It is important to know the rights, obligations and duties of an attorney, who when looking after the affairs of an incapable person is acting as a guardian. It is important to recognize that a power of attorney does not work in the same way as a guardianship order from the court or a statutory guardianship imposed on an incapable person. Even if a power of attorney has been in use for the purpose of managing an individual's affairs, the individual is not automatically precluded from taking steps with his or her property. Cheques signed by the individual must be honored by a bank and withdrawals by him or her from a bank account or investment vehicle are not prohibited because an attorney is also managing the person's affairs. In fact, under the Substitute Decisions Act, 1992, there is a specific prohibition from doing a capacity assessment which would invoke a statutory guardianship, if a valid power of attorney is known to exist. Therefore for a person who is still reasonably active, but of declining mental capacity, and therefore vulnerable to requests from others for money, etc., it is often falls to the attorney who is trying to assist that person to have to open new and otherwise unknown bank accounts, where the individual has no practical access, and other similar means of ensuring that the individual is protected from him or herself and those who may preying on him or her.
Nothing short of a formal assessment of incapacity under the Substitute Decisions Act, 1992 or Mental Health Act, formally removes a donor's right to act on his or her own. The Substitute Decisions Act, 1992 specifically states that no assessment for statutory guardianship is to be carries out if there is known to be a continuing power of attorney that affects all assets. An assessment simply to determine whether the individual has capacity can be requested by an attorney seeking to confirm whether an individual has lost capacity, but only if the individual consents to the assessment. If the individual will not agree to proceed with an assessment, and insists upon attempting to manage his or her own finances, and attorney is placed in a very awkward position. The resolution may only be available through court intervention in serious cases. Such actions amounts to a court application to appoint a guardian, which cannot be pursued without a formal assessment of the individual to confirm incapacity and personal service on him or her of the court documents. Such extreme measures are often ones that parties acting under a power of attorney try to avoid, where donor is already trying to avoid having his or her actions controlled, and where such court actions will only exacerbate what may already be strained relationships.
Without minimizing the importance of court intervention when it is necessary and appropriate to protect a vulnerable person from abuses and from predatory individuals, and from abuses arising out of misuse of a power of attorney (and such abuses are regrettably all too prevalent in our current society), it is important for any one who is considering court intervention to recognize its limitations, and also to be clear that it is the well-being of the vulnerable person which is being sought. Recent case decisions have pointed out the trend to allow power of attorney battles in court to become a form of battleground among family members ultimately with a view to determining the eventual distribution of the individual's estate, a form of "preemptive strike" in terms of a will challenge. Court decisions have been extremely critical of such actions and cost sanctions to the parties involved can be a very real consequence of such matters before the court. Particularly in disputes among children over the management of parent's affairs, which involves an attempt to have an existing power of attorney vacated and replaced with a guardianship, the costs can be very high. Judges have become much more prepared to make orders regarding costs of such battles which ensure that the incapable or otherwise vulnerable person is not saddled with the legal costs and that the disputing parties are forced to cover their own costs.
In keeping with the attempts to avoid guardianship and power of attorney contests from becoming a means of allowing families to fight for a control before elderly person has died, courts are reluctant to assist by ordering mandatory capacity assessments. A court has the jurisdiction to order a capacity assessment of an individual where capacity is seriously at issue, either for the property management or for personal care management. However, before a court will order a mandatory assessment, which is recognized as an invasive measure that should not be applied lightly, there must be compelling evidence that there is a serious issue relating to capacity and not simply a family dispute over control of the assets or the care of another person.
In the absence of a known power of attorney, a finding of mental incapacity by an assessor triggers the process of statutory under guardianship under the Substitute Decisions Act, 1992. The procedure for assessment and reporting is set out at s. 16 to the extent that it applies to statutory guardianship. An individual can also be found to be incapable under the Mental Health Act, in which case the Public Guardian and Trustee will also become Statutory Guardian, and assessments are necessary to establish incapacity is an application is made to the courts for the appointment of a guardian.
The Public Guardian and Trustee will, on receipt of an application from the attorney, designate the attorney as statutory guardian of the incapable individual. The attorney named in a power of attorney does not have to post an administration bond. In the absence of a power of attorney for financial matters, the family member or trust company that is ready and willing to take on the role must apply to replace the Public Guardian and Trustee as statutory guardian. The Public Guardian and Trustee has the discretion to require or waive the posting of a bond, regardless of the size of the estate in question. The actions of the Guardian will be governed completely by the relevant sections of the Substitute Decisions Act, 1992. The appointment of a relative or trust company as statutory guardian will only occur where an assessment has been carried out under s.16 of the statute and the person is found to be incapable. In all cases, the assessment of incapacity must be made by an assessor who is authorized under the statute to carry out assessments for that purpose.
If there is no validly signed general power of attorney for property, but there is a blank power of attorney that is limited to a particular bank account, or a general power of attorney that is not sufficient to cover all assets, and there is a finding of mental incapacity, the Public Guardian and Trustee will become Statutory Guardian. However, the individual or individuals named in the incomplete power of attorney can apply to the Public Guardian and Trustee to replace that office as statutory guardian, in the same way as a spouse, partner or relative can apply where there is no power of attorney. If the Public Guardian and Trustee is appointed as statutory guardian of property, there is an obligation to assist the individual, if he or she requests it, to obtain another capacity assessment after six months have elapsed. If the new capacity assessment shows that the individual has regained capacity, the PGT must relinquish the statutory guardianship. Similarly if the new assessment shows capacity to make a power of attorney and the individual does so, the PGT must turn over the individual's assets to the new attorney for management.
In the case of a power of attorney which is stated to come into effect on the onset of mental incapacity, the substitute Decisions Act, 1992, also sets out the process to be followed in the event of incapacity. The effect of the finding of incapacity is the activation of the power of attorney, and the attorney can then start to manage the incapable person's affairs. For powers of attorney that specify the way in which incapacity is to be determined, it is also likely that the doctor's letter or whatever document is used to confirm incapacity, will have to be used along with the power of attorney document to establish proper authority of the attorney.
Problems can arise when a power of attorney comes into effect only in the event of incapacity and the named attorney considers that incapacity has arisen, but donor does not agree. If the donor is not willing to consent to an assessment, in the way spelled out in the power of attorney document if such was included, or by a qualified assessor if the power of attorney document is silent, it may be difficult to obtain any confirmation of the incapacity. The individual's doctor, by reasons of privacy rules, may not consider him or herself able to provide any information to an outside person about the capacity of the patient, and may not be willing or able to carry out an assessment if the patient actively opposes the assessment. In fact, the Statement of Assessor, a prescribed form under the Regulations to the Substitute Decisions Act, 1992, contains a statement that must be signed by the assessor stating that the patient has been advised of his or her right to refuse to be assessed. An active refusal by the patient will stop the assessment unless a court order is obtained to require an assessment to go forward despite opposition.