This Chapter reviews and critically analyzes laws in Ontario and other jurisdictions that provide insights into the development of an alternative process to establish a legal representative for RDSP beneficiaries. The benchmarks for reform are used flexibly throughout the review and analysis (see Chapter I.C, Approaches to the Project Process). One step toward meeting the first of the benchmarks is to build on achievements that have already been made. With that in mind, this discussion paper focuses on key issues that were identified repeatedly in the LCO’s research and preliminary consultations.
The first key issue, the Choice of Arrangements to Establish a Legal Representative for RDSP Beneficiaries, is the core issue for this project. It considers the general arrangement to designate a legal representative or to have one appointed. The other key issues consider aspects of any choice of arrangement that merit in-depth analysis. These are reviewed in discrete sections on the roles and responsibilities of stakeholders, the eligibility of legal representatives and safeguards against financial abuse.
Other issues were viewed as beyond the LCO’s mandate, not integral to the objectives for reform or overly resource-intensive. They include questions concerning the intricate procedural requirements that normally accompany personal appointments to validate them in law, and issues surrounding redress through the criminal and civil justice systems. Some of these issues will be reviewed in the LCO’s ongoing Legal Capacity, Decision-Making and Guardianship project.
B. Choice of Arrangements to Establish a Legal Representative for RDSP Beneficiaries
This section considers existing arrangements to establish a legal representative for financial management in Canada and abroad, beginning with two Canadian provinces that have created a process specific to the RDSP. It continues to review other arrangements in decision-making laws, the law of trusts and laws in the income support and social benefit sectors. It concludes with a summary of several broad options for reform.
Figure 2, Options for Reform in the Choice of Arrangements, which is located at pages 90 to 91, provides a visual aid for readers considering the options for reform relating to the key issue reviewed in this section. The LCO invites you to access Figure 2 as a point of reference throughout the remainder of the discussion paper. The options for reform are discussed again in Chapter VI, Options for Reform, in terms of their relative implications for implementation along with a summary of the other key issues for the project.
Each of the existing arrangements reviewed in this section begins with the common law or statutory presumption of capacity. The establishment of a legal representative may then be contingent on an adult executing a personal appointment, on a finding of incapacity or on the determination that an adult needs assistance. For instance, personal appointments, such as POAs and self-designated trusts, are private arrangements that use positive language to define the level of capacity an adult must have to appoint another person for assistance with decision-making. Personal appointments do not result in a finding that an adult is incapable; however, there may be procedures in place to ensure that an appointment is legally valid, such as the presence of a witness. External appointments, including court and administrative tribunal orders, are public processes that may be based on an assessment of incapacity. It is, however, also quite common for laws to create a means to establish a legal representative without consideration of an adult’s capacity, for instance, where he or she has a confirmed need for assistance in managing daily expenses. These concepts and their potential implications for RDSP beneficiaries were discussed at length in Chapter II.B.3, What is Capacity? Foundational Concepts and Tensions.
There is a notable lack of empirical evidence on the practical implications and effectiveness of existing approaches. The LCO has commissioned a research paper in the Legal Capacity, Decision-Making and Guardianship project that will evaluate the implementation of some of these alternative arrangements. We also hope to hear from the public in response to the issues raised here.
2. Canadian Provinces with a Process Specific to the RDSP
a. Saskatchewan Special Limited Powers of Attorney
The Saskatchewan Ministry of Justice and Attorney General has released an information booklet that recommends adults use a “special limited” POA to appoint an attorney for the RDSP. The booklet was published prior to the federal RDSP Review and may not directly respond to the detailed challenges that stakeholders reported. Nevertheless, it deals with the overarching issue for this project inasmuch as it recognizes that “some persons with extreme mental disabilities do not have the capacity to enter into a contract. In this case, the person requires a legal representative appointed to sign the contract to set up an RDSP”. Saskatchewan’s approach is creative and does not require legislative amendment. However, it is based on that province’s POA legislation, which contains a lower threshold for capacity than exists in Ontario.
