So you have assumed the role of an attorney for property under a valid power of attorney (POA) legal agreement, a continuing POA for property, and are now wondering to what extent you are entitled to compensation for your actions of management?
There are many expectations for a person who is assuming the role of an attorney for property, as the position comes with a large amount of responsibility, requiring a lot of effort and can be quite time-consuming. It is for this reason that an attorney for property is statutorily entitled to compensation, outlined within section 40 of the Substitute Decisions Act 1992, where it is stated that an attorney for property may take compensation monthly, quarterly and annually that is in accordance with the prescribed fee scale.
While this statute entitles an attorney for property to be compensated, if the grantor of the POA legal agreement makes it a term within the document that the attorney for property is prohibited from receiving compensation, the attorney will not be permitted to receive any compensation. This term may play a role in the decision to accept the role of an attorney for property in a continuing POA, and should be carefully considered, as again, the role can be time-consuming and one of significant responsibility.
What is the prescribed fee scale, and how is it calculated?
The prescribed fee scale is outlined within the Substitute Decisions Act 1992, regulation 26/95, which states that the attorney for property under a continuing POA is entitled to:
- 3% on capital and income receipts
- 3% on capital and income disbursements
- three-fifths of 1% on the annual average value of the assets as a care and management fee
Capital and income receipts can be defined as profit which is generated either by the sale of real property recognized as sale proceeds or profit which is accumulated through an existing asset, such as interest from previously made investments.
Capital and income disbursements are recognized as expenses and losses. Acting as an attorney for property in a continuing POA may require large expenses to be paid on behalf of the grantor of the POA, which come from principal assets; this is a capital disbursement. While an income disbursement is the payment of funds which have been generated by the property and assets possessed, and are generally used to cover ongoing expenses.
Implications of being a paid power of attorney
It is important that, as an attorney for property in a continuing POA, financial records are kept diligently and that clarity, transparency and detailed accounts are maintained through the process of handling the grantor’s financial matters. All actions which are conducted on behalf of the grantor by the attorney for property may not be compensable. Rather, entitlement to funds tends to be heavily dependent on the growth of the financial and property portfolio of the grantor, while being maintained by the attorney for property.
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Suppose the process and handling of finances by the attorney for property of a continuing POA comes under scrutiny for the possibility of mismanagement or unethical practices by relatives or stakeholders, the Courts maintain the right to audit the finances and assess the extent to which the attorney is entitled to funds. This process is called the passing of accounts, and essentially is the attorney providing the courts with detailed records. These records should emulate formal accounting and contain all transactions that the attorney has conducted on behalf of the grantor over a specific period of time.
This process by the court helps determine the exact amount of compensation that the attorney is entitled to, while also removing any questions of uncertainty and unethical practices. Through this process, reduced compensation may be ordered by the court so as to better reflect the receipts and disbursements that have been provided and will be applied as such to better coordinate proper compensation.
Section 42 of the Substitute Decisions Act 1992, provides further information on the process of passing the accounts and lays out exactly who is capable of applying to the courts for the process to be initiated. Those who have the means to do so are:
- The grantor’s or incapable person’s guardian of the person or attorney for personal care
- A dependant of the grantor or incapable person
- The Public Guardian and Trustee
- The Children’s Lawyer
- A judgment creditor of the grantor or incapable person
- Any other person, with leave of the court
Verifying crucial steps in paying yourself as a POA
Accepting compensation while acting as an attorney for property in a continuing POA implies that you will need to demonstrate a high duty of care in the dealings on behalf of the grantor. Maintaining clear and detailed records of all transactions is a priority, and ensures that the responsibility is being handled diligently and ethically.
It is imperative to first follow the terms which are outlined within the POA legal agreement, ensuring there is no overreach and that the best interests of the grantor are protected and upheld, especially any specific instructions or restrictions regarding compensation. The statutory guidelines for compensation previously discussed will act as the legally recognized scale if compensation instructions have not been otherwise outlined in the POA document. Furthermore, if not outlined within the POA document, it must be decided which form of compensation will be acquired, monthly, quarterly or annually, to maintain consistency.
Lastly, any changes to major assets or the management of complex assets and finances within the portfolio become necessary due to certain circumstances, seeking independent legal advice can prove to be very beneficial and can help eliminate the possibility of disputes or even involvement of the courts through the passing of accounts. Managing property on behalf of another can be very strenuous, and ensuring that all actions are conducted in a legally regulated manner removes inconsistencies and possible miscalculations.
How much can a power of attorney pay themselves in Ontario?
In Ontario, an attorney for property is generally entitled to compensation at the following rates unless otherwise stated in the POA agreement: 3% of income and capital receipts, 3% of income and capital disbursements, 0.6% per year of assets under management.
Can a power of attorney transfer money to themselves in Ontario?
An attorney for a continuing POA agreement may transfer money to themselves under specific conditions. These conditions consist of:
– Compensation (following statutory fee scale unless otherwise stated)
– Reimbursement of out-of-pocket expenses
– Repayment of debts owed by the grantor to the attorney, with proper documentation
– Authorized gifts (this is very limited and regulated by the Substitute Decisions Act)
As an acting attorney, always document personal transactions with purpose and justification
Can a power of attorney gift money to someone?
Following the Substitute Decisions Act 1992, section 37 (3), ‘Optional Expenditures’, it is stated that gifts and loans to friends and relatives are permissible as long as they are in accordance with the restrictions outlined in the following subsection 37(4). Please reference the Substitute Decisions Act 1992, for further clarification.
