IV. A Streamlined Process to Appoint an RDSP Legal Representative

IV. A Streamlined Process to Appoint an RDSP Legal Representative2017-03-03T18:30:49+00:00

A.    Developing the Process

1.     Our Review of Alternative Arrangements

There is a long history of efforts to reform decision-making laws in Canada over the years and positive changes have been implemented in nearly every province. The LCO’s discussion paper for this project reviews and analyses existing laws, policies and programs in Canada and abroad as a foundation for developing creative solutions that build on past experience. We have had the benefit of commissioned reports, expert literature, policy documents and our own consultations, which provide insights into the contributions that existing frameworks can make. In this report, our recommendations integrate features of alternative arrangements in light of our research findings and the benchmarks for reform, discussed earlier. 

The starting point for our review of alternative arrangements is the federal government’s Economic Action Plan, where it recognized

Some provinces and territories have already instituted processes to allow for the appointment of a trusted person to manage resources on behalf of an adult who lacks contractual capacity, or have indicated that their system already provides sufficient flexibility to address these concerns.[129]  

Below, we briefly summarize the processes that are being or could be used to appoint a person who is legally authorized to make decisions for RDSP beneficiaries that the federal government has recognized. 

Similar to Ontario’s SDA, most of these processes were originally designed to apply to broader areas of property management than the RDSP. They permit adults to name another person to assist with or manage their finances, if they meet a stipulated threshold for capacity. Alternatively, a guardian (or substitute decision-maker by a different title) can be appointed following a capacity assessment. Nevertheless, the laws in this area vary widely across jurisdictions and governments have reported that concerns with establishing an RDSP do not arise in their jurisdictions or have not been escalated to a level that necessitates a policy response. 

Newfoundland and Labrador is the exception; it passed a legislative amendment to create a new process that specifically addresses this issue, albeit it is not in force. Saskatchewan has also provided guidance to members of the public on how to draft a POA that is limited to appointing a plan holder.

 

Figure 3: Processes in Provinces and Territories Recognized in the Economic Action Plan 2014

Alberta

Alberta permits a desk application for a court appointed guardian (called a “trustee”). Applicants fill out a self-help kit and submit it to specialized review officers in the Office of the Public Guardian who ensure proper completion of the documents and fulfill other duties, including providing notice to appropriate parties and drafting a review officer’s report. Review officers typically meet with adults subject to the application to consult them about their wishes before forwarding the application and supporting documents for a judge’s approval.[130]  

 

British Columbia

In British Columbia, adults can grant a “representation agreement” (RA) to authorize someone to help them or make decisions on their behalf. The threshold for capacity to do so is based on a set of non-cognitive factors that are less stringent and substantively different than for a POA in British Columbia and Ontario. It reflects a social policy decision to extend personal appointments to adults with significant disabilities who have unique ways of communicating that can be understood by a trusted person. RAs apply to stipulated areas of routine financial management that do not expressly include the RDSP. Some interpret the legislative language as including the RDSP and financial institutions have accepted RAs to establish plans.[131]

 

Manitoba

As part of an overarching scheme to provide services to persons with developmental disabilities, a substitute decision-maker can be appointed for these persons through an administrative proceeding that involves an initial screening by Manitoba’s Vulnerable Persons Commissioner and an appearance before a hearing panel.[132]  

 

Newfoundland and Labrador

Newfoundland and Labrador amended its POA legislation to permit adults to name two persons to be their “designates” for the RDSP. The amendments are not yet in force. The threshold for capacity to execute an agreement is less restrictive than are Newfoundland and Labrador’s and Ontario’s requirements for a POA. It is based on British Columbia’s RAs (see above). If an adult is unable to make a designation, certain family members can initiate an appointment of the Public Trustee through the Trial Division Court (equivalent to Ontario’s Superior Court of Justice).[133]  

 

Northwest Territories

The Government of the Northwest Territories has indicated that it will address the issue on a case-by-case basis. Not many cases are expected given its population of fewer than 45,000 residents.[134]

 

Saskatchewan

Saskatchewan recommends adults use a “special limited” POA to appoint a plan holder based on the province’s existing legislation, which contains a less stringent threshold for capacity than exists in Ontario. It suggests that the scope of the attorney’s powers be restricted to a plan holder who would not have authority to take funds out of the RDSP. Those extended powers would require full property guardianship or “co-decision making” due to concerns about financial abuse.[135] 

In Saskatchewan, a judge may appoint a co-decision maker as a less restrictive alternative to guardianship, where an adult “requires assistance in decision-making in order to make reasonable decisions….”[136] Co-decision makers share legal authority with the adult, and where a contract requires them to co-sign, it is voidable if one person signs it alone. However, co-decision makers must acquiesce in an adult’s decision if it is reasonable. Applications for this arrangement must be brought to the Court of Queen’s Bench (equivalent to Ontario’s Superior Court of Justice).[137]  

 

Yukon

The Yukon permits adults to grant a “supported decision-making agreement” to give trusted friends and relatives legal authority to help them make their own decisions. Supported decision-making “arrangements are for adults who can make their own decisions with some help”.[138] Supporters can participate in activities such as receiving confidential information, giving advice and communicating decisions. However, supporters are prohibited from making decisions on an adult’s behalf and a decision made or communicated with assistance is considered to be that of the adult.[139]  

The Yukon also has “representation agreements”, which authorize someone to make decisions on an adult’s behalf. Like RAs in British Columbia, they are restricted to routine financial affairs that do not expressly include the RDSP. The threshold for capacity to grant an RA is the same as for POAs in the province but is less stringent than in Ontario. RAs differ from POAs in the Yukon because they are drafted with the help of a government office rather than a lawyer. They are more accessible for that reason but also expire at the earlier of three years or when an adult’s capacity declines.[140]  

In addition to decision-making laws in provinces and territories highlighted by the federal government, our discussion paper considers laws in the areas of trusts, and the income support and social benefits sectors. Certain examples have already been mentioned in this report, such as CPP, OAS and ODSP trusteeships. 

 

2.     Public Consultations on the Options for Reform 

Even the brief summary of alternative arrangements in the preceding section reveals that approaches to this issue across Canada largely correspond to established legal frameworks in separate jurisdictions. The objective of our dedicated phase for public consultations was to gain feedback on the options for reform in Ontario. 

Several options for reform presented in the discussion paper laid the groundwork for our consultations. Based on our review of existing arrangements, mentioned above, we proposed that a streamlined process could be administered through 

  • a personal appointment similar to a POA but available to adults who meet a threshold for capacity that is less stringent than that to grant a POA for property management under the SDA, alone, or in combination with
  • a streamlined application to the Superior Court of Justice, an administrative tribunal or a government office.

The LCO understands that stakeholder buy-in is crucial to recommending law reform measures that are effective and we have been purposely sensitive to the feedback we received on these options. We also encouraged members of the public to comment on further options that were not identified in the discussion paper, which could reasonably achieve the benchmarks for reform.

The persons we contacted included lawyers and advocates who participated in consultations leading up to past commissioned reports that shaped the SDA (commonly called the Fram, Weisstub and O’Sullivan reports) and who have put the SDA in practice from the 1990s until present.[141] Self-advocates and their family and friends shared their personal experiences with the SDA, private trusts and ODSP. Furthermore, we heard from policymakers about the opportunities and constraints for future directions in Ontario. (Detailed information on whom we consulted and how is found in Chapter I.E.1, “Research and Consultations”.) 

Our recommendations in the remainder of this report are meant to balance the diverse perspectives that were expressed to us.

 

B.    Overview of the LCO’s Recommendations

The Law Commission of Ontario recommends that the Government of Ontario implement a process that would enable adults to personally appoint an RDSP legal representative to open and manage funds in an RDSP, where there are concerns about their capacity to enter into an RDSP arrangement with a financial institution. 

The process would be available to adults who do not have an attorney or guardian for property who could act as their plan holder. It would enable adults to choose whom they would like to assist them in gaining access to an important social benefit by opening the RDSP and deciding the plan terms. However, an RDSP legal representative would not have authority that extends beyond that of a plan holder to manage funds paid out of the RDSP. Therefore, when the time comes for beneficiaries to receive payments out of the RDSP, they would be required to manage their own funds or apply for guardianship, if they do not have legal capacity to do so. 

RDSP beneficiaries, like all adults in Ontario, have legal capacity under the SDA if they are able to manage their own finances with the help of family, friends and service providers.[142] However, the LCO believes that where adults are unable manage funds paid out of the RDSP with help, they require a more comprehensive solution than an RDSP legal representative can provide. This is due, in part, to concerns about financial abuse but also the nature of RDSP funds, which we discuss later in the report. 

In Ontario, guardians are a source of comprehensive decision-making for property management that adults and their supporters can turn to when in need. In addition, the LCO’s ongoing project on Legal Capacity, Decision-Making and Guardianship considers less restrictive alternatives to guardianship that could, possibly, address challenges that adults with varying abilities face. Our discussion paper in that project was released in June 2014. 

With respect to the criteria to grant the personal appointment, the LCO recommends they be based on the definition of legal capacity to grant a POA at common law. However, if the Government of Ontario believes that these criteria are not sufficiently flexible to improve access to the RDSP, we recommend that they be based on section 8(2) of the British Columbia Representation Agreement Act. These two thresholds for legal capacity are less stringent than the requirements to grant a POA for property under the SDA. Recognizing that Ontario’s existing threshold is unattainable for some adults with disability, we propose that this measure could improve access for adults wishing to appoint a plan holder. 

As a safeguard against financial abuse, we believe that the ease with which adults would be able to personally appoint an RDSP legal representative should be offset by robust protections. Therefore, we recommend that adults be entitled to benefit from provisions under the SDA that include requiring attorneys for property to keep accounts of financial transactions and permitting members of the public to file an allegation of suspected abuse with the OPGT. In addition, we recommend that an RDSP legal representative have authority to open an RDSP and decide the plan terms but not manage funds paid out of the RDSP. The ITA has embedded several protective measures for the management of funds while they are held inside the RDSP. Restricting the scope of an RDSP legal representative’s authority from extending beyond that of a plan holder would reduce the opportunities for self-dealing and mismanagement after funds have left the plan. 

Adults who appoint an RDSP legal representative using our suggested streamlined process could choose a relative, including a parent, spouse, common-law partner or sibling; a close friend; or a community organization that is approved by a designated government agency. 

Once an RDSP legal representative has been appointed, we recommend that he or she have the same duties of an attorney for property for an adult who has been found to be legally incapable under the SDA, as applicable, and be held to the same standard of care. This would require RDSP legal representatives to encourage an adult’s participation in decision-making, to the best of his or her abilities, and to consult with supportive family members and friends, among other duties. They would also be fiduciaries under the law, whose responsibilities must be “performed diligently, with honesty and integrity and in good faith, for the [adult’s] benefit”.[143] 

Finally, the LCO recommends that measures be adopted to provide third parties with certainty and finality in transacting with an RDSP legal representative, including exemptions from liability where they reasonably rely on the RDSP legal representative’s instructions. 

