Introduction
An attorney for property is typically afforded broad discretion to manage the property of the appointing donor, subject to any conditions or restrictions imposed by the legislation, the common law, or the terms of the power of attorney document itself.
In Ontario, a key restriction on the authority of an attorney for property is found in the Substitute Decisions Act, RSO 1992, c 30, which states at subsection 7(2):
The continuing power of attorney may authorize the person named as attorney to do on the grantor’s behalf anything in respect of property that the grantor could do if capable, except make a will (emphasis added).
As an aid to interpretation, we turn to the Succession Law Reform Act, RSO 1990, c S-26, which defines the term “will” at subsection 1(1):
(a) a testament,
(b) a codicil,
(c) an appointment by will or by writing in the nature of a will in exercise of a power, and
(d) any other testamentary disposition (emphasis added).
As we can see, the authority granted an attorney for property is not unlimited and, in this vein, an exploration of the meaning of “testamentary disposition” is merited.
“Testamentary disposition” defined
In the Bank of Nova Scotia Trust Company v Lawson, 2005 CanLII 46390 (ON SC), Justice McLean interpreted the meaning of “testamentary disposition”:
39 […] ‘disposition connotes a preconceived plan, an orderly arrangement’. (Garner, Dictionary of Modern Legal Usage, 2d ed., Oxford University Press 1995) The question is, is it testamentary in nature. Testamentary has been defined as, ‘(1) of or relating to a will or testament as document, (2) provided for or appointed by a will, or (3) created by a will’. (Garner, Dictionary of Modern Legal Usage, op. cit.) Will is defined as, ‘The written statement by which a person instructs how her or his estate should be distributed after death’. (Dukelow and Nuse, The Dictionary of Canadian Law, 2d ed., Carswell 1995).
In other words, a testamentary disposition is a preconceived plan as to the distribution of an individual’s estate upon death, reduced to writing.
Is a trust declaration a testamentary disposition?
A determination as to whether any written document entered into by an attorney for property can be characterized as being a testamentary disposition in nature must be determined on a case-by-case basis.
While in Lawson, a trust variation entered into by the Bank of Nova Scotia Trust Company in its capacity as an attorney for property was deemed to be a testamentary disposition owing to the fact that the subject trust variation changed the estate plan the donor had in place, the general act of an attorney for property entering into a trust declaration on behalf of a donor is not strictly prohibited.
In Selkirk v Selkirk, 2022 ONSC 2653, Justice Gomery reviewed Lawson, together with Easingwood v Cockroft, 2013 BCCA 182 and Testa v Testa, 2015 ONSC 2381. Easingwood, a decision written by Justice Saunders of the Court of Appeal for British Columbia, expressed reasons which were favourably adopted in Ontario through the decision in Testa:
51 […] where a document creates a trust that takes immediate effect, even though not performed until the death of the settlor, it is not dependent on death for its vigour and effect and is not testamentary.
Whereas the impugned trust variation in Lawson set out “provisions that would only take effect on the death of the settlor and her son”, as stated by Justice Gomery in Selkirk, in each of Easingwood, Testa, and Selkirk, the trust entered into by the attorneys for property took immediate effect and was not dependent on the death of the donor.
Summary
Based on the current common law, an attorney for property in Ontario can enter into a trust declaration on behalf of the donor for whom such attorney is acting, provided such trust declaration is not a testamentary disposition in nature. Where the validity of any such trust declaration is challenged, its nature and effect must be examined to determine whether such trust declaration constitutes a testamentary disposition or not.
Any article or other information or content expressed or made available in this Section is that of the respective author(s) and not of the OBA.