When planning for incapacity, one needs to understand what is a Power of Attorney and a Committeship. While both allow for a trustee person to make decisions on behalf of another party there are significant differences.
A Power of Attorney (POA) allows someone to exercise the POA on behalf of the donor in accordance with the terms of the POA. A POA only deals with the property of a person and can be revoked by the donor (provided the donor has mental capacity to do so) or by the issuance of a committeeship order. For a person to be able to grant a POA, the adult must be competent to do so the test is whether the adult is capable of understanding the nature and consequences of the proposed power of attorney. In determining whether the adult is understands the consequences, he or she must understand all of the following:
(a) the property the adult has and its approximate value;
(b) the obligations the adult owes to his or her dependents;
(c) that the adult’s attorney will be able to do on the adult’s behalf anything in respect of the adult’s financial affairs that the adult could do if capable, except make a will, subject to the conditions and restrictions set out in the enduring power of attorney;
(d) that, unless the attorney manages the adult’s business and property prudently, their value may decline;
(e) that the attorney might misuse the attorney’s authority; and
(f) that the adult may, if capable, revoke the enduring power of attorney
Anybody who has been granted power of attorney has special duties required by law. The Courts view them as a fiduciary who must not use the Power of Attorney for his or her personal benefit. Sometimes the POA abuse the power that is given to them and make financial decisions that are not in the best interest of the donor or his or her family. If a person who has granted Power of Attorney fails to fulfill their fiduciary duty, we can file a breach of trust claim with the Courts that may then be used to recover assets.
A Committee is appointed by a court order to deal with a person’s property and/or person. It cannot be issued unless the party is incompetent. The applicant, who is usually a close family member, may apply to the court for an order declaring that because of:
(a) mental infirmity arising from disease, age or otherwise, or
(b) disorder or disability of mind arising from the use of drugs,
is incapable of his or her affairs or incapable of managing himself or herself, or incapable of managing himself or herself or his or her affairs.
Once the declaration is made the court can then appoint an appropriate person to act as the Patient’s Committee.
In order to make the application for comitteeship, two affidavits of medical practitioners must be filed stating that the patient is incapable of managing his or her property or affairs because of:
(i) mental infirmity arising from disease, age or otherwise, or
(ii) disorder or disability of mind arising from the use of drugs,
Affidavits setting out the next of kin and the assets and affairs of the Patient also need to be filed. The application and affidavits must be served on the Public Guardian and Trustee as well as the patient (unless the court waives service)
It is often important to set out the relationship between the proposed committee and the patient in order to explain that the person was trusted by the patient and is the most appropriate person to be the committee (in addition to whether a bond should be imposed on the Committee.)
Subject to the terms of the court order, a committee has all the rights, privileges and powers with regard to the estate of the patient as the patient would have if of full age and of sound and disposing mind. Additionally a committee may be entitled to reasonable compensation for acting as a committee.
Regardless of whether a person is acting as Power of Attorney or as a Committee, they must act in the best interests of the person they are acting for. There are some differences between the duties imposed and it is important to speak to a lawyer to understand your obligations or to challenge actions taken by the Attorney or Committee.