guardianship Archives - Casey and Moss LLP

NON-COMPENSABLE TRANSACTIONS IN FIDUCIARY ACCOUNTING

Jun 18, 2025

I work all night, I work all day, to pay the bills I have to pay

Ain’t it sad?

And still there never seems to be a single penny left for me

That’s too bad…

My colleague Rebecca Suggitt previously blogged about the importance of keeping proper accounts as an attorney or guardian of property. One of the reasons she gave was that a guardian or attorney’s compensation is tied directly to the receipts and disbursements person under guardianship or attorneyship (who will be referred to as the “incapable person”).

Generally, the rule that applies to a guardian or attorney’s compensation is a charge of 3% on all receipts and disbursements in the guardianship or attorneyship accounts, per the regulations under the Substitute Decisions Act, 1992. (For simplicity, I will use the term “fiduciary” to mean “guardian” or “attorney” for the remainder of this blog, but be aware that “fiduciary” is a broader term that is not limited to guardians or attorneys.)

The broad purpose of this 3% charge is to compensate fiduciaries for the work they do to manage the incapable person’s assets, such as paying their bills, purchasing necessities and personal items, and collecting and managing money from their sources of income.

However, like many legal principles, there are exceptions to this general rule. There are certain receipts and disbursements that the 3% charge should not be applied to. Below are a few commonly seen non-compensable transactions:

Transfers Between Accounts

People often own more than one bank or investment account. The fiduciary may need to move money from the savings to chequing account to pay the incapable person’s monthly bills, or decide to invest the excess funds in chequing account by moving it into an investment vehicle. These transfers will appear in the accounting as a disbursement (when the money leaves the original account) and a corresponding receipt (when the money is deposited into the second account). But, because the money is not leaving the guardianship/attorneyship to pay a third party, nor is new money coming in, these are not compensable transactions. They should be recorded in the accounting bookkeeping or “memo” transactions only.

Refunds

The accounts will reflect refunds, for instance, when items are returned to a store and a credit is issued back to the incapable person. The refunded money will appear in the accounting as a receipt. Since these receipts are not deposits of new money or income, they are not compensable transactions.

Capital Losses

Capital losses occur when an asset is sold for less than its adjusted cost base. The fiduciary may need to liquidate stocks, investments, or other assets because the incapable person needs cash to pay for their expenses. Capital losses appear in the accounting as disbursements. However, they are not true disbursements because no money leaves the guardianship or attorneyship to pay for a good or service. As such, they are non-compensable.

Compensation Paid to the Fiduciary

Fiduciaries are permitted to pay themselves compensation on a monthly, quarterly, or annual basis, pursuant to the Substitute Decisions Act, 1992. If so, the accounts will reflect compensation payments to the fiduciary throughout the period of accounting. As it would be duplicative for the fiduciary to pay themselves for paying themselves, these transactions are non-compensable.

How to Reflect Non-Compensable Transactions in the Calculation for Compensation

The value of these identified non-compensable transactions should be deducted from the value of total receipts and disbursements during the accounting period. After making all deductions, apply the 3% to the net receipts and disbursements to calculate the compensation.

Zara Wong

Nothing contained in this post constitutes legal advice or establishes a solicitor-client relationship. If you have any questions regarding your legal rights or legal obligations, you should consult a lawyer.

WHEN BONDS AREN’T WORTH IT: SEEKING TO DISPENSE WITH BONDS IN GUARDIANSHIP APPLICATIONS

Mar 11, 2025

A guardianship application involves applying to the court to be appointed as an incapable person’s substitute decision maker for property management and/or personal care decisions.

When a party applies to the court to be named a guardian, this usually means that the incapable party did not have a power of attorney in place. The process can be stressful and regularly arises when family members realize they need to begin making financial decisions for the incapable party but are unable to do so without a power of attorney for property in place.

To complicate matters further, applicants seeking to be a loved one’s guardian of property are regularly required to obtain expensive bonds as security to ensure the safety of the incapable party’s assets.

The judge hearing the guardianship application will determine whether or not it is appropriate to forgo the requirement that a guardian obtain a bond (see: Grant v Robinson, 2024 ONSC 1558 and Connolly v. Connolly and PGT, 2019 ONSC 4148).

It is important to discuss with a lawyer the information a judge will need to determine whether a bond is necessary in the case at hand. Every situation is different, but it is often helpful to provide evidence on the following:

The proposed guardian’s relationship to the incapable party. For example, a court may be less inclined to order that the spouse of an incapable party obtain a bond, especially where assets have always been jointly held between the proposed guardian and the incapable party.
Whether the proposed guardian resides in and has assets in Ontario that could be used to repay the incapable party in the event funds are mismanaged or misappropriated.
Information on the incapable party’s assets and the funds required to meet the incapable party’s care needs.
Information on the estimated cost of a bond and whether the cost will be burdensome for the incapable party or is disproportionate to their assets.
Whether the incapable party has made any specific gifts in their will.
The proposed guardian’s intention to continue relationships with or retain professionals such as accountants and financial advisors to provide advice on investment strategy and the incapable party’s financial obligations.
A plan to seek an order that the proposed guardian shall bring an application within two to three years to “pass their accounts”. A passing of accounts application requires the guardian to show the court all transactions related to the incapable party’s funds during the accounting period. The need for a bond can be reassessed on each passing application.
A clear, common sense management plan that shows how the proposed guardian intends to manage the incapable party’s funds.

