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An enduring power of attorney is a creature of statute. Its enabling legislation is The Powers of Attorney Act, 2002. 1 Prior to its enactment and its predecessor legislation, a power of attorney was not enduring in nature. Therefore, when the grantor lost capacity, the power of attorney would terminate and could no longer be validly used.2 Now, enduring powers of attorney's survive a grantor's incapacity.
The powers granted by a power of attorney are assumed to be unrestricted, subject only to limiting provisions in the power of attorney itself or legislation.
A power of attorney can also be springing, so that it takes effect immediately, or it can be contingent and require something to occur for it to take effect. This allows the grantor to appoint the person they believe is best suited to make property, financial, and/or personal decisions for them, and to clearly define when those decisions begin to be made for them. Notwithstanding the grantor's intentions, the legislation created additional protections to allow for the termination of a power of attorney, including:
- By court order, including if the attorney has abused their authority;3
- On the written resignation of the attorney;4
- If applicable, upon a date indicated in the power of attorney;5
- If a property attorney becomes an undischarged bankrupt;6
- If an attorney receives compensation for personal services or health care services provided to the grantor as part of their occupation or business;7
- If the attorney has been convicted of certain types of criminal offences (e.g., broadly described as those that are acts of violence, intimidating, criminal harassment, uttering threats, theft, fraud, or breach of trust”);8
- If a personal or property decision maker or the public guardian and trustee is appointed (or, for the Public Guardian and Trustee, they sign an acknowledgment to act) as guardian or co-decision-maker for the grantor or attorney under The Adult Guardianship and Co-decision-making Act; 9
- If a property attorney is appointed for a missing person; or 10
- If the grantor and the attorney are spouses, then upon them ceasing to cohabitate in a spousal relationship with the intention to end that relationship. 11
A power of attorney will also terminate upon the death, or the deemed death of the grantor or attorney.12 It can also be declared void for a lack of capacity.13
The built-in protections for enduring powers of attorney reflect the shifting relationship that occurs when a grantor begins to lose capacity. When an attorney acts for a grantor with capacity, they act as an agent. They might act upon explicit directions of the grantor or, at a minimum, the grantor should be able to directly monitor the conduct of the attorney. To whatever extent they are unsatisfied, the grantor can immediately revoke the power of attorney and seek to hold the attorney responsible. However, as a grantor begins to lose capacity, the attorney shifts into the role of trustee or fiduciary. The grantor loses or has lost the ability to appreciate the decisions being made on their behalf, and instead, it is the attorney's responsibility to make good and reasonable decisions for them. As succinctly stated by the Saskatchewan Court of King's Bench:
The capacity of [the grantor] is of particular importance in the context of this application. It impacts directly upon the duties and responsibilities of [the attorney]. If she is acting merely as an agent, carrying out the instructions of her principal as she suggests, and her principal has the capacity to instruct, her liability may be limited. However, if [the grantor] is not competent, then the duties and responsibilities of [the attorney] become much more onerous. She is then clearly in a fiduciary and trust-like relationship. Her actions, or inactions, will attract much more attention, and potentially more liability.14
Accordingly, it is reasonable to expect that, as the grantor's capacity diminishes, the attorney's responsibilities and obligations increase. While capacity is often treated as a catch-all phrase, it is more appropriately considered as taskspecific. The ability to make day-to-day decisions would require a much lower level of capacity than that required for complex financial decisions.