A full list of our recommendations is found in Chapter V. In the subsequent sections, we explain specific features of the streamlined process as follows:

 

Figure 4: Features of the Streamlined Process

  1. Determining the Beneficiary’s Capacity to be a Plan Holder
  2. Enabling Beneficiaries to Personally Appoint a Plan Holder
  3. Capacity Criteria to Grant a Personal Appointment
  4. Countering the Increased Opportunities for Financial Abuse
  5. The RDSP Legal Representative’s Role and Responsibilities
  6. Providing Third Parties with Certainty and Finality
  7. Who May Act as an RDSP Legal Representative
  8. Terminating the Personal Appointment

 

C.    Features of the Streamlined Process

1.     Determining the Beneficiary’s Capacity to Be the Plan Holder

Who Determines a Beneficiary’s Capacity to Establish an RDSP and How?

The ITA sets out the terms for opening and managing an RDSP at a financial institution. As discussed above in Chapter II of this report, an adult beneficiary must be the RDSP plan holder, unless he or she is not “contractually competent to enter into a disability savings plan” with a financial institution, in which case another legally authorized person must be the plan holder.[144] (See Figure 2: How to Open and Manage an RDSP under the Income Tax Act). 

Under the common law, an adult has legal capacity to enter into a contract when he or she understands the nature and effect of the transaction.[145] Financial institution employees could decline to open an RDSP for a beneficiary who they have reasonable grounds to believe does not meet this threshold of capacity. However, stakeholders have informed the LCO that it is much more likely that beneficiaries and their supporters will prefer to assess whether the beneficiary has contractual capacity, privately, before appointing an RDSP legal representative and approaching a financial institution.

In practice, beneficiaries and financial institution employees may not know how to determine whether the beneficiary has capacity to open and manage an RDSP. Financial institution employees are regularly called upon to assess the legal capacity of their clients in transactions unrelated to the RDSP. Nevertheless, ARCH Disability Law Centre, community organizations and financial institutions expressed concern to the LCO about the involvement of financial institutions in determining whether an adult has contractual capacity to enter into an RDSP arrangement.[146] The LCO heard that not all financial institutions train their staff on the subject and some apply a “common sense” test at the stage of opening an RDSP.[147] Similarly, although adults with disability and their supporters may have found themselves in situations where legal capacity to make a range of decisions is at issue – such as consent to treatment or personal care – they might not distinguish between the myriad definitions of legal capacity that affect them. 

As a result, in Chapter IV.D of this report, we recommend that the Government of Ontario disseminate accessible information to service providers and members of the public on any future streamlined process that includes guidance on the test for contractual capacity to open and manage an RDSP. 

 

Refuting a Financial Institution’s Opinion that a Beneficiary Is Not Contractually Capable

There may be adults who disagree with a financial institution employee’s opinion regarding their capacity to enter into a contract and who would like to refute it. In Ontario, adults could do this by requesting a letter of opinion from a designated capacity assessor to prove that they understand the nature and consequences of opening and managing funds in an RDSP. Such a letter of opinion may not be determinative of an adult’s ability to establish an RDSP because it is not a legal finding that a financial institution is required to accept. However, it would provide evidence to rebut the financial institution employee’s opinion and could result in a resolution. 

Capacity assessors can provide a letter of opinion on request regarding an adult’s capacity to make specific decisions, such as the capacity to open and manage funds in an RDSP. The adult making the request must be careful to indicate what type of opinion is desired, however, because capacity assessments can be used for other purposes, including the appointment of a guardian for property under the SDA. The OPGT automatically becomes the statutory guardian for adults who have been determined to be legally incapable of property management under section 6 of the SDA, where the capacity assessor is asked to issue a “Certificate of Incapacity”.[148] Nevertheless, capacity assessors can provide letters of opinion without issuing a Certificate of Incapacity, where the purpose of the request has been clearly specified. The capacity assessment process is voluntary, relatively inexpensive, takes place in the community and, for adults who believe themselves to be legally capable, it is a valid option. 

The LCO is also aware that financial institutions have previously relied on doctors to conduct capacity assessments in the context of the RSDP.[149] In a brochure on the Capacity Assessment Office, the Ministry of the Attorney General comments, 

An assessment of mental capacity for any purpose other than those specified in the Substitute Decisions Act need not be performed by a designated capacity assessor. In situations not covered by the Act, another professional may be able to provide an opinion about capacity for that particular purpose. This may be a less intrusive or less costly option.

Before requesting any assessment – whether from a capacity assessor or other professional – it is important to be clear about the purpose of the capacity assessment, and certain that an assessment is actually necessary in the circumstances.[150] 

 

2.     Enabling Beneficiaries to Personally Appoint a Plan Holder 

The Streamlined Process as a Personal Appointment

Early proposals to the LCO and the federal government favoured a process that would enable adults to choose their own RDSP legal representative and enthusiasm has continued, throughout the project, for this as a preferred option.[151] In this report, we recommend such a process, which we believe could be readily integrated in Ontario, where POAs are already common. 

POAs, representation agreements, designation agreements and supported decision-making authorizations are all types of personal appointments that are used in Canada. They can be fast and cost-effective, and the federal government has highlighted several as an adequate remedy for RDSP beneficiaries’ concerns (see Figure 3: Processes in Provinces and Territories Recognized in the Economic Action Plan 2014).

Personal appointments are rooted in values of autonomy, human dignity and self-determination because they allow adults to proactively select whom they would like to help them and how. The procedural exigencies of personal appointments are also widely perceived as less intrusive than public appointments, which are administered with the oversight of a court, tribunal or government office.[152] Unlike guardianship applications, they do not result in a formal determination of incapacity. Moreover, arrangements can be made with the assistance of a lawyer or in the comfort of one’s own home. 

During the LCO’s consultations we asked participants whether they believe adults should be able to choose their own RDSP legal representative. Of those who responded, most affirmed that, yes, they should. The following statements are indicative of what we heard:  

Legal clinic representative:

I would suggest that the threshold for capacity should be lowered and should include as many accommodations as necessary in order to enhance someone’s decision-making ability so that they can appoint their own representative should they need their own representative.[153] 

Mother of an adult with disability

Yes, I think that, effectively…those who are able should be entitled to choose [their RDSP legal representative].[154] 

Self-advocate:

Do you think adults themselves should be able to choose [who should] be their representative?…I think they should be able to choose and not have it decided for them.[155]  

The LCO agrees with stakeholders’ assertions that this option for reform is desirable: we understand that it could be consistent with the benchmarks for reform and specific aspirations for privacy, informality and simplicity. 

However, there are attributes that a personal appointment must have to improve access to the RDSP for adults in Ontario. It must be based on less stringent criteria than the threshold for capacity to grant a POA for property under the SDA because this standard has been unattainable for some adults wishing to establish an RDSP. It must also be bolstered with enhanced safeguards because the more relaxed the formalities, the greater the opportunities for financial abuse. Finally, it must satisfy third parties’ concerns. We continue to discuss these and other important elements that we believe should be included in a streamlined process for RDSP beneficiaries, below.

 

The Law Commission of Ontario recommends that:

1.      The Government of Ontario implement a process that would enable adults to personally appoint an RDSP legal representative, where there are concerns about their capacity to enter into an RDSP contract with a financial institution and they do not have an attorney or guardian for property management.


What to Do When an Adult Is Unable to Choose: Applying to Be an RDSP Legal Representative

There are adults who will not be able to take advantage of a personal appointment process no matter how flexible the capacity criteria because they may not have access to a person who can understand their wishes. Personal appointments may also not be practical for all adults who are able to grant them. For instance, adults with episodic disabilities such as bipolar disorders, who experience fluctuating symptoms, might revoke the document when they are experiencing symptoms.[156] Therefore, the LCO’s discussion paper reviewed public appointment processes that would enable a parent, sibling, friend or other candidate to apply to become an RDSP legal representative in cases where an adult cannot appoint someone him or herself. 

In Ontario, a public appointment process could be administered through the Superior Court of Justice, an administrative tribunal (i.e., the Consent and Capacity Board) or a government office. Adults with disability, family members and friends whom the LCO contacted were hesitant to express a preference among these public appointment processes and, generally, characterized them as intrusive and demoralizing. Court and administrative tribunal processes were identified as “imping[ing] too greatly on the independence, autonomy and access to justice of persons with disabilities”.[157] Additionally, we received feedback from numerous stakeholders to the effect that “fast-tracked court or tribunal applications are unlikely to succeed as a result of government resource constraints, inaccessible procedures, and the limited expertise of the available tribunals”.[158]

Overall, participants familiar with ODSP trusteeships favoured a process that could be delivered by a government agency, such as the OPGT, the Ministry of Community and Social Services (MCSS) or an independent department, which they said could be established specifically to support RDSP beneficiaries.[159] However, experiences with government agency administered processes in Canada and abroad demonstrate that they are resource intensive and may not be feasible in these circumstances. Processes to appoint a representative for recipients of income support and social benefits payments demand that a government case worker oversee the appointment, review periodic accountings and respond to complaints.[160] The LCO has concerns that options for reform in this area of the law would necessarily entail the allocation of additional funding that the Province may not have at present and that without funding for adequate oversight mechanisms, financial mismanagement could go undetected.[161]  

The LCO did receive a novel proposal in the final stage of our project that a comparable process could be administered in a more private and less resource-intensive manner with the oversight of a professional, such as a family doctor, lawyer or social worker. According to CACL, CLO and PooranLaw, the process would allow an individual to nominate him or herself as an RDSP legal representative, where a professional who has known the applicant and beneficiary for a designated period of time attests to their relationship as one that is characterized by trust.[162]

On its face, the process could be consistent with the aspirations of adults with disability and their family and friends because it would enable them to establish a plan holder by contacting service providers who may be active in their community networks. Additionally, the Canadian Bankers Association submitted, “We are of the view that a process that engages private professionals such as doctors or lawyers to provide the requisite degree of oversight when a government approved form is completed to ‘qualify’ the holder will facilitate the opening and operating of RDSPs….”[163] 

However, academics specialized in legal capacity and decision-making laws, advocacy organizations, government representatives and legal professionals were unaware of analogous laws in Canada or abroad that permit a legal representative to nominate him or herself with the oversight of a non-governmental entity.[164] The Ontario Medical Association expressed that professionals, such as doctors, may not feel qualified to participate in such a process. Interviewees also raised questions about what assessment criteria would be used, whether the degree of oversight would be sufficient to safeguard beneficiaries against abuse and how the professionals involved in the process could be secured against liability.[165] Considerable research would be required to resolve these issues, beyond that which our project allows at this stage.

Adults who are unable to personally appoint a plan holder are not, however, entirely without recourse. Ontario’s existing process of applying to the Superior Court of Justice for a conditional guardianship order remains an option. It is also consistent with approaches in British Columbia, Newfoundland and Labrador, and Saskatchewan where an application can be brought to the trial level court when an adult is unable to grant a personal appointment. 

 

3.     Capacity Criteria to Grant and Revoke a Personal Appointment

As mentioned above, personal appointments do not result in a formal determination that an adult is incapable. Nevertheless, personal appointments are conditional on the grantor’s ability to meet stipulated criteria that are correlated with capacity. These criteria are typically framed in positive language, which affirms that an adult has capacity to grant a POA, supported decision-making authorization or other personal appointment, at the time of its execution. The threshold for capacity to revoke a personal appointment is ordinarily the same as the threshold to grant the personal appointment. 