Overall, when bringing a guardianship application, it is critical to provide evidence on the proposed guardian’s honesty, integrity and their dedication to acting in the incapable party’s best interest. These factors and the specific examples above may militate against a finding that a bond is necessary.

Rebecca Suggitt

COMMENCING AN APPLICATION FOR GUARDIANSHIP: LESSONS LEARNED FROM THE TRENCHES

Dec 17, 2024

It seems that the past few months have been full of guardianship applications, each with their own nuances and challenges. After a brief moment of respite, I thought this would be a useful occasion to document some of the things I have learned along the way. Below are some tips “from the trenches”:

1. Give your Client a Realistic Timeline

Guardianship applications do not follow the typical roadmap of litigation, even if they are uncontested. Depending on your client, he or she may have little to no information about the alleged incapable person’s finances or care needs. This means that you need to build in more time than usual to make inquiries with banks, healthcare providers, and family members.

And then there are all of the nuts and bolts of putting together an application record for the court, some of which can be deceptively cumbersome or easy to overlook. Take, for example, the requirement to include a statement by the applicant indicating that he or she has informed the person alleged to be incapable of the nature of the application as well as their right to oppose it. How will your client communicate this? What happens if the incapable person refuses to meet with your client? Or, consider the requirement to serve the incapable person with the application and to allow them to participate at the court hearing. How will you communicate the Zoom coordinates to the incapable person if the hearing takes place virtually?

The short of it is that you need to be clear with your client that guardianship applications take time, and it is prudent to have a work plan from the start setting out all the steps that need to take place and who will be responsible for each step.

2. If Retaining a Capacity Assessor, Be as Comprehensive as Possible in your Retainer Letter

I have found that the best practice for retaining a capacity assessor is to be as forthright as possible, and to document your retainer in a letter. When retaining a capacity assessor, be sure to:

Make it clear that you do not represent the alleged incapable person, only the person(s) applying to be his or her guardian;
Set out the background leading to the assessment, making sure to frame things neutrally;
Identify any known conflicts or outstanding pieces of litigation;
Specify what type(s) of assessment(s) you are retaining the assessor to conduct, and provide the legal criteria associated with each type of assessment;
Provide collateral information about the alleged incapable person’s care needs and property; and
Remind the assessor that your client(s) should not be present when the assessment takes place.

This list is certainly not comprehensive, but can provide a helpful start.

3. Ensure the Management and Guardianship Plans are Clear and Flexible

One of the best parts about reviewing applications to pass accounts is that you get to see all sorts of guardianship and management plans. Over time, I have learned that some simple additions to a plan can make a world of a difference in allowing a guardian to effectively manage another person’s assets without being put in an impossible position where they cannot comply with the plan.

The following are some of the notable additions to plans that I have seen or used in guardianship applications:

Index all amounts to account for inflation;
Include an annual contingency fund, in case expenses end up being higher than initially anticipated;
Include a reallocation clause, in case one category of expenses exceeds the others in a given year;
Build in the cost of future passings, including accounting and legal fees; and
Add in discretionary language, where reasonable and appropriate.

4. Give Your Client A Roadmap for the Future

Once you have your guardianship judgment in hand, it may be tempting to think that your job is complete. The reality is that the real work has just begun. The point of bringing a guardianship application is not to get a piece of paper, but to ensure that your clients have the necessary tools to effectively manage another person’s property or care. The most common pitfall I see when reviewing guardianship accounts is that the applicant has not received adequate advice about how to comply with the terms of the judgment appointing them.

I recently got into the practice of preparing a detailed reporting letter following a guardianship appointment, explaining the terms of the order, setting out the guardian’s duties and obligations, and providing some examples of common situations they can expect to navigate. Another important consideration is the application to pass accounts, which most guardians of property will be required to commence within the first few years of their appointment. Working backwards from this deadline, you can give your clients helpful information about how to keep records, how to manage or consolidate bank accounts, when to begin preparing the accounts in court format, and when to commence the necessary court application. To this end, I will often give clients customizable spreadsheets so that they can track their transactions on a monthly basis in preparation for the passing.

The role of a court-appointed guardian is to step into the shoes of another person, to protect their welfare and best interests. For this reason, lawyers should take special care to ensure that clients are fully aware of the scope of this responsibility and are well-equipped to carry out the role with honesty, integrity, and trust.

Adam Giancola

ACTING AS A LOVED ONE’S LITIGATION GUARDIAN: RESPONSIBILITIES AND RISKS

Mar 7, 2024

This blog post expands on Adam Giancola’s blog series about the role of litigation guardian at common law.

