Understanding Quebec’s mandate law changes

Intro Speaker:  

Hello, and welcome to Matters Beyond Wealth with your host, Leanne Kaufman, president and CEO of RBC Royal Trust. For most of us, talking about subjects like aging, late life, and estate planning isn’t easy. That’s why we’re going to help get the conversation started on this podcast while benefiting from the insights and expertise of some of the country’s top experts. We want to bring you information today that will help to protect you and your family in the future. Now, here’s your host, Leanne.

Leanne Kaufman:

Hello, I’m Leanne Kaufman, and welcome to RBC Wealth Management Canada’s Matters Beyond Wealth. Today I’m excited to introduce our guest host, Carmela Guerriero, vice-president of Sales and Client Experience at RBC Royal Trust. Carmela, take it away.

Carmela Guerriero:

Quebec’s recent amendments to protection mandates have ignited lots of questions. These changes, intended to enhance clarity in mandates, have sparked debates on their implications. As Quebec’s legal landscape undergoes a transformation, many grapple with the implication of these revisions on mandates. So, let’s break it down to understand what it is, who needs it, and the changes to be aware of.

Hello, I’m Carmela Guerriero, and welcome to RBC Wealth Management Canada’s Matters Beyond Wealth. With me today is Christina Kadas, a notary with the firm Christina Kadas. Christina has extensive experience in incapacity procedures. She’s accredited by the Chambre des notaires du Québec to present those procedures before Quebec courts. Christina brings in-depth knowledge of the process of a protection mandate and instituting protective supervision for an incapable person.

Christina, thanks for being here with me today to talk about changes to the mandate law in Quebec and why this matters beyond wealth.

Christina Kadas:

Thank you.

Carmela Guerriero:

So Christina, let’s take a few steps back and first talk about the very basic difference between a power of attorney and a protection mandate. I think differentiating the two is important, as sometimes people tend to think it is one and the same.

Christina Kadas:

Yes, that’s an excellent question. So, the main difference between a protection mandate and a power of attorney is the person’s ability to make their own decisions. So, a power of attorney is valid when a person is able to make their own decisions, but is choosing not to. A power of attorney is only applicable to financial decisions and doesn’t apply to medical decisions. The protection mandate is used when a person is confirmed to be incapable. So, when we have a confirmation of incapacity by a doctor, by a social worker, there is a legal procedure completed to confirm their incapacity, and this protection mandate applies to medical decisions and to financial decisions. So, when a person is capable, we would not be talking about a protection mandate, and when a person is incapable, they wouldn’t be able to use a power of attorney. So, the main difference is the person’s capacity or incapacity at that time. That’s what determines which legal documents we would be using to make decisions for them.

Carmela Guerriero:

And is it two separate documents, or can they all be in one, and then they’re just kind of activated depending [on] the situation?

Christina Kadas:

So, they could be drafted together in the same document, or they could be drafted in separate documents. That’s up to the notary and up to the client. They would have a discussion together just to determine what’s best and what best suits their needs. Sometimes putting a power of attorney and a protection mandate together in a document as one could be beneficial—when we have a client that’s what I refer to [as] in a “grey zone.” When a person is not fully capable but not fully incapable yet, they may be on their way to incapacity. If we don’t have the documents, the power of attorney and the mandate in the same document, we could end up stuck. The reason being that the power of attorney is valid when they’re fully capable, and then the protection mandate is valid when they’re incapable. So that’s why sometimes putting it together, even when we’re not sure or the incapacity is declared but not full yet, it could be useful to have them in the same document.

Carmela Guerriero:

Yeah, that’s a really great point. I guess there is that grey zone, by the time someone does become fully, I guess declared, there’s still the electricity bill that needs to be paid, right? Or a rent that needs to be paid. So yeah, that makes sense, that makes sense.

The population is aging, that’s for sure, and planning for the future is even more relevant, particularly around incapacity. Why is the protection mandate so important as part of that planning?

Christina Kadas:

Well, as you said, people are living longer, but unfortunately there are more and more illnesses. More and more, especially neurocognitive disorders, we can think of Alzheimer’s and dementia, they’re on the rise. So, before clients thought that the Will was the most important thing to be able to divide our assets, but in my opinion, the mandate is just as important because you’re deciding when you’re capable who is going to be the best person to make medical and financial decisions for you. So really it’s about taking care of your well-being and not only of your assets. So that’s why I think it’s extremely important to actually put it in place, to have your wishes respected if ever you’re not able to express them on your own.