Definitions of capacity differ from place to place and across areas of decision-making. Other jurisdictions accept less stringent criteria in relation to personal appointments for financial matters and Ontario does for personal care. Additionally, beyond the SDA, Ontario recognizes various standards, for instance, to create a trust, make a will and retain legal counsel.[166]  

The question for us in this section is what criteria would be flexible enough to improve access for RDSP beneficiaries but, at the same time, respect the fundamental characteristics of personal appointments, including safeguards against abuse and the grantor’s agency. 

In section 4, “Countering the Increased Opportunities for Financial Abuse”, we also suggest a number of targeted safeguards that could be implemented to counterbalance the less stringent criteria for a personal appointment. 

 

Agency, Flexibility and Safeguards

POAs under the common law create what is essentially an agency relationship between the principal (the grantor) and the agent (the attorney). Agents have a duty of obedience that obliges them to follow a principal’s instructions. Indeed, common law POAs expire when an adult no longer has the capacity to direct the attorney because the decision of the agent is treated as though it were that of the principal.[167] 

Continuing POA legislation was enacted to allow a POA to persist into an adult’s legal incapacity. Continuing POAs do not establish an agency relationship, per se, because although attorneys should encourage an adult’s participation, among other duties, they can substitute their own decisions for those of a person who has been found to be legally incapable.  [168] Nevertheless, there is still an element of agency in the act of granting a POA itself because it is a tool that is designed to give effect to an adult’s expressed wishes, including the desire for an attorney to make decisions on his or her behalf. 

Making a personal appointment conditional on the ability to demonstrate some form of agency is important to ensuring that an adult’s wishes are realized.[169] If the criterion for a POA were that a grantor is 18 or over, alone, there would be nothing to indicate that he or she actually desires a POA. 

In the course of our consultations, parents told the LCO of occasions where family members had obtained a POA or representation agreement on behalf of individuals who were unable to consent. Some expressed discomfort with having done so themselves, while others said that they had not done so because they preferred to wait for a legal process that meets their loved ones’ needs. The LCO is also aware of innovative proposals that capacity criteria should not be required because an individual’s capacity can be actualized through interpretive methods used by his or her informal, community network.[170]

Our suggestions in this project are intended to be sufficiently flexible for the law to capture the diverse circumstances of adults with disability seeking to participate in the RDSP, including those who may need support making and communicating their decisions. Nevertheless, the LCO maintains that adults should be able to make choices that affect their lives and do as much for themselves as possible, and that a grantor’s active contribution to making a personal appointment, such as a POA, is imperative. 

Therefore, although they may be less stringent, the criteria for a personal appointment should be crafted to provide an indication that adults are executing the document willingly and free of undue influence, and that they are able to ascertain whether an RDSP legal representative is a suitable person. Otherwise, additional oversight would be required that would move the process outside the ambit of a personal appointment.

 

Capacity to Choose an RDSP Legal Representative: The British Columbia Approach

The most flexible test of capacity to execute a personal appointment for financial matters in Canada is found in the British Columbia Representation Agreement Act. Representation agreements apply to prescribed areas of routine financial management that do not explicitly include the RDSP. However, adults with disability have interpreted the legislative language as including the RDSP and representation agreements are being used to appoint plan holders in that province.[171] Newfoundland and Labrador has also adopted a similar test for adults seeking to access the RDSP. In this report, the LCO recommends that test of capacity to appoint an RDSP legal representative in our jurisdiction be based on the Representation Agreement Act, only if the Government of Ontario wishes to adopt the more flexible option being used in Canada. We explain our reasons for this recommendation below and discuss several reservations that have led us to recommend that the Government of Ontario first consider a different, cognitive test that would be more in keeping with Ontario’s current framework.

The Representation Agreement Act came into force in 2001 after years of “unprecedented community-government collaboration”.[172] With substantial input from the public about their goals for a novel decision-making arrangement, it was positioned as one of several interlocking decision-making laws and was projected to supplant POAs. However, British Columbia’s POA legislation remained in force and, after a review of both regimes, commissioned by the Attorney General, the two now operate in parallel.[173] 

Nevertheless, RAs are distinguishable from POAs. We have already noted that RAs are restricted to routine financial affairs. Additionally, whereas the threshold for capacity to grant a POA is premised on cognitive criteria that can be likened to Ontario’s, adults can make an RA where they demonstrate non-cognitive factors that are both less stringent and substantively different. 

The factors required to make a representation agreement reflect a social policy decision to extend personal appointments to adults with disabilities who may have “unique ways of communicating” that can be understood by a trusted person who has personal knowledge of “what he or she values and what he or she dislikes or rejects”.[174] Although they include an element of awareness about how a representation agreement can affect the adult, they do not require that adults have particular knowledge about their circumstances, including the types of decisions that a representative could make. The Representation Agreement Act reads as follows:

In deciding whether an adult is incapable of making a representation agreement…all relevant factors must be considered, for example:

(a)      whether the adult communicates a desire to have a representative make, help make, or stop making decisions;

(b)      whether the adult demonstrates choices and preferences and can express feelings of approval or disapproval of others;

(c)      whether the adult is aware that making the representation agreement or changing or revoking any of the provisions means that the representative may make, or stop making, decisions or choices that affect the adult;

(d)      whether the adult has a relationship with the representative that is characterized by trust.[175] 

Framing capacity in this manner has been favoured in the disability community as a means to recognize the “shades of grey with respect to capacity”.[176] In a research paper commissioned by the LCO, the Canadian Centre for Elder Law explains, 

For supporters of the new system, moving to a functional capacity test that enumerates such subjective terms as “feelings of approval” or a relationship “characterized by trust” brings the legislative system into the circles of support and the reality of engaging with some members of the community of persons with intellectual disabilities.[177] 

Professor Robert Gordon has written that representation agreements are “of immense importance for intellectually disabled adults, and especially those who have been cared for and assisted throughout their youth by family members, and when there is a continued need for assistance during adulthood”.[178] He informed the LCO that the capacity criteria have opened up access to financial planning tools for adults with developmental disabilities and brain injuries. Representation agreements, he says, are also increasingly familiar to third parties, such as financial institutions, as a result of public education.[179] Between 2006 and 2009, approximately 1,000 RAs were filed with the voluntary registry and support service, Nidus Personal Planning Resource Centre and Registry, by adults of all ages.[180] 

Adults with disability, family members and advocacy organizations urged the LCO to adopt a process modelled on the Representation Agreement Act. For instance, a self-advocate told us that the British Columbia framework “makes it easier for people to do these things in a way that doesn’t create a problem as they’re trying to open [an RDSP]”.[181] In addition, we heard from financial institutions that they would be amenable to this solution as long as the representative’s authority to make decisions concerning the RDSP was explicitly recognized.[182] 

Based on this information gained in our consultations, the LCO believes that the non-cognitive criteria reflected in the Representation Agreement Act would allow adults who otherwise might not be able to personally appoint someone as an RDSP plan holder. However, significant reservations about these criteria that were brought to our attention should be considered if this option is to be implemented in Ontario. The first relates to financial abuse and the second to uncertainties about how the criteria would be applied in practice. 

With respect to financial abuse, the LCO heard from select stakeholders that the non-cognitive approach could increase the opportunities for undue influence in the drafting process and wrongdoing after an appointment because it does not require that adults have the ability to understand the nature and consequences of the appointment. ACE, for example, submitted to the LCO that

Fundamentally, we understand that the non-cognitive capacity threshold accepts that an adult decision-maker need not have the ability to understand the nature or consequences of a decision in order for binding legal effect to be given. While we disagree with approach in principle, we also believe it creates an increased risk of financial abuse.[183]

The disability community acknowledges the increased risks presented by the Representation Agreement Act and the legislation contains enhanced protections that adults are obliged to use to offset them.[184] The safeguard that differs most notably from arrangements in other jurisdictions is the requirement that an adult appoint a monitor, unless the representative is a spouse, the Public Guardian and Trustee, a trust company or a credit union. A monitor is also not compulsory if the adult has at least two representatives who must act unanimously in exercising their powers.[185] 

According to the Public Guardian and Trustee for British Columbia, complaints regarding RAs are not prevalent and no more frequent than those concerning POAs. Nor has there been “a significant case taken to court regarding financial exploitation by a representative”.[186] Furthermore, in this project, we propose measures to safeguard beneficiaries against financial abuse that could be effective regardless of whether the capacity criteria are cognitive or non-cognitive. This is because each of our recommendations is premised on a process that is more approachable at the front-end.

Certain other reservations that ACE and other stakeholders have articulated are, however, unique to a process that relies on the non-cognitive approach. They relate to the practical application of the criteria, which ACE characterizes as “both so broad as to be potentially meaningless and so complex as to be impractical”.[187] The LCO received multiple comments that these criteria are a source of tension in British Columbia. Notably, estates and trusts lawyers who assist adults with future planning tools have been hesitant to embrace RAs because “the legal community has been concerned that the test in the representation agreements is vague”.[188] 

Determining an adult’s communication of “preferences”, the expression of “feelings of approval” and the existence of a relationship “characterized by trust” are all factors that may be difficult to gauge. In practice, a close caregiver who has intimate knowledge of the adult’s way of communicating tends to mediate the process of granting a representation agreement; however, the adult’s instructions could be ambiguous to third parties, such as lawyers and witnesses. ACE notes that “while it is certainly true that caregivers develop these interpretive abilities, [we are] concerned that this proposal will, again, create opportunities for abuse that are impenetrable to review”.[189] 

The LCO shares these apprehensions, especially as they call into question the adult’s agency in executing an authentic personal appointment that reflects his or her wishes. Stakeholders have proposed that the capacity criteria under the Representation Agreement Act be fine-tuned to provide clarity to third parties before they are adopted in Ontario. By way of example, a “relationship that is characterized by trust” could be qualified by its having been ongoing for a minimum number of years.[190] We believe that such modifications could be pursued, given the predominant view that RAs are advantageous to adults with disability seeking to establish an RDSP. However, as a first position, we recommend that the Ontario government consider an approach to deciding the capacity criteria for a streamlined process that is more consistent with cognitive standards that are already in use in our province, as discussed below. 

 

Capacity to Choose an RDSP Legal Representative:  The Common Law Test of Capacity

Although the British Columbia model is well-liked in the disability community, the LCO recommends that the Ontario government first consider a threshold for capacity that is more in keeping with existing, cognitive standards in the province. Specifically, we suggest that a standard that is adapted from the common law threshold for a POA could be accessible to RDSP beneficiaries. 

The cognitive standard that best responds to the needs of RDSP beneficiaries would be one that can reach the greatest number of individuals, who have diverse experiences with disability. The LCO’s discussion paper reviews a number of cognitive standards that are used in Canadian provinces and territories for personal appointments, such as supported decision-making authorizations, self-designated trusts and continuing POAs. For the most part, they mirror the definition of capacity at common law to make a POA, which simply demands that the grantor has the ability to understand and appreciate the nature and consequences of the appointment. 