If your loved one is involved in litigation but lacks the capacity to understand and make sound decisions related to their court proceeding, or is a child under the age of eighteen, they will require a litigation guardian to participate in litigation. All litigation guardians must be over the age of eighteen.

A litigation guardian steps into the shoes of the party under disability and makes decisions arising from the litigation on that person’s behalf. It is a considerable and often demanding role, but one that is critically important to safeguarding the interests of parties under disability in Ontario.

Getting Started

Under Rule 7.02(2) of the Rules of Civil Procedure, any person who wishes to act as a litigation guardian, except the Children’s Lawyer and Public Guardian and Trustee, must file an affidavit with the court with the following information:

the proposed litigation guardian’s consent to act as litigation guardian;
confirmation that a named lawyer has been given written authority to act in the proceeding;
evidence regarding the nature and extent of the disability;
where acting for a minor, the minor’s birthday;
whether themselves and the person under disability are Ontario residents (the proposed litigation guardian is not strictly required to live in Ontario, but this is a factor for the court to consider);
their relationship to the person under disability (you do not have to be a family member);
whether the proposed litigation guardian has an interest in the proceeding adverse to the person under disability; and
acknowledges that they have been advised they may be liable to personally pay a costs award against the person under disability.

Responsibilities

The Rules of Civil Procedure sets out various requirements for litigation guardians:

Litigation guardians, other than the Children’s Lawyer and Public Guardian and Trustee, must be represented by a lawyer. These fees are to be paid from the party under disability’s assets.
All litigation guardians “must diligently attend to the interests of the person under disability and take all steps necessary for the protection of those interests”. Procedurally, this means ensuring that the correct procedures are followed. Substantively, this means acting reasonably and properly for the benefit of the person under disability.
The litigation guardian, on behalf of the party under disability, may only enter settlements that are in the best interests of the person under disability. Where there is a party under disability, judicial approval of the settlement is required and courts will only approve settlements that are in the best interest of that person. A lawyer will provide the litigation guardian with advice on what settlements may or may not be in the party under disability’s best interest.

It is also important to understand where the role of a litigation guardian starts and ends. A litigation guardian is not the same as a guardian or attorney for property or personal care. A litigation guardian’s role does not extend beyond issues within the litigation. Unless they are also an attorney or guardian of property, a litigation guardian cannot manage or hold the property of the person under disability, which includes settlement funds.

Risk

In litigation generally, the losing party is responsible for paying a reasonable share of the winning party’s legal fees; this is called a “costs” award.

As discussed above, there is a risk that a litigation guardian could be personally liable for costs awards against the person under disability. The reason for this is to prevent litigation guardians from acting frivolously or improperly at the expense of the party under disability.

This risk is why it is especially important for litigation guardians to hire competent, trusted counsel to provide advice on how to act reasonably and appropriately during litigation.

Rebecca Suggitt

ANGELA CASEY PRESENTS AT “THE ANNOTATED GUARDIANSHIP APPLICATION” PROGRAM

Mar 7, 2024

I am grateful to Jan Goddard and Yasmin Vinograd for inviting me to be a panelist at the Annotated Guardianship Application program on March 6, 2024. They obviously put a lot of thought and care into choosing interesting topics and great speakers. Each time I participate in the program, I end up learning new things from the other speakers and panelists:

Meredith MacLennan offered three tips for registering guardianship orders on title. Guardianships sometimes arise in situations where the vulnerable person is already being financially exploited. As a guardianship lawyer, I have seen unfortunate situations where vulnerable adults have signed paperwork that is manifestly against their best interests at someone else’s behest. Even with a guardianship order in place, there is nothing stopping a wrongdoer from manipulating an incapable person into signing documents to take out a mortgage or transfer title. Registering the guardianship order on title gives notice to anyone seeking to lend or purchase the home that the owner has a substitute decision maker. However, I learned yesterday that from a conveyancing perspective, this is not as easy as it sounds. Meredith’s top tip was to ask the court for a stand-alone order to register on title because the standard Judgment appending a management plan will not be accepted for registration.

Arthur Fish and Alexander Procope spoke about how to help litigants find an off-ramp from the destructive road of guardianship litigation through alternative dispute resolution. I especially valued Arthur Fish’s insights about delving into the family history of high-conflict/low resolution families to uncover the trauma that is truly driving the family conflict.

Various speakers answered some tough questions from the audience, like whether “joint and several” guardianship appointments are possible (Lisa Filgiano clarified they are not). Doreen So shared an example from her own practice where she came up with a creative partial guardianship solution when a Florida property could not be transferred utilizing an Ontario power of attorney.

The program was chock full of practical advice on how to do a guardianship application from the first meeting with the client through to closing your file. The annotated precedents have been expanded over the years to include a retainer letter, a Notice of Application, an affidavit, a management plan, a guardianship plan, a closing letter, and a Judgment. The program is still available for viewing through the LSO, and I highly recommend it.

Angela Casey