Carmela Guerriero:

Yeah, that makes sense, when you’re at your most vulnerable, right? When you’re not able to speak for yourself, to have a document that can support you essentially seems really, really key, and just as important, as you said, as a Will.

So, someone right now who is starting to consider preparing a mandate, what would you recommend that they consider or think about as they build out their wishes if they should fall incapable?

Christina Kadas:

Definitely the choice of the mandatary, so the choice of the person that they’re going to choose to make their decisions for them, the person that will be best placed to handle their finances and handle their medical decisions. Sometimes it’s going to be two different people, or it’s going to be the same person. You can say, “This person is best placed to make my medical decisions and another person is best placed to make my financial decisions.” Or two people jointly, or three, that’s completely up to the person. But essentially you could choose someone that you know, is going to respect your wishes, you know that is going to act in good faith, and that’s always going to have your best interest. That’s going to be the driving force in whatever decisions they’re making on your behalf because like we said before, you’re not in a position to express yourself any longer.

So, this person is really your spokesperson. This is the person that is the one deciding what is best for you. It’s also to make decisions about things that you were normally doing that are still important to you. For example, caring for a spouse that you were making decisions for, not that you’re making decisions for, but that you were essentially paying for their expenses or covering household expenses or anything that you were doing before that was part of your daily life that was common or standard for you. You just want to make sure that the person that you’re choosing to make decisions for you keeps up with those types of things.

Carmela Guerriero:

Yeah, that’s an important one. I, myself think about this wonderful charity that I support every year, and financially if I could, I’d love for my mandatary to continue to do that, right? If I become ill and can’t speak for myself. So that’s a great point, making sure that is embedded, that wish of mine is embedded in the mandate so that they can carry that forward, right? That would be key?

Christina Kadas:

Yes, so that’s something that would have to be specified as well. As a general rule, we can no longer continue making donations when a person becomes incapable because we have to preserve their wealth for their needs just in case they need it for their care. But unless the person specifies it specifically in their mandate that they would like to continue supporting a certain charity or they would like to continue giving a certain amount of money, then the mandatary is in a position to respect those wishes. But if the mandate is silent about these types of things, unfortunately, once the incapacity is declared, they no longer have the authority to make those decisions on their own.

Carmela Guerriero:

Yeah, so these are really good things to think about as folks start to think about making their mandate.

Other things to think about, I know there has been recent legal amendments with respect to protection mandates. Can you share what they are and what this means in practical terms for those Quebecers that have a mandate or will be creating one soon?

Christina Kadas:

Yeah, so the amendments took place actually and were in effect as of November 1st, 2022. So any mandate that was signed before then would not necessarily have to be changed, but if someone would like to review their mandate that was signed before that or would like to create one after that date, there are certain rules that now apply to the new mandates that are signed.

One of the main ones is the obligation to appoint someone to receive a rendering of account. So before in our mandates, we had the possibility of excluding our mandatary from rendering account. So they didn’t have to necessarily report to anyone to let them know where our money was spent and why. However, this has definitely changed since November 1st of 2022, where now in the mandate, when you’re signing your mandate, you must choose someone that will receive this rendering of account. Someone that will, at least once a year, your mandatary would be sending a summary to this person of the funds that came in, the funds that went out, the net value, and why. So that’s a very important change that’s happened, and that’s namely to minimize cases of abuse.

Another change that’s happened in mandates is the obligation to prepare an inventory when the mandate is homologated, essentially. So when the judgment is rendered confirming that the mandate is now in effect. The mandatary that is now appointed to make the financial and medical decisions for the person, essentially the financial portion has to make an inventory of assets to say, “Okay, on the date that this person was declared incapable by the court, these are the assets that I’m managing. Here are the assets, here are the debts, this is the person’s net value, and here’s why.” That also is going to facilitate their task once they have to render account, because at least they have that starting point. So, we can always go back to that and see where money was spent, whether there was growth, whether the value has decreased, and that way we can justify it. So that’s really the role of the mandatary and of the verifier that will receive the rendering of account.