Duties and Obligations
The continuation of powers after a grantor's incapacity necessitated the codification of some of the duties and obligations of an attorney.15 As contained in the legislation, an attorney must exercise their powers honestly, in good faith, in the best interests of the grantor and with the care that could reasonably be expected of a person of the attorney's experience and expertise.16
There is also a duty against self-dealing at common-law for fiduciaries.17 As expressly stated by our Saskatchewan Court of Queen's Bench, as it then was:
…the law does not allow a person who has accepted a fiduciary obligation to act as a power of attorney to profit at the expense of the grantor, nor can such a fiduciary confiscate money or assets that are the property of the grantor.18
Consistent with the duty against self-dealing, the legislation also prohibits an enduring power of attorney from making a gift that exceeds $1,000, unless expressly allowed for in their power of attorney document, or the court otherwise approves it.19 Pursuant to the legislation (and absent any additional powers or court order), if the gift is less than $1,000, then it may be permissible if: the portion of the estate is not required to meet the needs of the grantor or their dependents, and the attorney believes that the grantor would have made the gift if they had capacity. However, a gift to oneself as an attorney is not appropriate without approval from the Court (to allow otherwise would be contrary to the duty against self-dealing).20If the gift exceeds $1,000, then the Court may approve it if “it would be appropriate for the property attorney to make the gift.”21 All of which is further governed by the overarching duties of the attorney, namely to act in the best interests of the grantor, honestly, and in good faith. However, none of these limiting provisions prevents an attorney from providing for the maintenance, education or benefit of the grantor's spouse or dependent children, even if the attorney is the grantor's spouse (contrary to the normal rule against self-dealing).22
Failure to meet any of these standards and duties would constitute a breach of their fiduciary duties. However, perfection is not the standard, and such an assessment is highly discretionary. A clear benefit to the attorney in exercising their powers is, perhaps, one of the easiest breaches to identify, for instance:
- A property attorney removed money from the grantor's accounts that he held jointly with his wife for his own benefit. The court considered it “impossible” to “suggest that the removal of funds… through the power of attorney…was done honestly, in good faith or in the best interests of the grantor”.23
- A property attorney utilized the grantor's bank accounts for transactions and purchases that clearly benefited herself. While the attorney insisted the grantor intended these as gifts, she bore the onus of proving to the court that a gift was intended – her own oral testimony and a report from an accounting firm were insufficient to do so.24
The legislation also specifically bars an attorney from making or changing a “will in the name of the grantor,” which is defined broadly in the regulations to include a “will” as defined under The Wills Act, 1996, and “any other instrument intended to take effect on death.25
The Wills Act, 1996, defines “will” to include a “testament, a codicil, an appointment by will or by writing in the nature of a will in exercise of a power; and any other testamentary disposition”.26
Accordingly, an attorney (whether appointed under an enduring or non-enduring power of attorney) cannot engage in estate planning on behalf of the grantor.
Practically speaking, this means that a property attorney cannot write a will or codicil, but also cannot appoint or change designated beneficiaries, or add or remove people as joint tenants or account holders with rights of survivorship. These actions might also fall outside the anti-gifting provisions, and others could be interpreted as contrary to the grantor's best interests and as a failure to act honestly, in good faith, and reasonably, depending on the recipient and how it accords with the grantor's known testamentary intentions. These estate planning practices are particularly actionable when the transfer, designation, or appointment changes the grantor's standing wishes when they had capacity. It is not the attorney's job to supplant the testamentary intentions of the grantor with their own.
An example of such actionable conduct arose in a guardianship dispute, where the property attorney: (1) sold multiple pieces of property to himself contrary to his duty not to engage in self-dealing; (2) changed the beneficiary of life insurance policies contrary to the legislation; and (3) transferred title to two pieces of property into joint tenancy with right of survivorship to his wife. All of which were contrary to the incapacitated adult's long-standing testamentary wishes and sought to defeat a family property claim of her spouse.27
Engaging in estate planning as defined above is expressly barred by the legislation; however, as is exemplified in the above case, it does occur. If such a transaction accorded to valid testamentary wishes, did not encroach on funds needed to maintain the grantor comfortably, and was not subject to property interests held by anyone else, then it is unlikely that any interested person would contest or set aside the transaction. The estate pays less taxes and, if certain designations are made, then the need for letters probate or administration could be avoided entirely (and the cost consequences thereof). Even with the expected savings for the grantor's estate, such testamentary transactions are still contrary to statute, actionable, and subject to liability.
The attorney's exposure would be fact dependent. For instance, if the grantor's family home was transferred to anyone other than their spouse, then, subject to an agreement to the contrary, the spouse would have family property rights to that house (most likely half its value).