However, the threshold for capacity to enter into different types of decision-making arrangements based on the common law standard can be more or less stringent because “the requisite capacity to enter into legal transactions varies according to the type of transaction”.[191] What an adult must be able to understand and appreciate depends on multiple considerations that include the authority awarded to the legal representative, the relative complexity of decisions and the area of decision-making (e.g., medical treatment, real estate, the RDSP). 

Supported decision-making authorizations provide an example. Government representatives in the Yukon and Alberta, where supported decision-making authorizations are available, have indicated that these arrangements were created in order to respond to ideological concerns about definitions of capacity voiced in the disability community.[192] Supporters can participate in activities such as receiving confidential information, giving advice and communicating decisions. They are seen as particularly beneficial in the healthcare context, where an adult may want a spouse, parent or other person to be involved in sensitive decisions.[193]   

However, supporters are prohibited from making decisions on an adult’s behalf and a decision made or communicated with assistance is considered to be that of the adult.[194] As a result, the capacity requirements for supported decision-making authorizations are elevated: they are available only to “adults who can make their own decisions with some help”.[195] For the RDSP, a supporter’s help would need to be sufficient to enable an adult to enter into a contract with a financial institution him or herself.

Family members and advocacy groups in the community of persons with psychosocial disability, such as schizophrenia, said that an adult’s capacity to make decisions about the RDSP with some help could fluctuate over time. They, along with parents of adults with developmental disability, were ambivalent as to whether their loved ones would be able to meet the threshold for capacity to grant this type of appointment.[196] Moreover, the LCO met with and heard about other adults with significant impairments, who would not likely be able to understand and appreciate essential terms of the RDSP, which would be required under the basic common law test.[197] 

Nevertheless, the basic common law test can be tailored to be more accessible to RDSP beneficiaries. The Law Reform Commission of Nova Scotia has observed, “For a limited [enduring POA], the test for capacity is whether the donor understands the nature and effect of the more limited powers granted”.[198] In the case of the RDSP, Saskatchewan has recommended that adults use a “special limited” POA to appoint an RDSP plan holder based on the province’s existing legislation, which contains a threshold for capacity that reflects the simplicity of the common law. The Ministry of Justice and Attorney General has suggested that the scope of the attorney’s powers under a special limited POA be restricted to those of a plan holder who can set up an RDSP, consent to contributions and make investments but who cannot take money out of the RDSP.[199] In a booklet released to the public, the Ministry explains that the test of capacity sets a low threshold. In other words, if a person understands that he or she is signing a paper that appoints a parent as attorney to create a savings account, there would be sufficient understanding to give capacity to sign the power of attorney.[200] 

The Public Guardian and Trustee for Saskatchewan informed the LCO that its guidance to the public was intended to make POAs more accessible for adults with disability. Additionally, restrictions on the attorney’s authority would serve to limit the opportunities for abuse in circumstances where the beneficiary may be unable to detect wrongdoing.[201] 

Ontario’s definition of capacity to give a POA for personal care provides another example of a variation on the common law test. It consists of flexible criteria, which tie the personal appointment to the existence of a trusting relationship between the grantor and the attorney. We compared the SDA provisions concerning POAs for property and personal care in this report, above at page [x]. The threshold for capacity to grant a POA for personal care reads

Capacity to give power of attorney for personal care

47.  (1)   A person is capable of giving a power of attorney for personal care if the person,

(a)    has the ability to understand whether the proposed attorney has a genuine concern for the person’s welfare; and

(b)    appreciates that the person may need to have the proposed attorney make decisions for the person.[202]

Community Living Ontario, an organization that provides advocacy support to persons with intellectual disability, advised the LCO that it consistently encourages the use of Ontario’s criteria to give a POA for personal care among its membership, and that they would be appropriate in these circumstances.[203] The CACL has stated that the same provisions have extended the right to choose a substitute decision-maker “to persons who would likely not previously have been regarded as capable of granting a power of attorney”.[204] Furthermore, in written submissions to the LCO, ACE proposed that that a personal appointment for RDSP beneficiaries be worded similarly.[205]

The Saskatchewan approach and Ontario’s definition of capacity to give a POA for personal care offer two potential adaptations of the common law test to grant a POA that could improve access for adults wishing to personally appoint someone to establish an RDSP. Arguably, because they are based on cognitive criteria, they might be less accessible to adults with disability who have unique ways of expressing themselves than, for instance, the Representation Agreement Act. On the other hand, a threshold for capacity that is more compatible with existing, cognitive standards in the province would create an option for incremental change that the LCO believes could still empower adults to participate in the RDSP to a much greater extent.

 

The Law Commission of Ontario recommends that:

2.      The criteria to grant and revoke the personal appointment identified in Recommendation 1 be based on the definition of legal capacity to grant and revoke a power of attorney at common law, which requires that the grantor have the ability to understand the nature and consequences of the appointment.

3.      If the Government of Ontario believes that the criteria to grant and revoke the personal appointment proposed in Recommendation 2 are not sufficiently flexible to improve access to the RDSP, the criteria be based on the definition of legal capacity to make a representation agreement under s.8(2) of the British Columbia Representation Agreement Act, which consists of factors including the communication of a desire to have a representative, the expression of approval and the existence of a relationship with the representative that is characterized by trust.  

 

4.     Countering the Increased Opportunities for Financial Abuse

The less stringent the test is to determine whether an individual is capable to appoint a representative/decision making support person, the more protections should be in place to ensure that the representative is offering proper decision making support to the person and that the representative is not in any way abusing their authority.[206]

Authorizing a person to assist or make decisions on behalf of another creates an opportunity for mistreatment because “[t]he corollary of trust and power is that it always creates a potential for abuse”.[207] Unfortunately, in the financial sector, many of the same tools that are introduced to promote security for persons with disability can also be exploited to their disadvantage. Financial abuse can occur through a range of activities, such as withholding funds, cashing investments without consent, pressuring an adult to make expenditures and, generally, making decisions in a manner that has detrimental consequences.[208] 

The RDSP can attract significant wealth. Before investment income, private contributions to an RDSP can total $200,000 and the federal government’s grants and bonds can total $70,000 and $20,000 per beneficiary, respectively, depending on factors such as income and contributions. There is a general perception among stakeholders that the amount of RDSP savings could be alluring to self-interested individuals, who might trick, threaten or persuade beneficiaries into naming them as their RDSP legal representative. 

Consequently, although participants whom we consulted believe that adults should be able to choose their own RDSP legal representative, many were uneasy about the heightened risks that result from adopting less stringent criteria to grant a personal appointment. The mother of an adult with disability explained,

It is not that we want to deny the possibility [for an adult] to choose, it is that we want, in some way, to protect them so that when the time comes for them to have a need for their money, they have access to the money.[209]

The LCO has sought to recommend criteria for a personal appointment that provide an indication that adults are executing the document willingly and that they are able to ascertain whether an RDSP legal representative is a suitable person. However, inasmuch as they are less stringent than Ontario’s existing requirements under the SDA, we agree that enhanced protections are indispensable to securing RDSP beneficiaries’ rights to live in safety. 

In this section, we recommend that existing safeguards against financial abuse found in the SDA be applied to a streamlined process for RDSP beneficiaries as well as supplementary protection, which consists of restricting the scope of an RDSP legal representative’s authority.  

 

Existing Safeguards against Financial Abuse under the SDA

Ontario’s existing safeguards against financial abuse are relatively comprehensive when compared to other Canadian jurisdictions. The SDA contains measures for sustained protection from formalities in executing an appointment through to government interventions where harm is suspected. 

An adult who names an RDSP legal representative should be awarded at least the same protections as a person who has an attorney acting under a POA for property. Therefore, we recommend that the Government of Ontario consider incorporating the following provisions, regarding powers of attorney, into a streamlined process for the RDSP:

1.   Executing an Appointment: POAs are executed privately. Without the benefit of the OPGT or court oversight, the SDA requires that two witnesses sign the POA. The SDA prohibits certain persons from acting as witnesses, including minors, an adult’s child and a spouse or partner of the adult or the attorney.[210] 

An adult can appoint one or more persons as attorneys. If more than one person is appointed, the attorneys must make decisions jointly unless the POA says that they can act separately. Giving attorneys the opportunity to make decisions separately guards against interruptions in representation that can be expected from temporary absences, such as sickness or vacations, or for unexpected reasons.[211] A substitute attorney can also be named to avoid an adult being “left with no one to manage [his or her] financial affairs”[212] if the primary attorneys are unavailable. Having multiple attorneys, or a substitute, can also safeguard against the POA being automatically terminated where an attorney dies, becomes incapable of managing property or resigns.[213] Moreover, adults can execute multiple POAs to come into effect upon the termination of another POA.[214]

2.   Responsibilities Following an Appointment: Attorneys are fiduciaries “whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit”.[215] The Office of the Public Guardian and Trustee has explained that “the most important goal in performing [the role of a substitute decision-maker] is to maximize the quality of life of the incapable person”.[216] 

Attorneys have a duty to take an adult’s comfort and well-being into account, and to manage his or her finances in a manner that is consistent with personal care decisions.[217] An adult’s choice of residence, desire to purchase clothing and food or even take a vacation are all personal care decisions. The attorney’s role is to realize these preferences by arranging an adult’s finances accordingly.[218] 

Attorneys must encourage an adult to participate in decision-making, to the best of his or her abilities, and foster regular contact between an adult and supportive family members and friends. They must also consult periodically with an adult’s family, friends and caregivers.[219]

3.   Accountability and Intervention: Attorneys must maintain accounts of all transactions involving the adult’s property.[220] An application may be made to the courts to “pass” the accounts in order to permit those who are concerned about the administration of the adult’s property to have it reviewed by an external arbiter.[221] The court has broad powers during the passing of accounts, including appointing the OPGT or another person pending the determination of the application and ordering that a POA be terminated.[222] 

The OPGT has an obligation to investigate all allegations that an adult is incapable of managing property and that serious adverse effects are occurring or may occur.[223] A member of the public, a bank employee, a government agency or any other individual or organization could make such an allegation. If the results of the investigation demonstrate reasonable grounds to believe that an adult is incapable and that a temporary guardian is required to prevent serious adverse effects, the OPGT must apply to the court to be named as a temporary guardian.[224] The SDA gives the OPGT significant discretion in taking steps to conduct its investigation. During the investigation, the OPGT is entitled to access records relating to the adult in the control of a range of individuals and organizations, including a bank, credit union or other financial institution.[225] 

4.   Revoking an Appointment: An adult can unilaterally revoke a POA under the SDA, where he or she is able to meet the very same threshold for legal capacity required to make the appointment.[226] For a streamlined process, the LCO suggests that this would be equivalent to the common law threshold for capacity to make a POA. Should the Government of Ontario believe section 8(2) of the Representation Agreement Act is the appropriate threshold for legal capacity to make a personal appointment, it would also be the threshold to revoke the personal appointment. 

