A relationship with a client can change dramatically when the client starts showing signs of mental incapacity and the person with power of attorney wants to step in. Defining when your client has become mentally incapacitated, thus allowing the holder of the POA to take over, can be the cause of a significant disagreement between your client and the POA-holder.
“In my experience, especially in the past three or four years, I have seen more files contesting who is the most appropriate decision-maker when it comes to financial matters,” says Arlin Pachet, a psychologist in Calgary who performs mental capacity assessments. His testing process determines whether a person is capable of managing property and finances.
Under legislation such as Ontario’s Substitute Decisions Act, British Columbia’s Adult Guardianship Act, and Alberta’s Adult Guardianship and Trusteeship Act, a person is presumed mentally capable until proven otherwise.
Decline in mental capacity may indicate the onset of dementia, says Pachet. Your client may forget his or her appointment with you or may have trouble understanding abstract ideas, such as rates of return.
If a normally well-groomed client shows up dishevelled and unkempt or appears sleepy and develops a grey pallor, Pachet says, it’s time to suggest your client see his or her family physician.
“If there are adequate triggers identified by the family doctor,” Pachet says, “and if the client seems to be medically stable, then the doctor can refer him or her for a capacity evaluation.”
Official capacity assessments are conducted by trained physicians, nurses, social workers or occupational therapists. An assessment to determine capability for property care could take 30 to 90 minutes, and typically includes questions such as “How do you monitor your financial advisor’s performance?”
Pachet, who provides assessment training to health-care professionals, says it’s important to ask the same question in different ways — something a financial advisor can do with his or her clients, he says.
If Pachet suspects something “unscrupulous or unsavoury going on” with a client’s POA after an assessment, he will notify the Office of the provincial Public Guardian & Trustee. Pachet also interviews people close to the person being evaluated — such as a financial advisor — for a deeper look.
— OLIVIA LI