1. What Does Alberta Law Say?

2. What Is a Trusteeship Order?

3. The Court Decides Who Will Be Appointed

4. The Application Process Takes Time

5. An Enduring Power of Attorney Avoids Court Involvement

6. An Enduring Power of Attorney Is Different From a Personal Directive

7. How the Process Works

8. Common Mistakes

9. Costs and Considerations

10. When Should You Speak With an Estate Planning Lawyer?

11. How Bridgestone Law Can Help

Introduction

An Enduring Power of Attorney is one of the most important estate planning documents an adult can have. It allows you to appoint someone you trust to manage your financial and legal affairs if you become incapable of making decisions for yourself. Without this document, even a spouse or adult child may not automatically have the legal authority to access your bank accounts, manage your investments, sell your property, or deal with financial institutions on your behalf.

Many people assume that their closest family members will automatically be able to step in if they lose mental capacity because of illness, an accident, or age-related cognitive decline. In Alberta, this is generally not the case. Unless an Enduring Power of Attorney is already in place, your loved ones may need to apply to the Court under Alberta's Adult Guardianship and Trusteeship Act to be appointed as your trustee before they can legally manage your financial affairs.

The court application process can be time-consuming, expensive, and emotionally difficult, particularly during a period when families are already coping with a medical crisis. In the meantime, important financial matters, such as paying bills, managing investments, renewing insurance, or selling property, may be delayed until the necessary legal authority has been granted.

Understanding what happens if you lose capacity without an Enduring Power of Attorney, how trusteeship applications work, and why advance planning is so important can help you protect your finances, reduce stress for your family, and ensure that someone you trust is able to manage your affairs if you are no longer able to do so yourself.

What Does Alberta Law Say?

In Alberta, an Enduring Power of Attorney allows you to appoint another person (known as your attorney) to make financial and legal decisions on your behalf if you lose mental capacity. It is an important part of incapacity planning because it allows you, not the Court, to decide who will manage your affairs if you are no longer able to do so yourself.

If you lose capacity without an Enduring Power of Attorney, no one automatically receives legal authority to manage your financial affairs, even if they are your spouse, adult child, or closest relative.

Instead, someone may need to apply to the Court to become your trustee under Alberta's

Adult Guardianship and Trusteeship Act.

What Is a Trusteeship Order?

A trusteeship order is a Court order that gives an individual the legal authority to make financial and property decisions for an adult who no longer has capacity.

Depending on the circumstances, a trustee may be authorized to:

• manage bank accounts;

• pay bills and living expenses;

• collect income;

• manage investments;

• buy or sell property;

• deal with insurance companies;

• file tax returns; and

• manage other financial and legal matters.

The trustee must act in the incapable adult's best interests and comply with the responsibilities imposed by Alberta law.

The Court Decides Who Will Be Appointed

If there is no Enduring Power of Attorney, the Court, not the incapable person, determines who should be appointed as trustee.

Applicants may include:

• a spouse or adult interdependent partner;

• an adult child;

• another family member;

• a trusted friend; or

• in some circumstances, the Public Trustee.

If more than one person wishes to act, disagreements can arise, requiring the Court to decide who is most appropriate.

The Application Process Takes Time

Obtaining a trusteeship order generally requires:

• medical evidence regarding the adult's capacity;

• preparation of Court documents;

• service of required notices;

• compliance with the Adult Guardianship and Trusteeship Act;

• filing the application with the Court; and

• obtaining a Court order.

During this process, important financial decisions may be delayed until legal authority is granted.

An Enduring Power of Attorney Avoids Court Involvement

One of the greatest advantages of preparing an Enduring Power of Attorney while you have capacity is that it often eliminates the need for a future Court application.

Because you choose your attorney in advance:

• you decide who will manage your affairs;

• your family avoids the expense and delay of Court proceedings;

• financial decisions can often be made more quickly;

• your wishes are more likely to be respected; and

• uncertainty during a medical crisis is reduced.

For many families, preparing an Enduring Power of Attorney is one of the simplest and most effective ways to plan for unexpected incapacity.

An Enduring Power of Attorney Is Different From a Personal Directive

People often confuse an Enduring Power of Attorney with a Personal Directive, but they serve different purposes.

Generally:

• an Enduring Power of Attorney deals with financial and legal decisions; and

• a Personal Directive appoints someone to make personal and healthcare decisions if you lose capacity.

Many Albertans prepare both documents as part of a comprehensive incapacity and estate planning strategy.

Because incapacity can occur unexpectedly at any age through illness, injury, or cognitive decline, preparing these documents before they are needed can save families significant time, expense, and stress while ensuring that trusted individuals are authorized to act on your behalf.

