Practical Applications -

 The Standard of Competency Required for a Power of Attorney


Many have inquired why an individual with a disability couldn't simply sign a Power of Attorney (POA) appointing a parent (or whomever) as the person to handle some of or all of their affairs. As opposed to the messiness which is guardianship, the "taking away" of the individual's rights, to say nothing of the exorbitant cost involved. Which is a very good question.

Although, unfortunately, I think my answer will not only be lengthy (there are many points to consider) but also not what many would prefer to hear. At any rate, I have decided to break this issue down into a few posts. In this first part, we will examine the standard of competency required to execute a valid POA. The first thing to consider is that the donor (the person granting the POA) must be high functioning enough to be competent to make one.

When is it too late to give a power of attorney?

 A - It is too late to give a power of attorney if you are not mentally competent. Competency is sometimes an issue where the person wishing to give a power of attorney is suffering from progressive dementia. In this situation, it may be necessary to get a medical opinion as to whether the person is competent.

Although written from the point of view of the more or less typical person, this excerpt still makes the point. In my opinion, if a person is capable of executing a valid POA then they probably don't need (or at least wouldn't qualify for) guardianship in the first place. Meaning that, the way I see it, the law would take the view that if they are legally capable of executing a valid POA, they are legally competent to manage their own affairs.

But although I am fairly confident that the standard of competency required to execute a POA is the similar to the legal standard of competency to be able to enter into a contract, for example, I have come across a few lawyers who seem to think otherwise, that as long as the person has the ability to understand what they are signing, it is okay. Which would mean, if correct, that creating a "simplified" POA (simplified to the ability of understanding of the donor) would be effective.

In all honesty, I am not quite sure what to make of this. So I did some more digging. And found that there appears to be authority going both ways; in other words, some cases seem to say that the standard of competency required to execute a valid POA is higher than that required to execute a Will and others imply otherwise.

Capacity and incapacity (and competency and incompetency) are legal concepts. And they are task specific. For example, the minimum level of competency required for a person to execute a valid Will (which we call testamentary capacity) is lower than that required for many other legal acts. In the context of making a Will, what is essential is whether the person has the ability to understand the information relevant to making the pertinent decision and the ability to appreciate the reasonably foreseeable consequences of that decision (or lack of decision).

Adding to the potential confusion, the situation varies among the provinces. British Columbia, for example, provides has legislation allowing for a document called a "Representation Agreement", which allows a person to create a legal Plan giving authority to someone else when a person needs assistance managing their affairs. They can cover financial and legal matters AND health and personal care matters. And, most importantly for our purposes today, the law says everyone 19 years and older may make an Agreement with standard powers – even if they cannot manage their own affairs now.

Which could be your perfect solution. If you live in British Columbia. Unfortunately, we have no similar legislation in Nova Scotia. So I ran the question by a few other lawyerly types (read: lawyers). And received answers similar to this one:

Guardianship orders are established in a process where there is a thorough objective vetting of medical evidence, the condition of the person and to some extent the capacity of the proposed guardian to manage the affairs of the person subject to the order. In addition, the Act provides for third party sureties. And the typical order now provides for periodic review and accounting of the guardianship. From the point of view of simple public policy, they integrate into a regime which provides for the proper management of the person’s affairs with at least notionally, ongoing accountability.

Powers of Attorney do not have any of that rigour.

I do not know what are or how to express the relative levels of competency for a POA to operate vs. the status of the person for a guardianship order. I assume they are the same or very close.

I do not see how a person who is incompetent to the point where an order would be granted can have the capacity to enter into a POA. A person who relied on the POA of an incompetent cannot rely on the POA. I think people should be advocating for a simpler guardianship process, with standard forms, where an application is made to an administrative authority, conducted on a the record, (a tape) where there is legal aid or public trustee vetting of the application as it comes before the authority, on the motion of either of which the matter could be bumped up to court. The process as it is frustrating complicated and expensive.

In addition to the issue of the standard of care required to execute a valid POA, there are a few other goods points to consider in there. Such as if the person who executes a POA in your favour is later found to be incompetent, the POA will be invalid. And that last paragraph also makes another very good point. One which we will be discussing in more detail in another post. Because it can and has been done in other provinces.

But to return to the point of this post, the best I can tell you is that appears to be some controversy surrounding exactly what the standard of competency is to execute a valid POA. Perhaps it is true that if the document is simplified enough for person to understand the nature purpose of the specific matter at hand; in other words, exactly what rights they are passing to another person, that will be sufficient. Pehaps not. Perhaps you pay your money and you take your chances.

But there are other concerns I have with POAs which I will detail in another post.

I can say for now that, in addition, to my other research I came across the most interesting book at the Nova Scotia Barristers' Library, entitled "Advising The Older Client". Written by a lawyers, for lawyers, it covers such topics as the ethical issues involved in representing a client with diminished capacity, estate planning, guardianship, POAs, health care directives and capacity, consent and health care decision-making, among others. Although written in the context of advising seniors, I actually found it quite useful around many of our issues. And although not written specifically for Nova Scotia, it does cover the situation across the provinces.

So if anyone 'has the stomach for it' (actually, that's very unfair - I find it quite readable), they might want to go check it out. Not right now, though. Right now, it's mine.