Yet another problem would arise if a piece of property were transferred into joint tenancy with right of survivorship without a proper trust agreement in place. In Saskatchewan, indefeasibility of title means that the law presumes each person holds an equal share in that piece of property. If the value of that piece of property is needed to care for the incapacitated grantor, the child could refuse to sell and give up their half share in the land. The law in Saskatchewan assumes the child is entitled to half the value of the land just by virtue of having received title. The presumption of resulting trusts does not apply to real property in Saskatchewan when parents transfer property to adult children. Even if the attorney satisfies the court that it was a trust arrangement in which the grantor retained the full value of the land, cost awards rarely fully indemnify litigants. The grantor's estate likely will have less money because of the attorney.
The attorney might very well be liable to the grantor for that loss if they are held to account, and, since their actions were contrary to an express statutory bar, they are unlikely to have been reasonable.
Accounting and Being Held to Account
The most tangible obligation of the personal and property attorney is their duty to keep good records, and their obligation to provide an “accounting” if directed by the Public Guardian and Trustee office, the courts, or upon the termination of the power of attorney.28 If the person who granted the power of attorney still has capacity, then the right to ask and receive an accounting belongs to the person whose affairs are being managed. If the person loses capacity, then other interested persons can request an accounting, inter alia: a person named by the enduring power of attorney or, if no one is named, then an adult family member.29 If the enduring power of attorney is terminated for any reason and the grantor lacks capacity, then that attorney provide a final accounting to an interested person, a person named by the grantor in the enduring power of attorney, an adult family member if no one is named, a decision-maker or guardian, the personal representative of the estate, or the public guardian and trustee.30 A final accounting may also be requested by a beneficiary of the grantor's estate.31 In providing a final accounting, the attorney is also required to verify it by affidavit.32
In so far as required to provide an accounting, the attorney
must provide an accounting in the prescribed form attached to
The Powers of Attorney Regulations and then verify it by
affidavit. In doing so, the attorney engages in a
“bookkeeping and reporting exercise.”33 The
attorney is not required to explain why actions were
taken.34 The purpose of the accounting provisions is to
protect vulnerable adults, to prevent financial abuse under powers
of attorney, and to provide a process to obtain accountability and
transparency from the attorney. 35 As Justice Robertson
of the Saskatchewan Court of King's Bench found, in the
context of ordering an accounting: “the purpose of the
legislation was ensuring there is no abuse of power of attorney. An
accounting provides transparency and may either reveal wrongdoing
or dispel suspicions that might otherwise
linger.”36
While the production of confirming source records is not plainly required by The Power of Attorney Act and Regulations, the courts have still directed the production of source records where it is “reasonable in light of all the circumstances” (e.g., bank statements and cancelled cheques to confirm the reported transactions).
In doing so, the requesting individual does not need to show cause. Even so, evidence of suspicious conduct, malfeasance, or “red flags” only bolsters any claim for an accounting and the production of supporting records.
If there is evidence of abuse, whether obtained from an accounting or not, then the attorney may be held to account for those acts or omissions through a distinct action to account. An action to account is derived from common law.37 It is “an independent action for an accounting to settle any issues between the parties.”38 It is a right of the beneficiary of a trust (or an appropriately interested person) to “hold the trustee to account …. Absent such a right, both the trustee's obligation to act in accordance with its fiduciary duty and the terms of the trust itself would be substantially unenforceable.”39 Therefore, to the extent the attorney is proved on a balance of probabilities to have improperly used funds, then the attorney would make the grantor or their estate “whole.” For instance, if the attorney improperly gifted a piece of property, then that transaction might be voided, the property returned, or the attorney required them to pay the value of that property to the grantor or their estate.
