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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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