Attorneys for property take note! A recent court decision, Re Schaefers, has provided some guidance as to when the court will remove an acting attorney for property. Generally, the court will not interfere with the choice of an attorney who has been named in a valid Power of Attorney signed by a capable person (the ‘donor’); however, there are times when a court finds that it must intervene. This was one such case. Throughout this blog, where I refer to ‘attorney’ I mean the substitute-decision maker named in a document called a Power of Attorney. In this blog, an attorney does not mean a lawyer.
An 87-year old incapable woman was suffering from Alzheimer’s. She had named the attorney in a Power of Attorney for Property document signed some years previously. Although the attorney was generally paying the woman’s bills, there was considerable concern as to whether the attorney was acting in the best interests of the incapable woman.
In reviewing the situation, the court set out a two-step test for determining when an acting attorney should be removed. Firstly, before a court should disregard the wishes of the donor in choosing an attorney, there must be strong and compelling evidence of the attorney’s misconduct or neglect. Under this part of the test, there must be evidence to establish that the donor had the capacity to grant the power of attorney in the first place. Secondly, the court must decide whether the acting attorney is serving the best interests of the incapable person.
In the end, based upon strong and compelling evidence of neglect, the court removed the attorney. The court found that he had failed to perform his duties as an attorney on a number of fronts; for example, he failed to provide requested information and documentation, he was late in providing needed information to the accountant for the preparation and filing of income tax returns, he neglected to make quarterly tax payments, he did not voluntarily pass his accounts despite having agreed to do so, he neglected to review the incapable woman’s Will and Powers of Attorney in a timely fashion, and, contrary to a court order, he failed to present monthly accounts. The court stated that “an attorney for property is a fiduciary and the duties and responsibilities of an attorney are significant.”
This decision seems to lower the threshold for the removal of an acting attorney. It is important to note that, in this case, the attorney was removed despite the fact that there was no evidence of any actual damage to the incapable person’s estate or of the attorney having misappropriated any of the incapable person’s property. It is also interesting to note that the attorney did not pay himself any compensation. The lesson from this case is that courts can, and will, act proactively before any actual damage occurs. The court’s decision was influenced by the fact that the attorney failed to abide by court orders and to complete tasks that he had agreed to perform.
With cases like this, it is really about a fine balance: on the one hand, the court must respect an individual’s choice to name the person he or she believes is best able to handle his or her financial affairs but, on the other hand, the court must protect the interests of the incapable person and step in when the appointed person doesn’t live up to the high standard to which an attorney must be held in carrying out his or her duties and responsibilities. This case provides guidance to acting attorneys as it is clear that the duties of attorney must not be taken lightly and should be undertaken with the utmost care and attention as he or she will be held to a high standard. It also provides some peace of mind to grantors that there is a safeguard in place should the attorney named not meet the standard set by the court.
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Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.