Law Times

PAGE 10 FOCUS OctOber 25, 2010 • Law times Powers of attorney no longer a 'boilerplate document' Change comes as litigation on the rise over abuse of contentious legal authority BY ROBERT TODD Law Times ever before, which means liti- gation involving alleged abuse by attorneys is correspondingly on the rise. "I can tell you that I have E been really shocked," says Adam Cappelli of Cambridge LLP in Burlington, Ont. "I have had cases both acting for and against an attorney who used mom and dad's funds like it was their own bank account." Cappelli says he and other trusts and estates lawyers are increasingly coming across situations like that. He believes attorneys — typically family members — aren't getting ad- equate advice before taking on the role. That has created prob- lems even for those with good intentions. xperts say there are now more activated powers of attorney in Ontario than "A lot of them will legiti- mately be buying necessities for their parent and they might use the parent's bank card and withdraw cash," he says. "That cash is not a re- ceipted transaction." When situations like that happen without proper re- cords of purchases, other siblings may get suspicious, which creates unnecessary conflict, says Cappelli. "Next thing you know, you're act- ing for an attorney trying to justify their expenditures, and they've got a very poor paper trail. If they got an hour's ad- vice from a lawyer, they might avoid some of these mishaps, understand that they've got an obligation to consult with mom or dad when making decisions, not to presume that because mom is 83, she's incompetent." Shifting children. There are simply more activated powers of at- torney now than ever before. "The statistics are that about 80 per cent of elder abuse is financial in nature, and 75 per cent of the abus- ers are family members," says Cappelli. "That's a pretty star- tling statistic." Part of the problem is that So-called springing powers of attor- ney are useful, but a key question is what triggers them, says Mary Wahbi. demographics make the problem all that more common, he says, noting that millions of seniors are now pass- ing decision-making author- ity over to their baby-boomer too many people automatical- ly designate a family member as their attorney, he suggests, adding that it's more prudent to find someone who can ef- fectively carry out the role. While people with low in- comes are typically unable to hire a trust company, those with the means would be wise to do so, he notes. In cases where that's not realistic, Cap- pelli encourages people to ap- point two family members. "Then you have a check and balance. You have two that have to sign off on transactions. There's a lesser degree of oppor- tunity to abuse." Mary Wahbi of Basman Smith LLP says lawyers are also increasingly grappling with is- sues surrounding the activa- tion of a power of attorney. That's because there's an on- going debate within the trusts and estates bar over whether the document should be im- mediately valid and continue after incapacity. That approach comes with the inherent risk that people appointed to the role could begin abusing their authority right away, Wahbi notes. "So that one option is, 'OK, on its face, I appoint you as my attorney for property, no restrictions. And I'm trusting that you're not going to use it until I become incapable.'" Another option is a springing Better Results Faster THE ONE AND ONLY Westlaw® Canada Estates&TrustsSource® Only Estates&TrustsSource® gives you all the case law and legislation you need plus exclusive one-of-a-kind practice-specific resources that help you provide effective solutions for your clients. 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For more information www.westlawcanada.com Call 1-866-609-5811 power of attorney that comes into play only once a person has become incapable. But the problem with that strategy, Wahbi says, is that it's unclear what the triggering event is. "Is it going to be a letter from a doctor? Is it going to be a capac- ity assessment? We're trying to avoid a court application, so we don't want it to be that a court determines I'm incapable." A third approach now widely used involves a power of attorney that's completely effective once signed but held in escrow by the law firm or another third party that acts as the gatekeeper for the docu- ment's release. Wahbi says each lawyer has a different opinion on which of these three approaches is best. Some people who are re- luctant to hold such documents in escrow and face litigation if deemed negligent in releasing it strongly oppose the third approach. Others say the bot- tom line is that someone des- ignated as an attorney needs to be trusted at all times. "Clients will have various degrees of how they feel about it," Wahbi says, adding that most people seem to prefer having the law firm hold the document in escrow. "My view is the law firm is fine holding it provided that we have fairly specific instructions from the client as to when to release it. But I've been called on in several circumstances to release it, and it is quite trou- bling, and you do have to be quite careful as to when you do it and what kind of medi- cal evidence you're going to require." All of this leads to a renewed approach to handling pow- ers of attorney. "As more and more people are having these documents done and more of our clients are actual medical doctors or have been through a process with an ailing parent or family member, they are much more specific about the things they do and do not want done," says Wahbi. "It isn't a boiler- plate document anymore; it's very specific." LT Untitled-7 1 www.lawtimesnews.com 10/14/10 3:15:43 PM

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