In Saskatchewan, the threshold for capacity to execute a POA reflects the simplicity of the common law. The Powers of Attorney Act reads, “[a]ny adult who has the capacity to understand the nature and effect of an enduring power of attorney may grant an enduring power of attorney”. The explanatory booklet on the RDSP interprets this as a “low threshold” that could be met sufficiently “if a person understands that he or she is signing a paper that appoints a parent as attorney to create a savings account”. A special limited POA for the RDSP that follows the booklet’s recommendation would have a similarly low requirement.
The Saskatchewan Ministry of Justice and Attorney General suggests that a special limited POA be RDSP-specific only, limiting the scope of an attorney’s powers to that of a restricted plan holder, who would not have authority to decide terms for the timing and amount of one-time DAP withdrawals or the management of funds that have been paid out of the RDSP. It suggests that those extended powers would require full property guardianship due to concerns about safeguards against abuse:
It is suggested that the special limited power of attorney would give a parent the power to set up an RDSP, contribute funds, consent to someone else’s contributing funds, or transfer the RDSP to another financial institution, but not the power to withdraw funds or close the RDSP. For someone to have the ability to withdraw funds, he or she would have to apply for full property guardianship. Full guardianship has the protection of annual accountings, bonds and the ability for removal.
The LCO has learned that restricting a plan holder’s authority to request one-time DAP withdrawals, as suggested in the Saskatchewan approach, could conflict with some financial institutions’ operational constraints. Under the ITA, a plan holder does not have authority to manage funds that have been paid out of the RDSP. However, plan holders can request that one-time DAP withdrawals be made from an RDSP on the beneficiary’s behalf prior to, or during, the receipt of mandatory lifetime payments that begin at age 60 (for more information see Chapter II.B). The ITA enables each financial institution to stipulate as a term of contract whether DAPs are permitted. This is one of the areas of flexibility conferred on financial institutions to account for variations in their operational constraints. Most, if not all, financial institutions permit DAPs as a standard term of contract. As a result, if a legal representative were restricted from requesting DAPs, he or she might not be able to agree to the terms of contract that are necessary to open an RDSP at many financial institutions. Adopting the Saskatchewan approach in Ontario could limit an RDSP beneficiary’s choice of service provider. It also appears not to be commercially viable for financial institutions to offer two types of contracts for the RDSP.
An additional possible shortcoming of Saskatchewan’s suggested approach is that it disentitles RDSP beneficiaries from making one-time withdrawals, unless they have the capacity to do so independently. Therefore, it cannot serve those adults with diminished capacity who use the RDSP as a contingency plan throughout their lives, rather than for long-term savings. The LCO heard from one such person who regards the RDSP as a safety net in the event that his abilities, services or support networks change.
Where an adult is unable to meet the capacity test for a special limited POA or needs a legal representative for withdrawals, the information booklet notes that Saskatchewan’s The Adult and Co-Decision-Making Act allows a person to apply to the Court of Queen’s Bench (the equivalent of Ontario’s Superior Court of Justice) to have a property guardian or co-decision-maker appointed. Appointments can be for specific purposes and “any application could be limited to appointment as a guardian for the purpose of opening and managing the RDSP only, and not all of the adult’s property”. In Ontario, the SDA stipulates that the court can “impose such other conditions on the appointment as the court considers appropriate”, which could also include the appointment of a guardian for RDSP decision-making. However, RDSP beneficiaries and their families have experienced challenges with court-ordered guardianship, as discussed in Chapter III.C, Challenges Posed by Ontario’s Current Framework. Saskatchewan’s framework for co-decision making is reviewed as a less restrictive alternative to guardianship in Subsection 3(b), below.
Elements of the Saskatchewan special limited POA for the RDSP have been incorporated into Option 1 in Figure 2, Options for Reform in the Choice of Arrangements.
b. Newfoundland and Labrador Designation Agreements
Shortly after the federal government introduced measures in the Economic Action Plan 2012 to respond to feedback it received during the RDSP review, Newfoundland and Labrador passed a Bill to amend its Enduring Powers of Attorney Act to permit an adult to designate two authorized persons or the Public Trustee as his or her representative(s) for the RDSP under a “designation agreement”. These amendments are not yet in force. As a result, the effectiveness of Newfoundland and Labrador’s response cannot be evaluated. The parameters of the legislation, and the parliamentary debates that led to its adoption, can be discussed in a general manner, as can related commentary from the legal