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Difference between revisions of "Four Key Duties of a Fiduciary"
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Four Key Duties of a Fiduciary (view source)
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In the role of attorney for Martina, you are a fiduciary. A fiduciary is someone who is in a position of trust toward another person. The law places duties on the fiduciary. As Martina’s attorney, you must: | |||
# Act honestly, in good faith and in Martina’s best interest | |||
# Manage Martina’s money and property carefully | |||
# Act within the authority you are given and within the law | |||
# Keep good records | |||
==Duty 1. Act honestly, in good faith and in Martina’s best interest== | |||
Under [http://canlii.ca/t/849l the law], you have a duty to act honestly and in good faith. Because Martina has placed trust and confidence in you and has given over power to you, the law imposes a duty on you to honour that trust. | |||
In managing and making decisions about Martina’s affairs, you must act in her best interests. This means that you must make decisions that are best for her. You must ignore your own interests and needs, or the interests and needs of other people. | |||
If any decision you make benefits you, it must only be done with Martina’s full knowledge and consent. | |||
To help you act honestly, in good faith and in Martina’s best interest, follow these guidelines. | |||
==Understand when the power of attorney is in effect== | |||
Understand when the power of attorney starts. It may be right away or only on some “triggering event”—for example, when Martina can no longer make her own decisions (this type is called a “springing power of attorney”). Check to see if the power of attorney document says how you will know when Martina can no longer make her own decisions. | |||
==Be guided by Martina’s wishes, beliefs and values== | |||
Many things can affect your decisions about Martina’s money and property. For example, you might feel pressure from others. Martina’s abilities to make decisions might change from time to time. | |||
When managing and making decisions about Martina’s financial affairs, you must take into account her current wishes, known beliefs and values. | |||
Ask her what she wants. If she can’t say what she wants, try to find out what she would have wanted. Be guided by her beliefs and values. Look at past decisions, actions and statements. Ask people who care about Martina what they think she would have wanted. | |||
Make the decisions you think Martina would have wanted, unless doing so would harm her. | |||
==Avoid conflicts of interest== | |||
A conflict of interest happens if you make a decision about Martina’s property that may benefit someone else at Martina’s expense. As a fiduciary, you have a strict duty to avoid conflicts of interest. You should avoid even the appearance of a conflict of interest. | |||
Here are a couple of common examples of possible conflicts of interest. | |||
'''Whose car is it?''' You use Martina’s money to buy a car. You use it to drive her to appointments, but most of the time you drive the car just for your own needs. This is likely to be a conflict of interest (unless Martina wants her money used this way). | |||
'''Should you do business with family?''' Martina needs repair work in her apartment. You hire your son and pay him from Martina’s money. This may be a conflict of interest, even though the work was needed. It appears that you have put your personal interest to benefit your son in conflict with Martina’s interests. | |||
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| text = Because you are now a fiduciary, you should avoid any conflicts of interest. Sometimes people have good intentions, but do things they shouldn’t. As a fiduciary, you have a duty to avoid making decisions about Martina’s property that may benefit someone else at Martina’s expense. | |||
}} | |||
==Don’t give or loan Martina’s money to yourself or others== | |||
Be very careful when it comes to giving Martina’s money—or even loaning it—to yourself or others. | |||
You can make a gift or loan from Martina’s property if the enduring power of attorney says you can. Still, be very cautious. For example, make sure that any gifts do not increase or complicate Martina’s taxes or change her plans to give away her property when she dies. | |||
Any gifts or loans should be in line with what Martina would have wanted. For example, Martina may have made some regular gifts or loans, such as to a preferred charity. You can continue this, as long as: | |||
# Martina will have enough remaining to meet her personal care and health care needs as well as those of her dependants, and to satisfy any other legal obligations. '''and''' | |||
# You don’t spend over a certain amount. Under [http://canlii.ca/t/8p5w the law], there is a maximum value of all gifts and loans of this type that an attorney can make in one year. The maximum is the smaller amount as between (a) $5,000 and (b) 10% of the adult's taxable income for the previous year. | |||
For example, let’s say Martina’s taxable income for a year is $20,000. 10% of that amount would be $2,000. That amount is smaller than $5,000. So $2,000 would be the total maximum value of all gifts and loans (of the type Martina regularly made) you could make in the following year. | |||
==Don’t pay yourself unless the power of attorney allows it== | |||
Don’t pay yourself for the time you spend acting as Martina’s attorney, unless the power of attorney allows it. [http://canlii.ca/t/849l The law] says that you can be paid for acting as an attorney '''only if''' the enduring power of attorney document says you can and sets out the amount or rate. | |||
If you do pay yourself, be sure to charge a reasonable fee based on the amount or rate set out in the power of attorney. Carefully document how much time you spend and what you do. | |||
Note that even if you are not paid for your time, you are entitled to be paid back for any reasonable out-of-pocket expenses. For example, let’s say you use your own funds to buy a journal or chequebook to be used for Martina’s benefit. | |||
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