New Brunswick’s new Enduring Powers of Attorney Act
New Brunswick joined the rest of Canada in enacting legislation that deals solely with powers of attorney when the Enduring Powers of Attorney Act (“Act”) came into force on July 1, 2020. Although many aspects of power of attorney practice won’t change, the Act does have significant impacts.
In part, the new Act replaces a patchwork of piecemeal legislative provisions that deal with various aspects of powers of attorneys. These include provisions of the Property Act, the Infirm Persons Act and the Advance Health Care Directives Act, the latter being repealed entirely. An enduring power of attorney under the new Act includes both a power of attorney for property and a power of attorney for personal care, which may be in separate documents or combined in a single document. Powers of attorney for property and/or personal care made prior to the commencement of the Act will remain valid and be subject to the new Act, and proxies formerly appointed under the Advance Health Care Directives Act will be deemed powers of attorney for personal care under the new Act, but limited to health care decisions for the grantor.
It is important to note that the new Act has not repealed the provisions of the Property Act that deal with irrevocable powers of attorney, nor is the new Act applicable to powers of attorney given by corporations for business purposes.
A significant shift in practice is that an enduring power of attorney for property must be signed and dated in the presence of a lawyer, who must provide a certification on several issues, notably including that it is the lawyer’s opinion that the grantor had the capacity to execute the power of attorney.
If the grantor is only appointing an attorney for personal care, then in lieu of the lawyer certification requirement, the document may be signed and dated in the presence of two adult witnesses, who cannot be the appointed attorney or a close relative of the appointed attorney.
Exercise of authority and evaluations of capacity
The Act establishes that an attorney for property may exercise authority at any time after the enduring power of attorney is executed; however, it also allows the grantor to restrict this exercise of authority until a specified date or until it has been determined that the grantor lacks capacity with respect to property and financial affairs. An attorney for personal care may only act upon the incapacity of the grantor. The Act sets out rules for determining the grantor’s capacity with respect to both powers of attorney for property and for personal care.
The grantor may now also designate in an enduring power of attorney for property “a person” who is to make the determination that the grantor lacks capacity, which may be the attorney, or, if none are so designated or willing to make the determination, an “assessor” may make such determination. The definition of “assessor” currently only includes a medical practitioner or nurse practitioner entitled to practice in New Brunswick, although the list may be expanded by regulation.
Also new is a specific requirement that an attorney must first consult with the grantor when making a decision on behalf of the grantor, even where the grantor lacks capacity, if it is reasonable to do so. If the grantor lacks capacity and the attorney must make a decision, the Act provides a series of steps for the attorney to follow in making the decision, and which fundamentally revolve around the grantor’s expressed wishes, their values and beliefs and what is in the grantor’s best interests. However, when an attorney for property is acting for a grantor who has capacity respecting their property and financial affairs, the Act requires the attorney to consult with the grantor and only act in accordance with their instructions. These requirements are similar to consultation requirements in other provinces, although more onerous on the requirement for actual consultation versus the requirement to have an understanding of the grantor.
Noteworthy is that, with the exception of reasonable expenses incurred, the Act stipulates that an attorney may not be compensated for acting as an attorney unless otherwise specified by the grantor in the enduring power of attorney. Moreover, a person providing health care services or support services to the grantor for compensation may not even be appointed as an attorney, unless that person is the spouse, common-law partner or relative of the grantor.
In the event that a grantor has appointed different people to act as attorney for property and as attorney for personal care, the Act imposes a duty to consult with each other over any matter falling under the jurisdiction of both. In the event they are in disagreement, the attorney for personal care has the ultimate authority to make the decision unless the grantor has specified to the contrary in the power of attorney. The decision of an attorney for personal care also supersedes a prior health care directive drafted by the grantor.
Appointment of monitors and record keeping
Grantors may also now appoint a monitor to oversee the conduct of their attorneys. In addition to communicating with the grantor, monitors will be able to request and review records kept by the attorney. They also have standing to apply for a variety of court orders, such as for the release of records, termination of authority, varying the terms of an enduring power of attorney or replacing the attorney.
As another method for ensuring that attorneys are kept accountable for their conduct, the regulations to the Act provide a detailed and lengthy list of records that an attorney for property is required to keep. In addition, an attorney for personal care is required to keep a detailed list of all decisions made by the attorney including the reason for each decision.
Role of financial institutions
Financial institutions may decline to follow attorney instructions, or suspend or restrict the withdrawal and transfer of funds, where the institution suspects an attorney is not acting in accordance with the Act. In such circumstances, the institution must then inform the grantor and, if appointed, the monitor and the other attorneys, if any. The definition of “financial institution” captures the obvious, such as banks, credit unions, and loan and trust companies, but also includes personal financial advisors who trade in securities as principals or agents, any organization registered as an adviser under securities law, insurers, and insurance agents and brokers.
Prior to the implementation of the Act, courts had already imposed a duty on banks to exercise reasonable care and skill to protect their customers in suspicious circumstances. This duty effectively allowed banks to refuse to comply with an attorney’s direction to withdraw funds in suspicious circumstances even though the bank was contractually obligated to honour such a request. It remains to be seen whether the Act will result in courts imposing the same common law duty of care now applicable to banks on the other types of financial institutions listed in the new Act.
Powers of attorney made outside New Brunswick
Another change to the law is that the Act deems valid an enduring power of attorney made outside New Brunswick if (i) the document confers on another person the authority to act in relation to property and financial affairs, personal care or both, (ii) the person given authority is able to act when the other person lacks capacity, and (iii) the document is valid in the place where it was made.
The introduction of the Act represents an important development in the law of New Brunswick, and will result in greater legal protection for New Brunswick’s more vulnerable population. Stricter witnessing requirements, extended oversight of attorneys, and increased clarity with respect to capacity evaluations all promote the responsible exercise of authority on the part of attorneys. Individuals, organizations and businesses alike are encouraged to be mindful of the impact of the Act when facilitating financial or other dealings under the enduring power of attorney’s authority. In particular, any person or trust company exercising powers of attorney granted under prior legislation must be mindful of the new requirements imposed on them by the Act with respect to ongoing consultation with the grantor and other attorney holders, conflict rules and record keeping.
This article is provided for general information only. If you have any questions about the above, please contact a member of our Estates and Trusts group.
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