Consequently, enduring powers of attorney are important estate planning tools that can impose significant obligations and potential liability on the attorneys. Often, they are granted to individuals and professionals who act objectively, act in the best interests of the grantor, keep good records, report their conduct to ensure transparency, and never use the power of attorney to benefit themselves from the grantor's estate. There are also those who believe they are acting in the best interests of the grantor but fall short, whether through ill-reporting, unintentionally imposing their own interests on those of the grantor, or not knowing the law and the limits of their powers. Ultimately, the lack of knowledge as to the law and their obligations is not a satisfactory defence. 40
Footnotes
1. The Powers of Attorney Act, 2002, SS 2002, c P-20.3 [POAA]
2. Rikley v Mooney, 2006 SKQB 544 (CanLII) at para 13
3. POAA s 15, s 19(1)(i), (2) [POAA]
4. POAA, s 19(1)(b)
5. POAA, s 19(1)(a).
6. POAA s 19; POAA, s 6(1)(a)(ii).
7. POAA s6(1)(b).
8. POAA s 19(1)(f); POAA, s 6(1)(a)(iii).
9. POAA, s 19(a)(g) and (g.1)
10. POAA, s 19(1)(g.2)
11. POAA, s 19(1)(h).
12. POAA, s 19(1)(g.3) – (c)
13. Rumbold v Forseth, 2020 SKQB 84 (CanLII) at para 69 – 70.
14. Rikley v Mooney, supra at para 12.
15. Carlson v Carlson, 2019 SKQB 328 (CanLII) at para 22; POAA, s 15.
16. The Powers of Attorney Act, 2002, SS 2002, c P-20.3, s 15.
17. Davidner Estate, 2023 SKQB 25 (CanLII) at para 38 [Davidner Estate]; citing from Bryant Estate v Stuart, 2021 SKCA 54 (CanLII) at para 34 [Bryant Estate].
18. Tiffin Estate v. Tiffin, 2004 SKQB 60 at para 101.
19. POAA, s 16.1; The Powers of Attorney Regulations, SR 2004, c P-20.3, Reg 1, s 3.2 [POAR]
20. POAR, s 3.2.
21. POAA, s. 16.1
22. POAA, ibid s. 16.
23. McFaull v Kidd, 2007 SKQB 402 (CanLII) at para 12 and 26.
24. Kessler (Estate) v Kessler, 2015 SKQB 369 (CanLII).
25. POAA, s 16(2).
26. The Wills Act, 1996, SS 1996, c W-14.1, s 2.
27. Anspach (Re), 2007 SKQB 457 (CanLII) at paras 74 to 78.
28. POAA, s 18 and 18.1
29. POAA, s 18(2).
30. POAA, s 18.1(1)
31. POAA s 18.1(1)(b).
32. POAA, s 18.1(2)
33. Thompson v O'Hara, 2016 SKCA 83 (CanLII) at para 29.
34. Ibid.
35. Saskatchewan Legislative Assembly, Debates and Proceedings (Hansard), 24th Leg, 3rd Sess (18 April, 2002) at 822-833 (Mr. Axworthy); Saskatchewan Legislative Assembly, Debates and Proceedings (Hansard), 24th Leg, 3rd Sess (18 April, 2002) at 822-833 (Mr. Axworthy); Saskatchewan Legislative Assembly, Debates and Proceedings (Hansard), 24th Leg, 3rd Sess (29 April 2002) at 1043 - 1044 (Mr. Heppner); Saskatchewan Legislative Assembly, Debates and Proceedings (Hansard), 24th Leg, 3rd Sess (8 May 2002) at 1270 (Ms. Draude); Saskatchewan Legislative Assembly, Debates and Proceedings (Hansard), 24th Leg, 3rd Sess (8 May 2002) at 1679-1681 (Mr. Julé and Hon. Mr. Axworthy); Law Reform Commission of Saskatchewan, Enduring Powers of Attorney: Consultation Paper (Saskatchewan, Jan 2001) at 35 -37.
36. Carlson v Carlson, supra, at para 31.
37. National Trust Co. v H & R Block Canada Inc., 2003 SCC 66 (CanLII) at para 34, [2003] 3 SCR 160; Thompson v O'Hara, supra at para 24.
38. Thompson v O'Hara, supra at para 29.
39. Davidner Estate at para 38; Byrant Estate at para 35.
40. Ibid at para 39.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
