Wills & Estates 101 Mini-Series: Part III: Attorney Compensation

In our last post we covered some of the primary responsibilities and basic legal requirements of powers of attorney for property and personal care. We now turn to some questions people often have about a person getting paid for being an attorney, questions such as:

     Will the person designated as attorney be paid for his or her work?

     How much and when would the attorney get paid?

In Ontario, the answers to those questions are very different for attorneys under a power of attorney for personal care and under a power of attorney for property.

Power of Attorney for Property: The starting point for compensation for this kind of power of attorney is the Substitute Decisions Act [SDA], which provides that a continuing power of attorney for property may take annual compensation from the property in accordance with the prescribed fee scale. Currently, the prescribed fee scale is:

     • 3% of capital and income receipts;

     • 3% on capital and income disbursements; and

     • 3/5’s of 1% on the annual average value of the assets as a care
     and management fee.

This is not a fixed entitlement applicable to all cases. The amount of compensation for acting under a power of attorney for property, and even the right to any compensation, is subject to challenge and to review by the courts. The prescribed fee can eventually be reduced or increased depending on the case and a number of factors such as the size of the estate, the complexity of the required work, and the skill and success of the attorney in the management of the estate.

Unlike executors under a will, attorneys for property have the right under the SDA to “pre-take” compensation, that is to get paid while the work is ongoing, before their accounts have been reviewed and approved by the court. The statute specifically refers to compensation being taken monthly, quarterly or annually. As we mentioned though, any amount taken improperly may be subject to a court challenge and adjustment.

The statute also makes compensation for attorneys for property subject to any provisions regarding compensation contained in the actual continuing power of attorney document. This flexibility allows the grantor to expressly set out the amount of compensation the attorney for property is to be paid.

If the grantor expressly provides that he or she does not want the attorney to take compensation, the attorney will not be entitled to compensation despite the entitlements contained in the SDA and its regulations. Anyone named under such a power of attorney such therefore review the document itself very carefully before deciding whether to accept this responsibility.

Power of Attorney for Personal Care: Curiously, the SDA does not say anything at all about compensation for attorneys for personal care. There is therefore some doubt about whether such attorneys are entitled to be paid for their services at all. There is some authority for such claims, but the amount, the timing and other rules about getting paid are unspecified and very uncertain.

Therefore if one wishes to provide for the compensation of their attorney for personal care, this should be discussed with the lawyer as early in the drafting process as possible and set out clearly in the power of attorney document, expressly stating this intention and a method for calculating the amount of the entitlement and when the attorney can pay himself or herself.

As discussed in our last post, attorneys for property and personal care take on an onerous responsibility and are generally held to high standards by the courts. Consequently, it is important when drafting a power of attorney to be mindful of the fact that if you only provide a nominal amount of compensation or deny any right to compensation entirely this could result in the attorney refusing his or her appointment.

Although this posting has summarized some of the fundamentals of attorney compensation, it is always best to discuss your power of attorney needs with a lawyer within the context of your overall estate plan and unique personal circumstances.

     — Craig M. Bater and Michael D. Heikkinen for abblaw.ca

[If you live in the Ottawa area and would like Augustine Bater Binks to prepare your will or power of attorney, please email us or call 613-569-9500 to speak to one of our lawyers or a member of our staff.]