Guardianship with respect to adults, in jurisdictions like Ontario, refers to the court appointment of a substitute decision maker with respect to a person who has been determined to be unable to make property or personal care decisions, or both, for themselves. Generally, this process is considered a last resort which is understandable given its perceived significance. However, when examined in more detail, it is possible to view it as a solution that respects special needs persons more than the name or process suggests.
Guardianship is not about taking total control of another person’s life and never letting them participate: quite the opposite. The special needs person is supposed to be consulted about the proposed management and care plans before the plans are sent to the Public Guardian and Trustee for approval and then filed with the court. Part of the management plans even reminds the applicant of their DUTY to encourage participation of the person for whom they are seeking guardianship and to consult supportive family, friends and caregivers.
There is also a section of the application to list who else has been consulted about the plans. With respect to guardianship of property, this could include: accountants, financial advisors, insurance specialists, lawyers, family, community organizations, care providers, and the person who is applying for guardianship of the person if different than for property.
Similarly, with respect to applications for guardianship of the person, which deals with health care issues as well as nutrition, shelter and accommodation, clothing, hygiene and safety, there is also an expectation that family, friends, care providers and the guardian of property will be consulted with respect to the proposed plan. The guardian of the person has a DUTY to foster the person’s independence, to encourage the person’s participation in decision the guardian will make, and to consult with supportive family, friends and caregivers. The application has a section where the applicant can set out their plans to do these things.
Capacity is a complex concept. It has meaning in both the medical and legal context which are similar but not identical. One key common element is that capacity is not absolute. It is task specific and can vary over time and subject to various conditions including medication or other treatment. A person can be capable of some decisions and not others and this can change. As a result, there is an ongoing requirement for professionals such as care providers, lawyers, and financial advisors to constantly evaluate capacity for everyone. It’s not just persons with a disability or special needs.
For example, there are legal tests to be able to make a Will or powers of attorney for property and care. Every lawyer doing this type of work has a professional and legal obligation to ensure their client meets the required test of capacity otherwise the documents will not be valid. These rules apply to everyone and the client interview process is structured to evaluate each client. Particular persons are not singled out, although the presence of known conditions may cause the lawyer to conduct a more detailed evaluation regarding legal capacity in some situations.
The legal process of appointing a guardian for a person, with respect to property or care or both, deals with big picture planning. In order for a guardian to be appointed, there must be a finding of incapacity to manage property or care or both. However, this does not mean that the person is unable to make any decisions or will not be able to participate in some decision making. As stated above, the application process specifically contains sections to show how the special needs person will be participating. This could even involve giving the person control of a small bank account or a regular allowance.
The reason for the broad approach is related to the tests for capacity to manage property or personal care. These tests look at the ability to appreciate a range of information, including the interconnection between care needs and the ability to pay for them, and develop long term strategies. This is a difficult process under the best of circumstances and many people who have capacity to manage property do not always do it very well. Where capacity is significantly impacted so that comprehensive long term planning in not realistic, someone needs to do this to ensure the well-being of the special needs person. Families care but this is not enough and sometimes caring too much can cloud judgment. Guardianship provides structure and accountability which protects both the special needs person and the people appointed as guardian.
Guardianship applications have existed for quite some time, in one form or another, but they are receiving increased attention due to the Federal Registered Disability Savings Program (“RDSP”). Due to the specific provisions of the Income Tax Act that permit the setup of these plans, some persons who are over the age of 18 are unable to start and maintain their own plan because there is concern that they do not have capacity to contract with a financial institution, or manage property, and they do not have close family who are eligible to start the plan instead and manage it as well as funds paid out of the plan.
If a person has a power of attorney for property or guardian of property, the attorney or guardian could start and manage the plan. Unfortunately, not everyone who could benefit from an RDSP has a POA for property or the capacity to make one. Guardianship of property is an option to deal with the lack of a POA for property but it requires incapacity to manage property. This is what causes concern for many families.