 

Supplementary Protection: Restricting the Scope of an RDSP Legal Representative’s Authority

The LCO understands that there is a strong desire for safeguards that supplement Ontario’s current framework. During our consultations, we received input from legal professionals, advocacy organizations and government representatives that the most effective means to achieve this goal would be to restrict the scope of an RDSP legal representative’s authority.[227] The LCO believes that confining an RDSP legal representative’s authority to areas of minimal vulnerability would preserve an adult’s autonomy to establish an RDSP, while also providing protections against financial abuse. 

The greatest areas of vulnerability in RDSP transactions are the management of funds that have been paid to the RDSP beneficiary and, to a lesser degree, requests for one-time withdrawals. As mentioned previously, funds paid out of an RDSP can be used for any purpose. Should the scope of an RDSP legal representative’s authority extend beyond that of a plan holder to managing these funds, the risks of financial abuse and mismanagement could be substantial. Furthermore, withdrawing funds from an RDSP before mandatory payments begin could carry penalties that reduce an adult’s entitlement to government grants and bonds. Depending on the applicable rules under the ITA, one-time withdrawals could also deplete an adult’s savings before his or her lifetime disability assistance payments are exhausted.[228] 

In our discussion paper for the project, we reviewed a range of innovative safeguards with a view to minimizing the risks of financial abuse in these major areas of vulnerability. They included measures such as the use of mandatory forms and information, limitations on withdrawals after a specified amount, and the appointment of a private monitor to advocate on an adult’s behalf. There are, however, serious limitations in the available literature evaluating the alternatives that we reviewed. Moreover, our own consultations with experts in Canada and abroad were inconclusive as to whether they would have the desired effect of improving upon Ontario’s existing framework. The LCO’s larger project on Legal Capacity, Decision-Making and Guardianship will address issues relating to safeguards under the SDA, including awareness of the law, monitoring mechanisms and redress. For the purposes of the RDSP project, however, we believe that the most appropriate response is to reduce the areas of vulnerability that self-interested individuals could exploit. 

Specifically, we recommend that an RDSP legal representative appointed under the streamlined process be permitted to open and manage funds in an RDSP but not to receive or manage funds paid out of an RDSP. Adults who appoint an RDSP legal representative would thus have a plan holder who could set up the plan, consent to contributions, apply for government grants and bonds, decide investments and request withdrawals on the beneficiary’s behalf. 

Although we do recognize that last area of decision-making (requesting withdrawals) is an area of heightened vulnerability, we question whether a plan holder’s authority should be restricted in this respect. To do so would not serve adults who use the RDSP as a contingency plan throughout their lives, rather than for long-term savings. Additionally, financial institutions told the LCO that it could conflict with their operational constraints and, therefore, limit an RSDP beneficiary’s choice of service provider. Most, if not all, financial institutions include one-time withdrawals as a standard term of contract. Offering two types of contracts would necessitate additional training, costs and internal monitoring of staff to confirm the proper contract is being offered. Several financial institution representatives informed the LCO that limiting a plan holder’s authority to request withdrawals would be unworkable.[229] 

Nevertheless, the LCO believes that when an RDSP legal representative wishes to request a withdrawal on a beneficiary’s behalf, additional protections are required. Because the RDSP legal representative’s authority is limited to that of a plan holder, he or she would not be able to act for the beneficiary if the latter lacked capacity to manage the withdrawal. Instead, the regular regime for managing property under the SDA would apply. It is important, therefore, that the beneficiary’s capacity to manage the withdrawal be taken into account. Otherwise, should an RDSP legal representative request that a payment be made in these circumstances, the adult could have difficulty making prudent expenditures or be at risk of financial abuse. 

As a consequence, we recommend that RDSP legal representatives have a duty to formulate an opinion with respect to the adult’s capacity to manage his or her funds prior to requesting withdrawals. If the RDSP legal representative has reasonable grounds to believe that the adult is capable of managing the payment out of the RDSP, he or she should be required to provide a financial institution with a signed statement attesting to this opinion at the time of the request. On the other hand, if the RDSP legal representative has reasonable grounds to believe that the adult is not capable of managing the payment, he or she should be required to either not request the payment or consider all options available under the Substitute Decisions Act, 1992, as appropriate. 

The options under the SDA include requesting a capacity assessment, applying for guardianship as a last resort and making an allegation to the OPGT under s.27 of the SDA. Under s.27 of the SDA, the OPGT must investigate any allegation that a person is incapable of managing property and that serious adverse effects are occurring or may occur. The OPGT must also apply for a court order to become an adult’s temporary guardian of property if, as a result of the investigation, the OPGT has reasonable grounds to believe that the adult is incapable of managing property and the prompt appointment of a temporary guardian is necessary to prevent serious adverse effects.[230]

We propose that placing a duty on RDSP legal representatives to examine an adult’s capacity to manage funds, prior to requesting a withdrawal, and to act according to options available under the SDA could achieve greater security for beneficiaries through a measure that is easy to implement.                       

It is also important to note that all beneficiaries have the full enjoyment of safeguards that the federal government integrated into the design of the RDSP program, which apply to the management of funds inside the RDSP. These include the following requirements under the Income Tax Act:

1.     Mandatory Payments: Payments from the RDSP are mandatory beginning at age 60. The Minister of Finance’s Expert Panel recommended that LDAPs commence at a certain point in time due to the “legitimate concern that the tax deferral benefit of [the RDSP] not be abused by permitting a multi-generational transfer of tax deferred income”.[231] This could occur if the plan holder restricts or the beneficiary foregoes payments so that another person receives a refund of contributions after the beneficiary’s death. Private contributions are also prohibited from being returned once they are deposited into an RDSP.[232] 

2.     Calculation of Payment Amounts: LDAPs are to be calculated on a strict formula that is intended to distribute the beneficiary’s funding evenly over the course of his or her remaining lifetime.[233] In recommending this safeguard, the Expert Panel explicitly took into account that “permitting the Beneficiary or Guardian unlimited access to the [RDSP] might result in the Plan being exhausted long before the Beneficiary’s lifetime needs had been fulfilled”.[234] Depending on the RDSP terms, plan holders can request one-time withdrawals before or after LDAPs commence. Beneficiaries can also request one-time withdrawals from the ages of 27 to 58, inclusive, provided that the total of government contributions is greater than private contributions. The amount of these one-time withdrawals is also limited under the ITA, albeit in some circumstances there may be no maximum amount.[235] 

3.     Designation of a Beneficiary upon Death: When an RDSP beneficiary dies all remaining government grants and bonds from the preceding 10 years must be repaid and any remaining funds are to be paid out according to the beneficiary’s own instructions in a will or intestacy rules.[236] Like mandatory payments, this creates a disincentive against withholding funds during the beneficiary’s lifetime because the estate does not automatically revert to the plan holder.

4.   Compliance Measures: Financial institutions must notify ESDC and the Canada Revenue Agency if they are aware that the RDSP is or is likely to become non-compliant.[237] An RDSP does not comply with plan conditions if it is not “operated exclusively for the benefit of the beneficiary under the plan” or if it is not operated in accordance with the plan terms.[238] The CRA’s Registered Plans Directorate also has a Compliance Division that conducts random audits and follows up with financial institutions to address discrepancies that are uncovered or reported. However, it does not have the resources to monitor every RDSP financial transaction, nor is it the division’s mandate.[239]  

Participants in the LCO’s consultations who submitted that an RDSP legal representative’s authority should be restricted to that of a plan holder under a personal appointment belong to the community of individuals and organizations that advocate on behalf of adults with disability, including ARCH Disability Law Centre, CLO, CACL, PooranLaw, ACE and the Ontario Agencies Supporting Individuals with Special Needs (OASIS). It should also be recalled that the Ministry of Justice and Attorney General for Saskatchewan endorsed a like approach (see page [x], above, “Capacity to Choose an RDSP Legal Representative: The Common Law Test of Capacity”). In written submissions to the LCO, ACE encapsulates the reasons for the LCO’s recommendations succinctly: 

Plan holders do not have authority to manage money once paid out of the RDSP to the beneficiary. Because plan holders do not have access to, or manage, funds paid out of the RDSP, there is little risk of self-dealing or financial abuse. The benefit of grantors allowing plan holders to establish an RDSP and apply for government funds is significant. In these circumstances, the balancing of autonomy and the prevention of abuse plainly favours allowing personal appointments of plan holders at a lower cognitive capacity threshold….[240]

We discuss further reasons for our recommendation that the scope of an RDSP legal representative’s authority be restricted to that of a plan holder in the following section, which is devoted to issues surrounding the RDSP legal representative’s role and responsibilities.  

 

The Law Commission of Ontario recommends that:

4.      The personal appointment process identified in Recommendation 1 incorporate the following features:

a.       The execution requirements for the personal appointment be the same as for a power of attorney for property under s.10 of the Substitute Decisions Act, 1992, which requires that the document be executed in the presence of two witnesses, who must sign the document. The following persons be prohibited from being witnesses: the RDSP legal representative, the grantor’s spouse or common-law partner, the grantor’s child, persons who have property under guardianship and minors.

b.       The grantor have the same protections against financial abuse found in ss.7, 8, 27, 32, 33, 39, 42 and 83 of the Substitute Decisions Act, 1992. These protections include permitting adults to appoint more than one RDSP legal representative or a substitute, in the event the primary RDSP legal representative is unavailable; requiring RDSP legal representatives to maintain accounts of transactions; allowing an application be made to the Superior Court of Justice to pass accounts and obliging the Office of the Public Guardian and Trustee to investigate allegations that an adult is incapable of managing property and that serious adverse effects are occurring or may occur. In addition, all beneficiaries have the protection of provisions under the ITA that regulate the management of funds in an RDSP, such as mandatory lifetime payments, the calculation of payment amounts and compliance measures.

c.        The RDSP legal representative have authority to open and manage funds in an RDSP, including consenting to contributions, deciding investments, applying for grants and bonds, and requesting that payments be made to the adult; however, he or she be prohibited from receiving and managing funds paid out of the RDSP on the adult’s behalf. 

d.       The RDSP legal representative be required to formulate an opinion with respect to the adult’s legal capacity to manage the payment out, prior to requesting that payments be made to the adult. If the RDSP legal representative has reasonable grounds to believe that the adult is capable of managing the payment out, he or she be required to provide the financial institution with a signed statement of that opinion at the time a payment is requested. If the RDSP legal representative has reasonable grounds to believe that the adult is not capable of managing the payment out, he or she shall either not request the payment out or shall consider all options available under the Substitute Decisions Act, 1992, as appropriate.

 

5.     The RDSP Legal Representative’s Role and Responsibilities

Opening and Managing Funds in an RDSP

Plan holders are the principal decision-makers for an RDSP. They are responsible for opening the RDSP and deciding how funds in the plan will be managed before they are received by the beneficiary. Our project seeks to improve access for adults with disability who have been unable to participate in the RDSP because there are concerns about their legal capacity to enter into a contract with a financial institution required to establish a plan. Accordingly, we recommend that an RDSP legal representative appointed under a streamlined process for beneficiaries in Ontario carry out the role and responsibilities of a plan holder, subject to stipulated terms in each plan (see Figure 3: How to Open and Manage an RDSP under the Income Tax Act).

