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Power of attorney compensation can be high, but the role can be a lot of work. Here’s what happens if you can’t accept the role or must resign.
We would like to appoint another power of attorney for my uncle. It is too stressful for me to continue to act due to circumstances. How much does it cost if I was to seek someone out from a bank? This is for property and financial matters only.
—Kate
Sorry to hear what you’re going through, Kate. If your uncle is suffering from cognitive decline, you may have your hands full dealing with his day-to-day care, let alone his finances.
There are definitely options available to you, and I will outline some of the considerations.
When you prepare a power of attorney for property (called a mandate in Quebec), you appoint someone to make financial decisions on your behalf. These documents are generally prepared so that if you become incapacitated, there’s someone who can manage your finances for you.
Someone acting as an attorney can typically manage your bank accounts, pay your bills and make decisions about your other assets. They cannot prepare a new will for you, nor can they make changes to your testamentary wishes like registered account or life insurance beneficiary designations.
A power of attorney for personal care may also be known as a personal directive, representation agreement or protection mandate, depending on the province or territory. These documents are used to appoint someone to make health-care decisions on your behalf.
Many people appoint the same attorney for financial and health matters, but it’s not a requirement. One family member or friend may be better suited to make financial decisions over health-care ones, and vice versa.
Someone who is named in a power of attorney or similar estate document is not obligated to act. They may choose to decline their appointment. This is a reason to make sure you let someone know beforehand that you are planning to name them.
Regardless, things can change, and it sounds like in your case, Kate, it’s just getting to be too much work for you. You should seek legal advice about how to step down from your appointment properly. You should inform all parties in writing and make sure a new representative is in place to maintain continuity.
You can appoint a professional as power of attorney. It could be an individual, like a lawyer, or it could be an entity, like a trust company. If there’s no replacement named by the grantor in their power of attorney document, you should seek legal advice about how to properly transition the duties to a new party.
If you want to name a bank, Kate, it will generally be a trust company owned by the bank that would take over the role. The trust company may not be as nimble or as flexible as you are, but it will be professional and it will offer continuity for as long as your uncle needs.
Each province sets out guidelines for attorney compensation. In the province of Ontario, for example, it’s 3% of capital and income receipts (incoming funds), 3% of disbursements (expenses or outgoing funds) and 0.6% of the average annual value of the assets. This can be quite a bit of money in some cases, though as you have noticed, Kate, the role can be a lot of work, too. If you have not yet taken compensation, you should consider it.
There’s no distinction in compensation between the type of individual or company that is acting as power of attorney.
In many cases, children acting as power of attorney for their parents will forgo compensation. Payments are taxable, so if the person is also a beneficiary of the estate, they may waive their entitlement, since the receipt of an inheritance is tax-free. Another family member or friend would not likely forgo compensation, and a professional certainly would not.
Some power of attorney documents specify the compensation to which an attorney is entitled. Some even provide no compensation, but limiting or forbidding compensation is rare. Your temptation to step down, Kate, may be an example of the risk of this approach, as well as the importance of ensuring that your appointee is up for the job.
So, Kate, you can definitely resign from your role as attorney for your uncle. You should seek legal advice to make sure you do it properly so that your uncle has continuity. If there’s no replacement named in the power of attorney, you may be able to have a bank-owned trust company or other professional take over for you.
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