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The roles and responsibilities differ from that of executors to a will. Here's how
Q: Ed, I would like to know what, if any, my sister who had Power of Attorney (POA) of our mother is entitled to claim from our mother’s estate. There are four children involved and we are all named as equal executors in her will. Please advise as to what she is entitled to in compensation—if anything. Her accounting of mom’s money before and after her death are very poor and she hasn’t disclosed anything to us… in regards to how much there was and where it went or to who it went.
—Robin
A: Robin, Powers of Attorney can have many problems. Your sister was named as your mother’s attorney. This means your mother signed power of attorney documents. These legal documents authorize your sister to act for your mother. Your sister, by receiving such power, has fiduciary duties that I will explain.
Each province has different standards, rules and compensation guidelines for attorneys. In Ontario, that current legislation is the Substitute Decisions Act, 1992.
You need legal advice to consider options. The cost of taking action may be prohibitive.
Is attorney compensation prohibited?
Attorney compensation could be specified in the actual power of attorney document. In Ontario, for example, there is no statutory form for power of attorney documents.
Your lawyer must review the document your mother signed. This is the starting point for your analysis.
Your mother could have specified that she didn’t want your sister to be paid. In Ontario, the law states your mother could deny your sister compensation. If your mother did not prohibit compensation, then your sister may claim it.
Ontario has regulations to set attorney fees. These regulations are subject to adjustment by a court. If there has been misconduct by the attorney, compensation can be denied. Of course, there are legal costs in pursuing remedies.
A principal concern would be if your sister acted as your mother’s agent or as her attorney. Was your mother incapable of managing her finances? The distinction is significant. Your sister’s duty to account may depend on this.
If your mother was incapable of managing her own property, your sister’s duties are different. Acting as an attorney means your sister must—by law—keep certain accounts and records. And if necessary, she can be called to court to submit her records for examination. You can then deal with her claim for fees and obtain explanations.
Informal and formal accounting for attorneys
If your sister provides an informal accounting, this may suffice. Producing bank and tax records may satisfy you. If there are additional unanswered questions, your sister, as an attorney, has the duty to explain as best she can.
She may not need to be a perfect bookkeeper or hire one. She should try to dispel any suspicions you have.
As executors you also have duties. You have the right to examine your sister’s accounting records—at least informally.
Financial records would help clear the air. Was your mother incapable of managing her affairs? If so, your sister’s obligations may have been quite time-consuming. She may also not have been aware of her obligations as attorney.
Your sister needed proper legal advice. She needed to be cautioned to maintain proper records and receipts. Reconstructing bank records much later is difficult.
Compensation paid to attorneys is taxable income. It must be reported on the attorney’s income tax return. There are other income tax obligations that the attorney must comply with. As an executor, you are entitled to obtain this information.
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I am power of attorney over my mother’s portfolio which consists of stocks,bonds,rifs,TFSA and cash for a total of approx. 2 million.I also pay her monthly bills,and responsible for her income tax and oversee all financial decisions.Have been doing this for 5 yrs and have yet to charge any fees.What fees am I entitled to.
Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.