There are, however, some stakeholders who would prefer to see an RDSP legal representative’s authority limited to a partial plan holder, while others would like to see it expanded to include managing funds paid out of an RDSP. In the previous section, we briefly explained our reasons for recommending that an RDSP legal representative’s authority correspond to that of a plan holder as a safeguard against financial abuse. In this section, we address further reasons for our view that this authority should not be expanded beyond that of a plan holder, which relate to the nature of RDSP funds after they are paid out of the plan.

Decision-making about funds in an RDSP is different from day-to-day financial management. Adults who are unable to select mutual funds for the RDSP may not have a parallel need in purchasing food or assistive devices or in paying rent. Throughout this report, we have related stories that adults with disability and their family and friends shared with us about how unique the RDSP is in this respect and, in particular, how they have been able to “muddle through” making decisions together without applying for guardianship before encountering the RDSP. Advocacy organizations and legal practitioners submitted to the LCO that appointing an RDSP legal representative with powers beyond those of a plan holder would unduly intrude on a beneficiary’s autonomy and self-determination.[241] 

However, the LCO has heard that some beneficiaries may not be able to manage funds paid out of the RDSP. If an RDSP legal representative can only manage funds while they remain in the plan, beneficiaries who are unable to make their own decisions with help would be required to apply for guardianship through the very process that they have declined to follow to date. This could result in a piecemeal solution, they say, that does not respond to beneficiaries’ needs and could increase vulnerability to financial abuse, should a guardian not be appointed.[242] 

Because financial institutions do not have the means to trace how funds are used once they are paid out of the RDSP – and do not feel they have an obligation to do so – they would also hope to see the scope of an RDSP legal representative’s authority include the ability to provide a valid receipt and discharge when funds are released. Similar to opening an RDSP and deciding plan terms, paying funds out to an RDSP beneficiary is a type of transaction that raises concerns about liability for financial institutions. In order to ensure compliance with the plan conditions, for which they are responsible under the ITA, financial institutions must direct RDSP payments to the beneficiary or a legally authorized person.[243] 

The LCO heard from financial institutions that where they have reason to believe that adults lack sufficient legal capacity to manage their funds, they would withhold payment until a legally authorized person can receive them and give a binding discharge. Therefore, expanding the scope of an RDSP legal representative’s authority beyond that of a plan holder could potentially relieve financial institutions from assessing a beneficiary’s capacity at multiple junctures, when releasing one-time payments and LDAPs.[244] In a written submission to the LCO, the Canadian Bankers Association provides a helpful explanation of its position:

The Income Tax Act provides that payments from the RDSP while the beneficiary is alive can only be made to the beneficiary. For a not contractually competent beneficiary, this means that there has to be a legal representative in existence to give a receipt and discharge for the payments. Expanding the class of persons who can be the holder of RDSPs for beneficiaries to a greater number of persons who are not the legal representative of the beneficiary only delays the problems issuers will face when it comes time to pay out from RDSPs. Any expansion of the provincial law to cover who can open an RDSP for a not contractually competent beneficiary should also make that person the legal representative for funds of the RDSP once they come out of the plan and are in use. It will be practically impossible to trace funds once they come out of an RDSP so this means the legal representative who can open and operate an RDSP should also be the legal representative of the beneficiary for all property purposes.[245] 

The LCO acknowledges that there are legitimate reasons for extending the scope of an RDSP legal representative’s authority beyond that of a plan holder. However, we believe that adults who require more than informal supports to manage their payments could need a comprehensive arrangement for property management that goes beyond the scope of this project on the RDSP. 

Expanding an RDSP legal representative’s authority could produce a disparity among decision-making regimes in Ontario that deal with assets, which are substantially the same. Once funds leave an RDSP, they become assets like any other asset. They could be used for small expenditures, reinvested or put toward the purchase of sizeable property. Ordinarily, adults would be required to grant a POA pursuant to the SDA to authorize a person to manage these affairs and adults who are unable to do so would be required to apply for guardianship. To extend the scope of an RDSP legal representative’s authority would entitle beneficiaries to personally appoint what is, in effect, an attorney for general property management through a less stringent process.[246]  

Insofar as establishing an RDSP is time-sensitive, we do believe it is reasonable to make the criteria for a personal appointment less stringent to improve access at the front-end: having a plan holder would enable adults to begin saving and apply for government grants and bonds. However, as a matter of fairness, there does not appear to be a principled basis for extending a streamlined process to the back-end at the stage of general property management. Adults who are not RDSP beneficiaries may also experience challenges with Ontario’s existing framework to grant a POA or apply for guardianship. They may be persons with disability or older adults who likewise need another person to manage their assets. Nevertheless, they would not be entitled to a streamlined process, simply because they do not have an RDSP. The LCO’s larger project on Legal Capacity, Decision-Making and Guardianship reviews issues surrounding the accessibility of appointment processes under the SDA for Ontarians, which could also be advantageous to beneficiaries in receipt of RDSP payments.

Given the freedom to use RDSP funds for any purpose, it is also unclear to the LCO where an RDSP legal representative’s role would end. Consider the example of purchasing a house. After the house has been paid for, who would have authority to administer related costs? Would the RDSP legal representative be obliged to manage the adult’s taxes? Would he or she have authority to sell the house? If so, who would manage the proceeds of sale? If not the RDSP legal representative, would the adult be left to do so unaided? Uncertainties about the reach of an RDSP legal representative’s authority arise with respect to countless examples (e.g., investments, motor vehicles), and the LCO believes that resolving them would have policy implications far beyond the RDSP. 

More importantly, however, these questions reveal that adults who require more than informal supports to manage their payments could have a real need for a comprehensive arrangement. In contrast to government benefits, such as ODSP, funds from an RDSP likely constitute an additional source of income for adults with disability. Arguably, a legal representative could be authorized to manage funds on an adult’s behalf under procedures that are fragmented across sources of income. However, this approach would leave adults with disability to navigate a multiplicity of rules that could look quite different in each case. It could also cause conflicts about tracing and the co-mingling of funds. 

Consequently, the LCO believes that extending the scope of an RDSP legal representative’s authority in Ontario could result in confusion and inefficiencies that can otherwise be avoided through the appointment of a guardian. Guardians are a source of comprehensive decision-making for property management that adults and their supporters can turn to when in need and they are presently the most suitable decision-makers for beneficiaries who are unable to manage their funds with help. ARCH Disability Law Centre’s comments encapsulate our view:

There are two possible scenarios. In one, the individual is capable to manage their day to day expenditures, but requires help to manage their RDSP. In such cases, while a representative may be required to offer decision making supports when it comes to the management of the RDSP, the person should be able to continue to manage their private funds unless there is clear evidence that they are unable to do so. In the second example, the individual is incapable of managing their finances. In such a situation, the person would either already have a guardian who would exercise control over the payments from the RDSP or a guardian could be appointed through the existing processes if such support was found to be necessary.[247]

The separation of a legal representative’s role and responsibilities with respect to applying and deciding the terms for a social benefit, on the one hand, and receiving and managing payments, on the other, has precedents in a number of programs, including the Canada Pension Plan, Australia National Disability Insurance Scheme and Community Living British Columbia individualized funding program.[248] As indicated above, the LCO also heard from representatives of government, legal clinics and the community of persons with disability who prefer this solution.[249] We agree, in particular, with the remarks of stakeholders to the effect that “there will generally be an adequate time period between opening an RDSP and the first payout for other property decision-making arrangements to be made, if necessary”.[250] 

Finally, we would reiterate that our larger project on Legal Capacity, Decision-Making and Guardianship investigates a range of alternatives to guardianship for Ontarians that beneficiaries could potentially use for payments made out of an RDSP in the future, including simplified processes to apply for guardianship, supported and co-decision making models, and formalized community networks. Our research and consultations on these issues are ongoing and we anticipate our final report in the larger project will be released in 2016 before the federal government’s temporary measures expire at the end of December 2016 (see Chapter I.C.2, “The Federal Government’s 2011 Review of the RDSP and Subsequent Activities”). In the interim, the LCO welcomes feedback from members of the public on a discussion paper for the larger project that was disseminated in June 2014.


Duties and Standard of Care

The benchmarks for reform in this project accept that people exist along a continuum of abilities and that decision-making is social and dynamic. Including adults in decision-making activities that affect them, after an RDSP legal representative is appointed, can have a positive effect on their sense of personhood, human dignity and quality of life. Therefore, the LCO recommends that RDSP legal representatives be required to fulfill set duties in discharging their role and responsibilities and be held to a standard of care. 

Under the ITA, an RDSP “is to be operated exclusively for the benefit of the beneficiary” and plan holders must manage funds in an RDSP according to specific rules about the amount and timing of payments to the beneficiary.[251] In Chapter IV.C.4 of this report, we reviewed these provisions alongside the duties of attorneys for property under the SDA, which include encouraging an adult to participate in decision-making, to the best of his or her abilities; taking an adult’s comfort and well-being into account; keeping accounts and managing an adult’s finances in a manner that is consistent with personal care decisions. Attorneys for property must “exercise the degree of care, diligence and skill that a person of ordinary prudence would exercise in the conduct of his or her own affairs”.[252] They can be held liable for breaching a duty but can be relieved of all or part of the liability if they “acted honestly, reasonably and diligently”.[253] 

The LCO has recommended that an RDSP legal representative have the duties of an attorney for property under the SDA, as applicable, and be held to the same standard of care. Our discussion paper for the project did analyze the provisions of the SDA against laws in other jurisdictions in response to dissatisfaction expressed by advocacy organizations with existing requirements to engage adults in decision-making activities. They, as do some commentators, suggest that decision-making laws incorporate different obligations in order to make an adult’s participation meaningful. Specifically, they argue for a shift in the focus of a legal representative’s role from one of substitute decision-making to support and advocacy.[254]

Substitute decision-makers for adults who have been found to be incapable in the areas of personal and health care in Ontario must consider a hierarchy of factors in making decisions, beginning with the wishes or instructions that an adult expressed while capable.[255] Other jurisdictions require legal representatives to consult with an adult and to comply with his or her instructions, if it is reasonable to do so. Where an adult’s current wishes cannot be ascertained, a legal representative is obliged to take other factors into account, such as an adult’s prior expressed wishes. Only as a last resort can a legal representative make decisions on a “best interests” standard, which asks what a reasonable person would do in the adult’s circumstances.[256]

However, there is little empirical evidence of the impacts of these alternative ways of framing a legal representative’s duties on an adult’s well-being.[257] The LCO believes that limitations in the information evaluating these regimes frustrate a thorough assessment as to whether they would improve upon existing standards in Ontario, particularly with respect to the role of an RDSP plan holder. Moreover, our research is ongoing on these questions in the Legal Capacity, Decision-Making and Guardianship project, where we believe they will be better addressed by the project scope and generous timeline. 

