Guardianship, Trusteeship, and Estate Planning: Navigating the Right Path

As an estate planning lawyer, I often talk to clients who are assisting their loved ones with their personal or financial decisions. This can be a very stressful task for family members, made no easier by the many pieces of literature and generalized advice around “personal directives”, “powers of attorney”, and guardianship or trusteeship. All of this terminology can be confusing. If you are helping a loved one, you may be wondering what is the difference between each of these, and when each should be used.

To get started, we must distinguish first whether the person in question (e.g. whether an aging parent, disabled adult child (all over the age of 18 years), etc.) has mental capacity. We’ll come back to what level of capacity is needed – but to put it simply, if a person has capacity, then they can create an enduring power of attorney and a personal directive. ‘Capacity’ is a legal question, so ultimately the decision as to whether an enduring power of attorney or personal directive can be made rests with the lawyer who is asked to draft the documents and evaluate if the person has the required capacity to sign them.

An enduring power of attorney is a document that gives another person (called the “attorney”) the legal authority to manage their financial affairs on their behalf. The power of attorney is said to ‘endure’ because it continues even when capacity is lost. If that person requires immediate help from a trusted family member or friend, then the power of attorney can be ‘immediate’. If that person does not require immediate assistance, but is prudently planning for the future, then it can be ‘springing’ so that it only comes into effect when capacity is eventually lost (if it ever is).

Similarly, a personal directive can be made so that a trusted family member or friend (called the “agent”) is given authority to make personal decisions. Unlike powers of attorney, personal directives only come into effect when the person who made them lost capacity. In the meantime, if an individual requires assistance, other options are available.

Now, let’s contrast this with a scenario where a person does not have capacity – in that case, they cannot make these documents and as a result the trusted family member or friend must bring an application to have themselves appointed as guardians (for personal matters) and/or trustees (for financial matters). This is an onerous process that requires, among other things, a complete review by the Office of the Public Guardian and Trustee, background checks and interviews, as well as an application to Court.

So, where an individual can make a power of attorney and personal directive, this is the easier, faster, and cheaper option. However, there can be unique circumstances where a guardianship or trusteeship application is the option that makes more sense – such as difficult family dynamics, or concerns with the adult being susceptible to manipulation or other types of abuse.

Getting back to capacity – how do you know if a loved one has the capacity to create an enduring power of attorney and/or personal directive? The question of capacity is different for each of these circumstances. To put it generally, a person must be able to understand the nature and effect of the document they are signing, and that they are entrusting a named person to completely make their financial or personal decisions on their behalf. Further, a person must understand that the document will continue even if they lose capacity, and that the designation of an agent or attorney cannot (easily) be changed once they lose capacity.

If you are helping a loved one navigate these tough questions, we encourage you to consult with an estates lawyer who can provide advice regarding the best solution for your family or friends.

Author: Kayla Thompson (March 2021)