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The Pitfalls of Representation Agreements in British Columbia
Why Extra Care Is Needed When Planning for Incapacity
Misunderstanding the Scope of Authority
One common pitfall is misunderstanding the extent of authority granted under different types of representation agreements. British Columbia recognizes two main types:
· Section 7 Representation Agreements are typically used for an adult who may have diminished capacity at the time of the agreement’s execution, allowing for limited authority over routine financial, personal, and healthcare matters.
· Section 9 Representation Agreements are the standard representation agreement executed by an adult who is capable of granting broader powers, including decisions about major and minor healthcare and living situation.
Representation agreements do not authorize the representative to deal with the adult’s real property or manage finances or legal affairs (with limited exceptions under a section 7 agreement), rather, these powers are generally reserved for an enduring power of attorney.
Overlapping or Conflicting Documents
Another pitfall is the confusion or conflict between a representation agreement and other incapacity planning tools, such as a power of attorney or advance directive. Each instrument covers different areas of authority:
· A representation agreement covers health and personal care decisions while alive.
· A power of attorney covers legal and financial decisions while alive.
· A will instructs the administration of the estate after death.
Without careful coordination, these documents can give rise to conflicting instructions, especially if different individuals are appointed in each role.
A person appointed as your attorney under a power of attorney does not have authority to make personal or health care decisions for you unless they are also named as your representative in a representation agreement.
Conversely, a representative under a representation agreement does not have authority to manage your legal or financial affairs unless they are also appointed as your attorney under a power of attorney.
Both the power of attorney and representation agreement cease to have any effect upon the death of the adult. Upon death, if the adult has a will, the named executor in the will can start the process to administer the estate of the adult.
Inadequate Capacity
Representation agreements, particularly under Section 9, require that the adult be capable of understanding the nature and consequences of the agreement. Diminished capacity can result in the adult not giving clear instructions to the estate planner or not understanding the risk of a conflict of interest between the adult and their representative.
According to the Adult Guardianship Act, "until the contrary is demonstrated, every adult (person who has reached the age of majority) is presumed to be capable of making decisions about their own personal care, health care and financial affairs."
Per the Public Guardian and Trustee, “where it is established that an individual lacked the capacity to enter into a specific arrangement, the arrangement or relationship may be set aside.”
There are many standards and tests for assessing capacity under BC Law.
The various tests for capacity focus on a person’s ability, at the time a decision is made, to understand what they are doing and the potential consequences of that decision.
In situations where capacity is in question, an estate planner may consider appropriate safeguards, such as a capacity assessment by a medical professional or independent legal advice for the representative, in order to protect their client’s interests and ensure the integrity of the planning process.
Failure to Revisit the Agreement Over Time
Life circumstances change, and so should incapacity planning. A common oversight is failing to review and update representation agreements, especially when:
· The named representative is no longer available or suitable.
· The adult's wishes or care needs have changed.
· New legislation or case law affects the validity or interpretation of the agreement.
· The adult has moved to a different province,
A stale or inappropriate agreement may lead to delays in medical treatment or personal care, or may even result in committeeship, which is a legal process in British Columbia where the Supreme Court appoints someone to make decisions for an adult who is no longer capable of managing their own affairs and has no valid incapacity planning documents in place.
Conclusion
Representation agreements are powerful tools when they're tailored to your needs and are aligned with your overall estate plan. At Johnston Franklin Bishop in Nanaimo, our estate planning team understands the complexities of incapacity planning and how to coordinate representation agreements with other crucial documents like wills, powers of attorney and advance directives. Don’t leave your future to chance. Let us help you put a plan in place that’s clear, legally sound, and gives you and your loved ones’ real peace of mind. Contact us today at 250-756-3823 or email ar@jfblaw.ca to schedule a consultation.
Sources:
· Representation Agreement Act, RSBC 1996, c 405. https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/96405_01
· Power of Attorney Act, SBC2007, c 30. https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/96370_01
· Health Care (Consent) and Care Facility (Admission) Act, RSBC 1996, c 181. https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/96181_01
· Patients Property Act. https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/96349_01
· British Columbia Law Institute, Report on Common Law Tests of Capacity, March 2013. https://www.bcli.org/wp-content/uploads/2013/09/2013-09-24_BCLI_Report_on_Common-Law_Tests_of_Capacity_FINAL.pdf
· Public Guardian and Trustee– Definitions and tests of mental capacity: https://www.trustee.bc.ca/adults/definitions-tests-mental-capacity
- Adult Guardianship Act [RSBC 1996] CHAPTER 6 - https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/96006_01
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