With respect to RDSP beneficiaries, we view our recommendations as setting a high standard, which obliges RDSP legal representatives to realize an adult’s preferences for personal care in making financial decisions. Describing the duties of substitute decision-makers for adults who have been found to be legally incapable of property management under the SDA, the OPGT explains, 

The most important goal in performing your role is to maximize the quality of life of the incapable person. You must manage the property in a way that accommodates the decisions made about the incapable person’s personal care….You may make a financial decision that overrides a personal care decision only if to do otherwise would result in negative consequences with respect to property that heavily outweigh the personal care benefits of the decision.[258]

For more information, we invite you to consult the OPGT information booklet on the duties of guardians and attorneys for adults who have been found to be legally incapable, here: http://www.attorneygeneral.jus.gov.on.ca/english/family/pgt/guardianduties.pdf.

 

The Law Commission of Ontario recommends that:

4.      The personal appointment process identified in Recommendation 1 incorporate the following features:

e.       The RDSP legal representative have the duties of an attorney for property under s.32 of the Substitute Decisions Act, 1992, as applicable, and be held to the same standard of care. These duties include encouraging an adult to participate in decisions, to the best of his or her abilities; consulting from time to time with an adult’s family and friends; and making decisions in a manner that is consistent with an adult’s personal care decisions. The standard of care requires RDSP legal representatives to exercise the degree of care, diligence and skill that a person of ordinary prudence would exercise in the conduct of his or her own affairs.

 

6.     Providing Third Parties with Certainty and Finality

As discussed above, the activity of decision-making after an RDSP legal representative is appointed is a social process that should foster an adult’s participation, to the best of his or her abilities. Achieving meaningful participation in the activity of decision-making requires that an RDSP legal representative engage with a variety of individuals in order to identify an adult’s preferences. Having multiple persons participate in decision-making activities could, however, cause confusion for third parties who must be able to easily pinpoint those who are authorized to enter into legally binding transactions. Furthermore, third parties may desire protections from liability where they rely on a decision-making arrangement, such as a POA, in good faith but the arrangement was terminated, varied or invalid.[259] 

Financial institutions that issue the RDSP have informed the LCO that they desire certainty and finality from a streamlined process. They would like to be able to reasonably rely on a personal appointment as one that is valid under the law and be able to take binding instructions from an RDSP legal representative, which would protect them in the event of subsequent loss or dispute. According to the Canadian Bankers Association,

Issuers require certainty that a person is the actual legal representative of the beneficiary under the law and that when they deal with that person, they have finality on the instructions and discharge for payments out of the plan. [Financial institutions] should be able to obtain objective proof that a person is the legal representative of the beneficiary and rely on it.[260] 

The LCO heard that two measures could make financial institutions feel secure with a personal appointment.[261] The first would be the use of a standardized document that would be recognizable to staff who interact with the RDSP legal representative. One bank employee described this measure as follows: “You want to be able to say ‘if I have this piece of paper, I’m okay’”.[262] In section D.1, “Accessible Information for Users of the Process”, below, we suggest that the provision of a non-mandatory sample form could be helpful to consumers of a streamlined process as well as to third parties. Here, we recommend that the Government of Ontario consider the second measure proposed by financial institutions, namely, the enactment of clear exemptions from liability where third parties reasonably rely on the instructions of an RDSP legal representative appointed through a streamlined process.[263] 

Most provinces and territories in Canada contain protections for third parties where they are unaware or could not reasonably have known that a POA is defective or has been terminated. For instance, under the SDA, when a POA is terminated or becomes invalid, any subsequent exercise of power by the attorney in entering into a transaction with a third party is binding if he or she acted in good faith and without knowledge of the termination or invalidity. This protection equally applies if a POA is ineffective because a prohibited person witnessed its execution.[264] British Columbia, Saskatchewan and jurisdictions outside Canada also protect third parties in situations where a POA is ineffective, more generally, “for failing to meet the requirements of the legislation, including the fact that the donor did not have capacity when they first granted the EPA”.[265]  

 

The Law Commission of Ontario recommends that:

5.      The Government of Ontario provide third parties with clear exemptions from liability should they rely on a personal appointment made pursuant to Recommendation 1 in good faith and without knowledge that it was invalid at the time it was executed or that it was subsequently terminated, varied or invalidated.

 

The LCO understands that comparable protections in the event of termination, variation and invalidity could be advantageous in the context of the RDSP because they could make financial institution staff feel comfortable taking instructions from an RDSP legal representative, where the document appears to be valid.[266] Such measures would not, however, protect third parties from liability where they have acted unreasonably in relying on a personal appointment. The Supreme Court of Canada has held that banks can be liable for damages if they know or suspect that an attorney is misappropriating funds or exceeding the authority granted under a POA.[267] Therefore, the LCO recommends that exemptions from liability under a streamlined process only go so far as to protect third parties who have reasonably relied on a personal appointment. In the language of the SDA, the person must have acted “in good faith and without knowledge of the termination or invalidity”.[268]

 

7.     Who May Act as an RDSP Legal Representative

An RDSP legal representative must be eligible, available and willing to carry out the duties of a plan holder. During the LCO’s consultations, participants identified existing restrictions on who may act as a plan holder in Ontario as a substantial barrier to accessing the RDSP. We heard that the eligibility criteria for RDSP legal representatives under a streamlined process should be as expansive as possible, while continuing to safeguard adults against the risks of financial abuse. 

Nearly all of the participants with whom we spoke asserted that beneficiaries should be permitted to choose a “trusted person” as their RDSP legal representative, including a relative, such as a parent, spouse, common-law partner or sibling; a close friend; or a community organization.[269] Our discussion in this section relates to how this might be achieved. Specifically, we recommend that eligibility criteria under the SDA, which permit family members and friends to be named in a POA, be extended to include community organizations. 

 

Who Can Be a Plan Holder under the Income Tax Act and Substitute Decisions Act, 1992

The federal government’s temporary amendments to the ITA allow a “qualifying family member” to become a plan holder where in a financial institution’s opinion a beneficiary’s legal capacity to enter into a contract is “in doubt”. Qualifying family members are limited to a narrow class of persons consisting of parents, spouses and common-law partners. If a plan holder is appointed under the ITA’s standard eligibility criteria – which will persist after the temporary measures expire – the plan holder can come from beyond this class: a plan holder can be any individual or institution that is legally authorized under provincial law.[270]

In Ontario, an adult can name any person as an attorney under the SDA. Although the SDA does not stipulate that a substitute decision-maker must be a natural person, it is generally accepted that this must be the case, except where the decision-maker is the OPGT or a trust company.[271] Therefore, a trusted family member or friend can be an attorney but an institution, such as a community organization, cannot. 

However, the RDSP is available to a range of persons with disability, some of whom are socially isolated and rely on a network of community service providers. Participants in the LCO’s consultations identified older adults, immigrants and persons with psychosocial disabilities as adults with disproportionately low access to close family and friends, who may be in need of a wider range of RDSP legal representatives.[272]  

The LCO also heard that where family supports are available, they can be unsustainable. As RDSP beneficiaries age to become recipients of lifetime payments, their friends and family age along with them. Although age is not directly correlated with the difficulties that adults face with decision-making, the incidence of cognitive disability, such as Alzheimer’s and dementia, increases with age.[273] The parents of an RDSP beneficiary may experience challenges making financial decisions themselves or they may pass away before a beneficiary’s payments are exhausted. After all, the RDSP was intended as a means to provide financial security in the absence of family supports. 

An adult may name the Public Guardian and Trustee in a POA on consent.[274] However, the mandate of the OPGT is strictly to make decisions on behalf of adults who have been found to be legally incapable of property management. Based on its mandate, the OPGT may turn away adults who are legally capable of granting a POA but who do not have a trusted person to act as an attorney.[275] Moreover, adults may not wish to rely on the OPGT to manage their affairs and it is conceivable that some might simply decline to open an RDSP instead.

 

Permitting Beneficiaries to Name a Community Organization as an RDSP Legal Representative

The LCO believes that adults who experience social isolation should not be further marginalized by the unavailability of family and friends, and we agree with stakeholders who assert that RDSP beneficiaries should be entitled to name a community organization as their RDSP legal representative.

Organizations are commonly appointed as trustees for ODSP, CPP and OAS, including community agencies, religious organizations and long-term care homes.[276] In Saskatchewan, The Powers of Attorney Act permits the appointment of corporations, other than trust corporations, as attorneys under a POA. This provision was adopted in 2002, after the Law Reform Commission of Saskatchewan recommended that the appointment of corporate attorneys be allowed, so that advocacy groups and “not-for-profit organizations dedicated to assisting vulnerable adults” would be able to act as attorneys.[277] In addition, individualized funding programs, such as Community Living British Columbia, customarily authorize organizations to manage an adult’s direct payments.[278]

During a consultation with the Ontario Agencies Supporting Individuals with Special Needs, agencies that provide residential and day services to adults with disability across Ontario expressed to the LCO that they would be willing to become plan holders for the populations they serve. Some of these agencies already act as ODSP trustees and are paid by the government to administer a package of services to clients. They told the LCO that they view the RDSP as part of a “holistic approach” to assisting persons who “don’t have anyone else”.[279] A staff member reported that of the 1,700 individuals they serve at one agency, “the vast majority would be individuals who have no family or long-term friends”.[280] For these adults, “it’s really about a relationship with their agency staff members”.[281]  

The appointment of an organization as an RDSP legal representative is, however, more complex than that of a person. Organizations may represent more than one adult at a time, which requires them to keep separate accounts for each individual. They must develop policies to address the delegation of signing authority to staff members interacting with financial institutions, including procedures to inform them if there is a transfer in authority to another staff member.[282] Furthermore, conflicts of interest could arise where an organization has a right to compensation for an adult’s food, shelter or other services, while controlling his or her funds.[283] 

To the extent that the LCO has recommended that RDSP legal representatives should not have authority to receive and manage payments on an adult’s behalf, conflicts of interest relating to expenditures will be minimized. Nevertheless, as an initial screening measure, we recommend that only community organizations that are approved by designated government agencies should qualify to act as RDSP legal representatives for beneficiaries. Government agencies approve organizations to provide services to adults with disability under certain other benefit programs. For instance, programs delivered through the MCSS, such as ODSP and Developmental Services, have detailed quality assurance policies to regulate organizations.[284] Organizations that are approved as ODSP trustees and service agencies for Developmental Services must be familiar with these policies and accustomed to accountability requirements, such as keeping separate records. 

The LCO recommends that where designated government agencies with relevant quality assurance policies approve a community organization to provide services to adults with disability, the community organization be recognized as eligible to act as an RDSP legal representative. Given that some adults may wish to appoint a community organization that has not sought out this type of qualification in the past, we also recommend that comparable procedures be developed for an entrusted government agency to determine whether the community organization is an appropriate candidate. For example, if an adult would like to appoint a religious organization that does not provide services through ODSP or Developmental Services, the government agency could undertake to assess its credentials based on specific evaluative criteria. Moreover, the government agency could maintain a running list of approved community organizations that adults could access in order to establish whether the one they wish to appoint has been or must apply to be approved. 

The LCO did receive suggestions that an additional limitation should be imposed, namely, that adults be required to appoint a community organization with which they have an established relationship. However, the LCO is of the opinion that adults should be able to select their RDSP legal representative from a broader group because there may be some who do not have an established relationship with a community organization but who still wish to appoint one. Moreover, although an adult may not have a personal connection with a community organization, we believe our proposed screening measures would ensure that community organizations will have valuable experience that can be applied in this context. 

