorized him to substitute another person in his stead to perform all or part of the power of attorney (article 2140 of the Civil Code of Québec). The power of attorney in the event of incapacity at issue here contained no such provision allowing the Applicant to delegate his powers to a third party.
2) The attorney does not have the power to transfer the principal's property which he is responsible for administering, and he cannot therefore act as the settlor of a trust. The court indicated that a general power of attorney does not, by itself, authorize the attorney to create a trust. The attorney must have the principal's express and specific authorization to do so, which he did not have in this case.
This decision, which is a severe one in our view, highlights the importance of drafting a detailed power of attorney in the event of incapacity. Indeed, it is easy to understand the Applicant's concerns and his desire to avoid that protective supervision (tutorship or curatorship) for his son be instituted in the event of the Applicant's death or inability to act. The Applicant's motion to the court showed his foresight and concern for adequately protecting his son in the long term by ensuring his property would continue to be managed by a professional trustee, for the sole benefit of his son, in the event the Applicant should die or become incapable of acting. However, these were not sufficient grounds for the court to grant his motion.
It is too soon to predict whether this decision will be followed by the courts in other cases. However, for the time being, it should serve as an incentive for some persons to revise the provisions of their powers of attorney given in anticipation of incapacity to include specific provisions concerning (i) the procedure for replacing the designated attorney, and the number of substitute attorneys designated in the power of attorney; (ii) the power of the attorney to delegate some or all of his powers; and (iii) where desired, the specific power to create a trust for the exclusive benefit of the incapable person in certain circumstances.
Footnotes
1 R.B. c. F.B., 2012 QCCS 247.
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