Can an Attorney (by Power of Attorney) plan the estate of the incapacitated donor? Only if...

When someone grants a power of attorney, they authorize another person (the attorney) to manage their financial and legal matters. However, this authority has strict limits when it comes to anything resembling making or changing a will.

A 2013 British Columbia Court of Appeal decision, Easingwood v. Cockroft, remains a leading authority on the subject. It provides some guidance on how far an attorney’s powers extend— when steps that may be considered by some to be estate-planning steps are taken during the grantor (the "Donor") of the power of attorney's lifetime.

A recent litigation scenario involving a man named Reg and his spouse Kay illustrates how these principles apply.

Reg’s Alter Ego Trust

Background:
Reg’s attorney, during Reg's lifetime but while Reg was incapacitated, used Reg's enduring power of attorney to establish an alter ego trust and transfer Reg’s assets into it.

Kay, surviving, challenged the validity of the alter ego trust via a Wills Variation Claim, where a spouse or child in BC can apply to court to vary a will, if they feel they were treated unequally per Section 60 of British Columbia's Wills, Estates and Succession Act (WESA)).
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What is an alter ego trust?
An alter ego trust (available to individuals aged 65 or older) is a lifetime trust that:

• Must only benefit the person who created it (the settlor) while they are alive, and
• Distributes the assets held in trust to beneficiaries dictated by the trust, after the settlor’s death.

Even though it governs the distribution of assets after death, an alter ego trust is not considered a will or a testamentary document.

The Central Question

Did Reg’s attorney exceed their authority by settling this alter ego trust for Reg?

This matters because an attorney:

• Must act only for the Donor’s benefit, and
• Cannot engage in testamentary planning, meaning they cannot decide who receives the Donor’s property after death.

Conclusion: The Attorney Acted Within Their Authority

The court found that the attorney did not exceed their authority. The reasons included:

1. The trust reflected Reg’s known wishes, documented in both his will and his marriage agreement.
2. The trust was inter-vivos—it took effect during Reg’s lifetime—so it did not constitute making or altering a will.
3. There was no conflict of interest: the attorney’s actions did not benefit themselves in a way that conflicted with Reg’s best interests.
4. Tax consequences benefitted all eventual beneficiaries, not just the attorneys, and arose by operation of law (the Income Tax Act), not because the attorneys created a gift.
5. Reg’s interests were preserved, not diminished.

Because the trust did not change Reg’s testamentary wishes and was consistent with both his will and his marriage agreement, the court held that the attorney acted within the scope of their authority.

The key point is that an attorney may take steps that resemble estate planning, such as settling an alter ego trust, if those steps are clearly for the Donor’s benefit and are consistent with the Donor’s settled intentions.

Legal Principles: What Attorneys Can and Cannot Do

1. Attorneys cannot make testamentary decisions

The rule is longstanding: a person cannot delegate the power to make a will or to direct who inherits their estate.

This principle featured prominently in:

• Bank of Nova Scotia Trust Co. v. Lawson, where a trust variation under a power of attorney was struck down because it changed what would happen upon the donor’s death.
• Banton v. Banton, where a power of attorney was used to create a trust with gifts to the remainder beneficiaries that conflicted with what would occur on an intestacy.

In both cases, the problem was not the use of a trust—it was that the attorney altered the Donor’s estate plan.

2. Attorneys may create lifetime trusts if they benefit the donor

In Banton, the court accepted that a broad power of attorney can allow an attorney to settle a lifetime trust for the Donor’s benefit. However, the attorney cannot re-engineer the Donor’s estate plan or provide themselves with unauthorized benefits.

This principle was later clarified and affirmed in Easingwood, where the Court of Appeal emphasized:

• The power of attorney is a tool for managing the Donor’s property and finances,
• Not for altering the Donor’s estate plan, unless the step taken is demonstrably in the Donor’s best interests and consistent with the Donor’s known intentions.

Practical Takeaways for the Public

1. A power of attorney does not allow making or changing a will.
   Estate distribution decisions must come directly from the person, not their attorney.
2. Lifetime trusts may be allowed if they help the donor.
   Attorneys can sometimes establish trusts, including alter ego trusts, when:
   • They match the donor’s long-expressed intentions, and
   • They provide a clear benefit to the donor.
3. Courts focus on intent, benefit, and consistency.
   If a trust or transaction mirrors the donor’s existing estate plan and is clearly in their best interest, courts are more likely to uphold it.
4. Well-coordinated estate planning matters.
   When wills, powers of attorney, trusts, and relationship agreements are aligned, attorneys, executors, and beneficiaries have clearer guidance and disputes are less likely.

Estate planning is complex, and mistakes made with powers of attorney or trusts can create costly disputes for families. If you want to help ensure your planning is legally sound, tax-efficient, and aligned with your long-term wishes, we can help. We advise clients across Vancouver Island on wills, trusts, powers of attorney, estate freezes, and coordinated tax-driven planning.

‍If you would like tailored advice or want to review or update your estate plan, contact our expert estate-planning team today to schedule a consultation: ar@jfblaw.ca or call 250-756-3823.

Case Citations

• Easingwood v. Cockroft, 2013 BCCA 182 (CanLII).
• Bank of Nova Scotia Trust Co. v. Lawson, 2005 CanLII 46390 (ON SC), 22 E.T.R. (3d) 198.
• Banton v. Banton, 1998 CanLII 14926 (ON SC), 164 D.L.R. (4th) 176, aff’d 2001 CanLII 24014 (ON CA), 53 O.R. (3d) 567.
• Power of Attorney Act, RSBC 1996, c 370
• Wills, Estates and Succession Act [SBC 2009] CHAPTER 13

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