Once a community organization has been appointed as an RDSP legal representative, we believe that it should also be obliged to develop and implement an internal management policy that contains measures similar to what is required under the ODSP Directives and Quality Assurance Regulations for Developmental Services. Such a policy would address procedures to maintain separate records of transactions respecting a beneficiary’s RDSP, to undertake periodic review of the records and to ensure that a suitable employee has clear signing authority to represent the community organization in transactions with a financial institution at all times.  

 

The Law Commission of Ontario recommends that:

6.    The Government of Ontario recognize that community organizations are eligible to act as RDSP legal representatives where they are approved to provide services to adults with disability through designated Ontario ministries.

7.    The Government of Ontario develop and implement a process for a designated government agency to approve the eligibility of community organizations to act as RDSP legal representatives, where they are not approved under Recommendation 6. The government agency be required to maintain a list of approved community organizations. 

8.    The Government of Ontario require that community organizations appointed as RDSP legal representatives under Recommendations 6 and 7 develop and implement a management policy with procedures to do the following:

a.       maintain separate records of transactions respecting each beneficiary’s RDSP;
b.       undertake periodic review of each beneficiary’s records; and 
c.        ensure that a suitable employee has clear signing authority to represent the community organization in transactions with a financial institution at all times.

 

8.     Terminating the Personal Appointment

The LCO recommends that a personal appointment made under a streamlined process terminate in the same circumstances as a continuing POA under the SDA and also when a statutory guardian or attorney for property is appointed. The SDA provides that a continuing POA is terminated a follows:

Termination

12.  (1)   A continuing power of attorney is terminated,

(a)    when the attorney dies, becomes incapable of managing property or resigns, unless,

(i)   another attorney is authorized to act under subsection 7 (5), or

(ii) the power of attorney provides for the substitution of another person and that person is able and willing to act;

(b)    Repealed.

(c)    when the court appoints a guardian of property for the grantor under section 22;

(d)    when the grantor executes a new continuing power of attorney, unless the grantor provides that there shall be multiple continuing powers of attorney;

(e)    when the power of attorney is revoked;

(f)     when the grantor dies.

(2)  The revocation shall be in writing and shall be executed in the same way as a continuing power of attorney.[285] 

Earlier in the report, we recommended that an adult be entitled to revoke a personal appointment where he or she has the legal capacity required to grant the personal appointment. Section 12(2) of the SDA above, which concerns termination, specifies that the revocation must be in writing and executed in the same way as the originating instrument.[286] 

A personal appointment will terminate automatically under the above provision if the adult grants a new one, unless he or she explicitly states that there are to be multiple appointments. Where the RDSP legal representative is no longer able or willing to act, a personal appointment could continue to be effective if another RDSP legal representative was authorized to act jointly under the document, unless it provides otherwise. It could also continue if a substitute was appointed.[287] 

In the case of the RDSP legal representative’s resignation, the LCO recommends that procedures under section 11 of the SDA should be required, including a delivery of a copy of the resignation to the adult, a named substitute and any attorneys, for example, acting under a POA for personal care. With certain qualifications, it would also be necessary to deliver a copy of the resignation to a spouse or partner and the adult’s relatives residing in Ontario, if the RDSP legal representative believes the adult is incapable of property management and no substitute has been named who is able and willing to act. Furthermore, the RDSP legal representative would need to make reasonable efforts to notify third parties whom he or she previously dealt with on the adult’s behalf, if further dealings are likely to be required.[288]  

In addition to the circumstances listed in section 12 of the SDA, the LCO recommends that if a guardian for property management is appointed on an adult’s behalf or an adult grants a POA after having regained the legal capacity to do so, an RDSP legal representative’s authority to be a plan holder be terminated.[289] The LCO has recommended that a streamlined process for RDSP beneficiaries be available only to adults who do not have a guardian or attorney who could be an RDSP plan holder. If a guardian or attorney for property management is appointed, he or she would have authority to make decisions about the adult’s assets, including the RDSP. Therefore, it would be appropriate for the personal appointment to terminate automatically.

 

The Law Commission of Ontario recommends that:

4.      The personal appointment process identified in Recommendation 1 incorporate the following features:

f.       The personal appointment terminate in the same circumstances as in ss.11 and 12 of the Substitute Decisions Act, 1992. These circumstances include where an RDSP legal representative dies, becomes incapable or resigns, unless there is another RDSP legal representative or substitute authorized to act; the adult grants a new personal appointment, unless he or she specifies that there are to be multiple appointments; the personal appointment is revoked or the adult dies. The personal appointment also terminate when a guardian for property is appointed on the adult’s behalf through the court or statutory guardianship processes, or the adult executes a valid power of attorney for property.


D.   Other Specific Issues

1.     Accessible Information for Users of the Process

The provision of information in accessible formats, languages and locations will be crucial to the success of a streamlined process. The Senate Committee on Banking, Trade and Commerce’s study on the RDSP remarked that low rates of uptake could be partly due to the issues of legal capacity and representation considered in the LCO’s project. However, it concluded, “Another possible explanation for the low uptake rate is a lack of awareness and understanding of the RDSP program among disabled individuals and those who assist them in their financial decision-making”.[290] Adults with disability and their family and friends repeatedly told the LCO that there is insufficient information on the RDSP that they can readily understand.[291] Consequently, although issues of awareness and understanding do not fall squarely within the scope of our project, we do believe that the users of a streamlined process should be provided equal access to a minimum level of education on the process itself. 

Adults learn about the RDSP at financial institutions and through various intermediaries. These entry points were discussed in Chapter II and include families and friends, caregivers, legal clinics, private trusts and estates lawyers, ODSP staff and community organizations. In the LCO’s project on Increasing Access to Family Justice Through Comprehensive Entry Points and Inclusivity, we focus on how entry points to the family law system “can play an important role in informing families about their options, referring them to relevant services and advising them on the best way to address legal challenges and family disputes in ways respectful of their religious, cultural, economic and other characteristics or needs”.[292] Not unlike the family law system, adults seeking an RDSP legal representative are most likely to begin their search for information by talking to their supporters and service providers.  Therefore, we suggest that information on the streamlined process be disseminated through these entry points, situated within the community networks that adults with disability commonly access.

With respect to the content of information, we mentioned previously in this report that several aspects of the streamlined process could merit attention. For instance, because beneficiaries and financial institutions may not know how to determine whether the beneficiary has capacity to open and manage an RDSP, we suggested that the Government of Ontario disseminate guidance on the test for contractual capacity (see Chapter IV.C.1, “Determining the Beneficiary’s Capacity to Be the Plan Holder”). Complementary information could include how to refute a financial institution’s opinion that a beneficiary is incapable of establishing an RDSP as well as the capacity criteria required to execute a personal appointment. During the LCO’s consultations, participants requested that they be provided with more information on the role and responsibilities of RDSP legal representatives and on safeguards against financial abuse, and we believe that direction on these issues would also be advantageous.[293] 

In order to make this information as clear as possible, we suggest that the Government of Ontario consider developing a booklet targeted at beneficiaries, potential RDSP legal representatives and third parties. The Ministry of Justice and Attorney General for Saskatchewan has released a booklet to the public entitled, RDSPs and Adults with Mental Disabilities, which explains its recommended use of a special limited POA by RDSP beneficiaries. A sample form for a special limited POA is attached to the back of the booklet.[294] In Ontario, the OPGT has also disseminated the Power of Attorney kit, which packages together basic information on POAs and a sample form that grantors can use as a template.[295] 

Legal professionals and advocacy organizations submitted that a government form should be made available to RDSP beneficiaries with an explanatory introduction and notes.[296] Financial institution employees also told the LCO that they would like to be able to objectively rely on a recognizable document, such as a government issued form (see Chapter IV.C.6, “Providing Third Parties with Certainty and Finality”).[297] The LCO’s larger project on Legal Capacity, Decision-Making and Guardianship reviews the possibilities for mandatory information and forms in Ontario and we do not recommend the adoption of a compulsory kit in this project. Nevertheless, we believe that non-mandatory, standardized information that includes a sample form could be helpful to users of a streamlined process for the RDSP as well as third parties.

 

The Law Commission of Ontario recommends that:

9.    The Government of Ontario distribute public legal education to potential users of the streamlined process identified in Recommendation 1 in a variety of accessible languages and formats. Among other issues, the public legal information could explain how to determine whether a beneficiary has capacity to enter into an RDSP contract with a financial institution; how to refute a financial institution employee’s opinion that a beneficiary is incapable of entering into an RDSP contract; the criteria to grant the personal appointment; and the role and responsibilities of legal representatives.

 

2.     Promoting Coherence across Canada

As a final matter in this report, we recommend that the Government of Ontario adopt a conflict of laws provision in order to promote coherence among the processes to appoint an RDSP legal representative for beneficiaries across Canada. 

From the time of the federal government’s review of the RDSP in 2011, some stakeholders have advocated for a permanent amendment to the ITA to address the subject matter of this project out of concern that, as a federal benefit, the RDSP should be treated uniformly across the country. As a provincial law reform agency, the LCO’s mandate applies to Ontario laws, policies and practices and we do not make recommendations to the federal government or other jurisdictions in this report (see Chapter I.D, “The Project Scope”). 

However, we have taken the approaches of other provinces and territories into account in coming to our recommendations for a streamlined process in Ontario. In particular, we have recommended that a streamlined process be constituted as a personal appointment, which is based on capacity criteria that are less stringent than the current requirements under the SDA to grant a POA. This same approach has been recognized by the federal government for the provinces of British Columbia, Newfoundland and Labrador, and Saskatchewan. 

Enacting a conflict of laws provision for a streamlined process would supplement these efforts to promote coherence across the country. A conflict of laws provision would enable adults travelling from outside Ontario to continue to be represented by a plan holder who was previously appointed through a valid arrangement. It could apply throughout an adult’s lifetime, whether he or she is visiting temporarily, moving for an extended period or settling to be close to family and friends. The SDA contains provisions for the recognition of POAs and guardianship orders made in other jurisdictions, which could be used as a model. For example, the provision respecting POAs reads,

Conflict of laws, formalities

85.  (1)     As regards the manner and formalities of executing a continuing power of attorney or power of attorney for personal care, the power of attorney is valid if at the time of its execution it complied with the internal law of the place where,

(a) the power of attorney was executed;

(b) the grantor was then domiciled; or

(c) the grantor then had his or her habitual residence.[298]

It is proposed that an adapted conflict of laws provision recognize approaches taken in other provinces and territories to issues of legal capacity and representation for the RDSP, including representation and designation agreements, and special limited POAs. 

 

The Law Commission of Ontario recommends that:

10.     The Government of Ontario adopt a conflict of laws provisions for the streamlined process identified in Recommendation 1, modelled on ss.85 and 86 of the Substitute Decisions Act, 1992, in order to promote coherence in the processes to appoint RDSP legal representatives for beneficiaries across Canada. The provision would enable adults travelling from outside of Ontario to continue to be represented by a plan holder who was previously appointed through a valid arrangement.

 

 

 

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