The Fiduciary Duty of an Attorney Under a Power of Attorney: “Utmost of Care”

The Fiduciary Duty of an Attorney Under a Power of Attorney: “Utmost of Care”

‍A power of attorney establishes a fiduciary relationship, meaning the Attorney (the person granted the power) has a fiduciary duty to act in the best interests of the Donor (the person who grants the power).

The Power of Attorney Act (British Columbia) mandates that an Attorney must, among other duties:

1. Act honestly and in good faith and exercise the care, diligence, and skill of a reasonably prudent person.
2. Keep prescribed records and produce them for inspection and copying at the request of the adult.
3. Act in the adult’s best interests when managing and making decisions about the adult’s financial affairs.
4. Foster the independence of the adult and encourage the adult’s involvement in any decision-making that affects them.
5. Keep their own property separate from the Donor’s property.
6. Make a reasonable effort to determine the adult’s property and liabilities as of the date on which the Attorney first exercises authority on the adult’s behalf and maintain a list of that property and those liabilities, including:
   a. The adult’s property and liabilities.
   b. The accounts and other records respecting the exercise of the Attorney’s authority under the enduring power of attorney.
   c. All invoices, bank statements, and other records necessary to create full accounts regarding receipts or disbursements.

Generally, unless explicitly stated otherwise, the power of attorney does not grant the Attorney ownership of the Donor’s assets. The Attorney should not use their authority to transfer the Donor’s assets into their own name unless they have specific written instructions to do so or the asset in question is clearly addressed in the power of attorney. Misusing a power of attorney can constitute a criminal offense.

A breach of fiduciary duty typically “captures circumstances in which there is a breach of the duty of loyalty owed by the fiduciary and includes circumstances involving acting in the face of a conflict, preferring a personal interest, taking a secret profit, acting dishonestly or in bad faith, or a variety of similar or related circumstances.”

An Attorney who breaches their duty cannot benefit from the breach. They cannot use their position for personal advantage. If the Attorney does so, they are accountable to the Donor for any resulting profit.

It is also worth noting that: “The addition of an adult child to an elderly parent’s bank account for the purpose of assisting with their finances may be sufficient to trigger fiduciary duties, regardless of the parent’s capacity and regardless of whether the child was actually acting as power of attorney for their parent.”

Ergo, the granting of power of attorney to an Attorney should be taken with the utmost caution, and the duties of an Attorney to the Donor must be managed with the utmost of care. Reviewing your estate planning with an estate planning lawyer is an important step to help minimize the risk and burden for you and your loved ones caused by inadequate or improper estate plans. Call us today at 250-756-3823 or email ar@jfblaw.ca to learn more about how we can assist you with estate planning, estate administration, estate litigation (such as wills variation claims), probate issues, and more.

References

• Pelletier v Pelletier, 2025 BCSC 43 (CanLII), https://canlii.ca/t/k8qc8, retrieved on 2025-01-18.
• Bowman (Re), 2009 BCSC 523 (CanLII), https://canlii.ca/t/235pw, retrieved on 2025-01-18.
• Power of Attorney Act (British Columbia), RSBC 1996, Chapter 370.

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