Carmela Guerriero:

It seems like there’s this tightening of governance, which sounds like a prudent thing to do to mitigate, as you said, elder abuse or other types of financial abuse. So, you have the mandatary and then you have the verifier. Who would you suggest that is? Someone obviously is independent or different, obviously, from the mandatary?

Christina Kadas:

Yes. Sometimes it’s the person that you’ve appointed as a replacement mandatary in your document. Sometimes it could be somebody completely different. So, it would just be someone that’s able to have that critical eye and that’s able to look into the report that’s being submitted by the mandatary and say, “Okay, this makes sense. Yes, spending is done in the best interest of the person.” Or, “The value of the person’s assets are being preserved.” Or, “No, decisions are being made foolishly,” or, “These are not made in the best interest of the person.” Or, “We could be making better decision. We could be preserving this person’s wealth better.” So, it would really be someone that can have that critical eye to look into what the person is managing, how the person is managing, and be able to say, “Yes, okay, I’m satisfied. This is in the best interest of the person,” or “No, maybe we have to make certain changes.”

Carmela Guerriero:

These are great insights to planning, but on the flip side, what happens if someone does become ill, especially with diseases like Alzheimer’s. Or has an accident that renders them incapable and unfortunately didn’t get to the planning? So, they become incapable, and now they don’t have a mandate with all these provisions. What happens in Quebec?

Christina Kadas:

Okay, so I think there’s two parts to that question. Firstly, when you have a diagnosis of say, cognitive disorder, it doesn’t necessarily mean that at the time of the diagnosis that the person is incapable. So that would definitely be my first question. It’s: okay, the person received the diagnosis, but we know that the person may actually be incapable in a couple of years. A diagnosis doesn’t necessarily mean that one day to the next, you’re unable to make a decision for yourself. So that would be a conversation to have, because maybe we do still have some time to sign a mandate. Maybe we could get a confirmation from a doctor to let us know that, yes, although this person has a diagnosis, they are still in a position to sign a legal document or to have a protection mandate put in place. In some cases, it’s possible. In some cases, it’s not possible.

Sometimes, like you mentioned, it could be an accident that renders a person incapable right away. In that case, there is a default system, which is called a tutorship to a person of full age. So, in the civil code, we do plan for another regime, which is the tutorship. Essentially, a person is appointed to make financial and medical decisions for the incapable person by the members of their family, and then a council is established with three members that would supervise the administration of that person. And then annually, a report would be sent to the public creator of Quebec to let them know where the person’s money was spent and why. So, the procedure is more strict. The reason being that we can’t assume that if the person was capable, they would have chosen the same person to make decisions for them. It’s more of a collective decision that’s made by their family. So, we need to make sure that that person is acting in their best interest, but there definitely is a default regime in place for someone that ends up incapable suddenly or didn’t plan for the incapacity.

Carmela Guerriero:

These are such great insights, Christina, but if you hope listeners just remember one thing from this conversation, what would that one thing be?

Christina Kadas:

I would say the importance of a protection mandate and how it’s pretty much just as important as signing a Will. A Will will handle the distribution of your assets after you pass away. However, in a mandate, you’re really deciding, who is going to make the best decisions for me, for my finances, for my person, my medical decisions when I’m still here and when I’m still alive? So if you have both of those components, I think you’re totally covered, because you’re choosing someone to decide for you when you’re here, and then you’re deciding how your assets are going to be distributed and who is going to distribute them in the event of your death. I would say when you’re thinking of your estate planning, the protection mandate is definitely a key component to consider.

Carmela Guerriero:

Well, thank you, Christina, for joining me today to talk about protection mandates and the changes to them and why this matters beyond wealth.

Christina Kadas:

Thank you.

Carmela Guerriero:

You can find out more about Christina Kadas at christinakadas.com.

If you enjoyed this episode and you’d like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review.

Until next time, I’m Carmela Guerriero standing in for Leanne Kaufman. Thank you for joining us.

Outro speaker:

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Thank you for joining us on this episode of Matters Beyond Wealth. If you would like more information about RBC Royal Trust, please visit our website at rbc.com/royaltrust.