As you are aware, a power of attorney is a legal document in which an individual (the "donor") gives another person or persons (the "attorney(s)") the authority to deal with their property and financial affairs during their lifetime. New rules affecting powers of attorney in Manitoba came into force on April 7, 1997. The legislation introduces new safeguards and more accountability for enduring powers of attorney and establishes the validity of springing powers of attorney. The new legislation makes no changes to the law respecting powers of attorney other than those which are enduring or springing. The purpose of this bulletin is to provide you with information on the new rules as they may affect Investors' clients.
Enduring Powers of Attorney
Prior to the recent amendments, Manitoba legislation recognized the legitimacy of a power of attorney which continued beyond the mental incompetence of the donor, so long as it was in writing, signed by the donor, witnessed by a person other than the attorney or the attorney's spouse and indicated that it was to continue after the donor became mentally incompetent.
Requirements of Execution
Under the new law the category of potential witnesses to an enduring power of attorney is restricted to those qualified to solemnize marriages, judges of superior and provincial courts, justices of the peace or magistrates, duly qualified medical practitioners, notaries public, lawyers and police officers. These new restrictions on who may witness the execution of an enduring power of attorney do not apply to enduring powers attorney executed in Manitoba prior to April 7, 1997.
An enduring power of attorney executed outside the province will be recognized in Manitoba if it is valid according to the law in the place of execution and if the terms of the document provide that it is to continue despite the mental incompetence of the donor. The legislation also provides a method of substitute execution for individuals who are unable to read or sign their name.
A donor may appoint as an attorney anyone who, at the time of the document's execution, is an adult, is mentally competent and is not an undischarged bankrupt. Multiple attorneys will be deemed to act successively in the order in which they are named in the document unless the enduring power of attorney provides that they are to act jointly. If joint attorneys are unable to agree, the majority decision rules. If there is no majority amongst the joint attorneys, the first attorney named in the document will have the authority to make the decision.
The law obliges an attorney to act if he or she knows or ought reasonably to know of the donor's mental incapacity and has acted in the past or otherwise indicated his or her acceptance of the appointment as an attorney. Once under a duty to act, an attorney may not renounce the appointment without leave of the Court of Queen's Bench.
A donor may provide for the supervision of the attorney by naming a "recipient of accounts" who is entitled to an accounting from the attorney on demand. If no recipient is named or a recipient is unable or unwilling to act, the attorney must provide annual accounts to the donor's nearest relative (an attorney or an attorney's spouse are not considered nearest relatives, even if they are in fact nearest relatives).
The authority of an attorney under an enduring power of attorney will terminate if:
Springing Powers of Attorney
For the first time in Manitoba, a power of attorney which comes into effect on a specified future date or on the occurrence of a specified event (rather than immediately upon execution) has been recognized in legislation. Prior to the introduction of this legislation, the key problem had been determining whether the specified event (usually the mental incapacitation of the donor) had occurred. The new legislation allows the donor to name in the power of attorney a person (called a "declarant") from whom the attorney may request a written declaration that the date or event has occurred. Where the event upon which the power of attorney comes into force is the mental incompetence of the donor, and if a declarant is not named in the power of attorney or if the named declarant is unable or unwilling to provide a declaration, the attorney is permitted to obtain the declaration from two duly qualified medical practitioners.
Third parties acting in good faith may regard a declaration as conclusive proof that the date or event has occurred. Attorneys are also protected under the legislation from liability where they act in good faith on the basis of a reasonable (but mistaken) belief that the springing power of attorney is in effect. Despite such protection, prudence would suggest that attorneys resort to the use of a declarant, especially if one is named.
A springing power of attorney is a form of enduring power attorney and, as such, is subject to the rules (discussed above) relating to execution, who may be appointed an attorney, termination and accountability.
The purpose of this bulletin is to inform you of current developments, not to provide legal advice. Clients should consult their professional advisors for advice based on their specific circumstances. Should you have questions, you can contact Jack Courtney in the Advanced Financial Planning and Support department at 1-800-737-0447 menu selection 2-1-2.