When a person lacks capacity to manage property on their own, they might need someone to step in and take over decision-making. But what if they do not have a Power of Attorney ("POA") and no longer have the capacity to make one?
That is where guardianships comes into play. Guardianship fills the gap that arises if someone has not made a POA.
A guardian can manage their relative's financial affairs. This way, bills do not go unpaid, debts are not incurred, and dependants (if any) are not abandoned.
While guardians do have quite a bit of flexibility, there are rules in place about what they can and cannot do.
Guardians must follow a special plan that they create and that is approved as part of the guardianship application. They must also comply with the Substitute Decisions Act ("SDA"). The SDA sets out the rules for when, if ever, a guardian can make a gift, loan or charitable donation on the incapable person's behalf. The SDA also establishes what expenses a guardian must pay for:
37 (1) A guardian of property shall make the following expenditures from the incapable person’s property:
1. The expenditures that are reasonably necessary for the person’s support, education and care.
2. The expenditures that are reasonably necessary for the support, education and care of the person’s dependants.
3. The expenditures that are necessary to satisfy the person’s other legal obligations. 1992, c. 30, s. 37 (1).
A guardian cannot hoard money for their own inheritance or change their loved one's Will.
A guardian must also "explain to the incapable person what the guardian’s powers and duties are", "encourage the incapable person to participate, to the best of his or her abilities, in the guardian’s decisions about the property" and "seek to foster regular personal contact between the incapable person and supportive family members and friends of the incapable person."
While guardianship conflicts do happen from time, they often arise because guardians are not familiar with or complying with their legal obligations.
It is our pleasure to help our clients become guardians of property and to help them understand the duties that come with this important role.
Interested in becoming your loved one's guardian of property? Our DIY course may be of interest. We have free lessons that go into more detail about whether guardianship of property is the right step for you.
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