Substitute decision maker disputes and retaining an estate lawyer
It is important to be careful when appointing a substitute decision maker when preparing a power of attorney for property. The actions of the substitute decision maker may give rise to power of attorney litigation. Pursuant to the Substitute Decisions Act, 1992 a power of attorney for property refers to the power of the substitute decision maker to make financial decisions in the best interest of the grantor (the person granting the power of attorney). The substitute decision maker typically has the power to make decisions related to:
- the management of the grantor’s income and investments
- budgeting of the grantor
- payment of expenses
The power of attorney is usually drafted such that it becomes effective and that it grants the above powers to the substitute decision maker when the grantor becomes incapable of making decisions of his own. As such, the mental capacity of the grantor may be an issue in estate dispute involving substitute decision makers.
Who should be appointed substitute decision maker?
A common misconception among people is that it is prudent to appoint their eldest child as the substitute decision maker. First and foremost, the person being appointed needs to be evaluated by the grantor for his or her ability to carry out the duties associated with being an attorney under a power of attorney.
The person being appointed should have the required skills to manage the property in question. The substitute decision maker should be able to deal with bank accounts, accountants, financial advisers, lawyers and other professionals. The attorney needs to have the required record keeping skills to manage receipts and file tax returns.
Another common mistake which complicates the purpose of the power of attorney is to appoint all children as substitute decision makers. If there is no “majority rules” clause in the power of attorney, any decisions being made will have to be unanimous. This may result in stalemates and significant delays in making decisions.
The substitute decision maker acting as a the attorney should be able to get along with any other siblings. If co-operation is not possible, the appointed person may be tempted to do things secretly.
Furthermore, may be in a position to dissipate the assets of the estate. All of these may give rise to costly estate litigation. It is therefore important to seek out the advice of an experienced estate lawyer who has significant knowledge of the estate law. A practical solution when appointing a substitute decision maker is to appoint someone who knows the grantor and the affairs of the family and who is not a family member as a co-attorney (for example, an accountant or a lawyer).
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