Firstly, the finding of incapacity to manage property is perceived very negatively to many since it implies a total loss of independence. However, as stated above, this form of incapacity is about big picture property management and not necessarily every single individual aspect. Management plans are tailored to individual needs and capabilities with the input of the incapable person, supportive persons and even relevant professionals. It is a form of structured decision-making to enable a special needs person to achieve their potential while protecting them and the person appointed.
The Law Commission of Ontario is currently looking at the guardianship process in relation to RDSPs but also with a view to their larger project dealing with substitute decision making laws generally in Ontario. The LCO recognizes the significant resistance to the idea of guardianship and is considering less restrictive options. The current report examines several possibilities to help people get RDSPs set up and managed but would still require a valid POA for property or guardianship appointment to manage receipts out of the plan if the beneficiary of the plan continued to be incapable of managing property in the broad sense.
While Ontario laws with respect to substitute decision making could benefit from reform, the current rules are not as restrictive and oppressive as many believe. Also, the informal methods of property management many people use to avoid guardianship are subject to abuse or at least allegations of financial abuse. A clear mechanism with accountability benefits everyone.
Powers of attorney for property are currently treated very casually by most people and this is leading to growing amounts of very costly litigation. It is likely that the rules around POAs for property will be tightened up thereby lessening the perceived gap between POAs and guardianship. Saskatchewan just updated its laws related to POAs for property and there are greater restrictions to protect grantors so it seems reasonable to assume something similar may happen in Ontario.
Why are RDSPs so important that guardianship laws are being reviewed? The short answer is that they have the ability to allow considerable amounts to be saved, on a tax-free basis, to provide for the support of a special needs person. The details of the program are complicated, which is part of the problem, but the short version is that up to $200,000 in contributions can be made and total of $70,000 in government matching. On top, there is the investment growth. An added benefit is that receipts from the RDSP will not cause a person to lose their ODSP. Clearly, it is a valuable program.
It could be several years before the provincial rules are sorted out to provide a simplified process to allow more people access to RDSPs, if the rules change at all. Some provinces have already moved down this path somewhat but Ontario is not there yet and the overall changes may not end up being significant. This leaves a choice between a very loose and difficult to monitor approach and a more rigid and structured approach. Which one better respects and protects a special needs person: that is the $64k question? However, professional experience favours structure and accountability.
Assuming guardianship is appropriate, what does it cost to apply? Legal fees can vary significantly but, according to the LCO report, the range in Toronto for an uncontested application is $8,000 to $20,000. My experience is that most applications should fit in about the $10,000 if they are uncontested and prepared by a lawyer who focusses in this area of law. These applications take a lot of work, particularly given the need to tailor the management plan to the specific needs of a particular individual and consult a range of people including other professionals. Viewed against the potential to accumulate as much as $270,000 or more in an RDSP, the cost may well be worth it.
The other issue guardianship appointments, or POAs for property, can address are the Qualifying Disability Trusts. The changes to the tax rates for testamentary trusts have significantly narrowed the availability of the graduated tax rates to the first three years of an estate and QDTs. There are several requirements for a trust to be a QDT. One is that it is testamentary (i.e. arises on death). Another is that the trustee and the beneficiary jointly elect for the trust to be a QDT. It is this requirement that is a problem if the beneficiary lacks capacity to make the election. The only options currently are for his/her attorney for property or guardian of property to make the election.
There are other options to manage property on behalf of a person who lacks capacity or who could benefit from assistance. Trusts are regularly used to own a home or manage financial assets for example. For some people, a guardianship appointment would be of limited use and should not be considered lightly. However, it can be a valuable tool to assist and protect special needs persons which is its primary function. Guardianship is not a sweeping condemnation. It merely answers a very dry legal question about the ability to engage in comprehensive financial management that can impede a special needs person from realizing their potential including accessing valuable planning tools like the RDSP.