Compensating Estate Trustees, Attorneys for Property and Attorneys for Personal Care
In preparing for our own incapacity and death, we often appoint our friends and family to make health and property related decisions on our behalf and then to administer our estate. These people are our Attorneys for Property, Attorneys for Personal Care and our Estate Trustees. Acting in these roles is not a commitment to be taken lightly—it comes with legal responsibilities, and can be immensely time consuming and emotionally draining.
Which leads to the question: Will our friends and family who act on our behalf be compensated for their time and efforts?
The answer is not straightforward, as the legal framework treats each role in a slightly different manner—some are governed by statute, some by case law, and some not at all. This framework for compensation is set out below, and it acts as the “default” rules. As you review them, you may feel that they are not appropriate for your circumstances, or they do not reflect your values. It is therefore important to keep in mind that these are only “defaults”—you can tailor the compensation that your Attorneys and Estate Trustees receive in the documents that give them their authority to act.
Compensation for your Attorneys for Property
If you appoint an Attorney for Property to manage your financial affairs during your incapacity, the Substitute Decisions Act provides that they are entitled to compensation in the amount of 3% on capital and income receipts, 3% on capital and income disbursements and 3/5 of 1% on the annual average value of the assets as a care and management fee. If you have more than one Attorney for Property acting, then they will have to share this prescribed amount. This amount can be adjusted by a court on a passing of accounts, to take into account the value of the services actually performed, or the Attorney for Property may take an amount greater than prescribed with the consent of the Public Guardian and Trustee and the incapable person’s Power of Attorney for Personal Care/Guardian of the Person (if any).
Compensation for your Attorneys for Personal Care
On the other hand, if you appoint Attorneys for Personal Care to make decisions relating to your health care, nutrition, shelter, clothing, hygiene and safety during your incapacity, they will not benefit from a statutory right to compensation. As a result, if you want your Attorneys for Personal Care to be compensated for the time spend carrying out their duties, it is important that the Power of Attorney documents specifically provide for such compensation. There is no uniformity when it comes to the quantum of such compensation—it is not possible to provide a percentage fee, as established for Attorneys for Property, because your Attorneys for Personal Care are not managing your assets. Some clients see the duties of Attorneys for Personal Care as “moral” duties that should be the responsibility of family, and therefore do not provide for compensation. Others, concerned about the potentially large investment of time and stress that may be involved in acting as an Attorney for Personal Care, prefer to provide a monthly stipend.
Compensation for your Estate Trustee
Finally, when we pass away, our Estate Trustees are statutorily entitled to receive fair and reasonable allowance for their care, pains and trouble, and their time expended in or about our estates—however, unlike for an Attorney for Property, there is no uniform formula to calculate this amount. The general approach, developed by the courts, is to calculate the “general guideline” amount—being 2.5% on the capital and revenue receipts, 2.5% on the capital and revenue disbursements, and (in exceptional circumstances with ongoing management of the estate) an annual care and management fee of 2/5 of 1% of the annual average value of the assets. The appropriateness of this “general guideline” amount, as calculated, is then to be cross-checked against the following five factors and adjusted accordingly: (1) the size of the estate; (2) the care and responsibility involved; (3) the time occupied in performing duties; (4) the skill and ability shown; and (5) the success resulting from the estate administration.
These default provisions are meant to be fair and reasonable in the majority of cases; however, you can be proactive and tailor your Wills and Power of Attorney documents to ensure that those who act for you are compensated in accordance with your wishes. Before deciding to shy away from compensating your Attorneys or Estate Trustees, it is worth remembering the amount of time and effort that Attorneys and Estate Trustees must devote to their duties. Further, and from a more practical perspective, it is also worth noting that the people we appoint have the authority to act, but they are not obligated to act. In certain circumstances, such as administering complex estates or dealing with families that do not get along, you may want to consider adding some “incentive” for your Attorneys or Estate Trustees to accept their appointment.
Stephanie Lalonde is an Associate with Brazeau Seller Law. She practices in the areas of Wills, Estates and Tax Law. Stephanie can be reached at 613-237-4000 Ext. 272 or email@example.com. For more information about Stephanie, please visit www.brazeauseller.com.
Disclaimer and Cautionary Note
The foregoing provides only an overview and does not constitute legal advice or establish a lawyer-client relationship with the authors or Brazeau Seller Law. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained from a qualified lawyer.