How the Process Works

Step 1: Capacity Is Lost

The process begins when an adult is no longer able to understand information relevant to making financial decisions or appreciate the consequences of those decisions.

Loss of capacity may result from:

• dementia or Alzheimer's disease;

• a stroke;

• a traumatic brain injury;

• a serious illness;

• another cognitive impairment; or

• an unexpected accident.

If there is no valid Enduring Power of Attorney, family members cannot automatically begin managing the person's financial affairs.

Step 2: A Family Member Applies for Trusteeship

If financial decisions need to be made, an appropriate person may apply to the Court to become the adult's trustee under Alberta's Adult Guardianship and Trusteeship Act.

The proposed trustee is often:

• a spouse or adult interdependent partner;

• an adult child;

• another close family member;

• a trusted friend; or

• in some cases, the Public Trustee.

The applicant must demonstrate that a trusteeship order is necessary and that they are suitable to manage the incapable adult's financial affairs.

Step 3: Medical Evidence Is Obtained

A trusteeship application generally requires evidence regarding the adult's mental capacity.

This often includes:

• a formal capacity assessment;

• medical reports;

• physician opinions; or

• other evidence required by the legislation.

The Court relies on this evidence to determine whether the adult lacks the capacity to manage their financial affairs.

Step 4: The Court Reviews the Application

The Court reviews the evidence and determines whether:

• the adult lacks capacity;

• a trusteeship order is appropriate;

• the proposed trustee is suitable; and

• the requested powers are in the adult's best interests.

If there are competing applications or disagreements among family members, the Court will decide who should be appointed.

Step 5: The Trustee Begins Managing the Adult's Affairs

Once appointed, the trustee has legal authority to manage the incapable adult's financial and property matters within the scope of the Court order.

Depending on the order, the trustee may:

• pay bills;

• manage investments;

• deal with financial institutions;

• buy or sell property;

• collect income;

• file tax returns; and

• make other financial decisions on the adult's behalf.

The trustee must always act in the adult's best interests and comply with the obligations imposed by Alberta law.

Practical Examples

Example One: An Enduring Power of Attorney Avoids Court

Susan prepares an Enduring Power of Attorney while she is healthy, appointing her daughter to manage her financial affairs if she later loses capacity.

Several years later, Susan develops dementia.

Because the Enduring Power of Attorney is already in place, her daughter is able to begin managing Susan's finances without applying to the Court, allowing bills to be paid and financial decisions to be made without unnecessary delay.

Example Two: No Enduring Power of Attorney Exists

David suffers a serious stroke and is no longer capable of managing his financial affairs.

Because he never prepared an Enduring Power of Attorney, his wife must apply to the Court for a trusteeship order before she can access his accounts, manage his investments, and deal with financial institutions.

Although she is ultimately appointed trustee, the application process results in additional time, expense, and stress during an already difficult period.

Example Three: Family Members Disagree

Michael loses capacity without an Enduring Power of Attorney.

Two adult children each believe they should manage his financial affairs and both seek to be appointed trustee.

The disagreement requires Court involvement to determine who is the most appropriate person to act, delaying important financial decisions and increasing legal costs for the family.

Common Mistakes

Assuming a Spouse Can Automatically Manage Your Finances

One of the most common misconceptions is that a spouse or adult child automatically has the legal authority to manage your financial affairs if you lose capacity.

In Alberta, this is generally not the case.

Without a valid Enduring Power of Attorney, even close family members may be unable to:

• access your bank accounts;

• deal with financial institutions;

• sell or refinance your property;

• manage your investments; or

• sign legal documents on your behalf.

Court authority may be required before these decisions can be made.

Waiting Until Capacity Has Declined

An Enduring Power of Attorney must generally be signed while you still have the mental capacity to understand the nature and consequences of the document.

Many people postpone preparing one until after a diagnosis of dementia or another cognitive condition.

If capacity has already been lost, it is usually too late to create a valid Enduring Power of Attorney, and a trusteeship application may become the only available option.

Choosing the Wrong Attorney

Selecting an attorney is one of the most important decisions in the planning process.

Your attorney should be someone who is:

• trustworthy;

• financially responsible;

• organized;

• willing to act; and

• capable of managing complex financial matters.

The role often involves significant legal and financial responsibilities, so careful consideration should be given before making an appointment.

Failing to Review the Document

An Enduring Power of Attorney should not simply be signed and forgotten.

It should be reviewed whenever significant life changes occur, including:

• marriage or divorce;

• changes in family relationships;

• the death of an appointed attorney;

• significant changes in financial circumstances; or

• changes in Alberta law.

Regular reviews help ensure the document continues to reflect your wishes.

Assuming a Will Solves Incapacity Issues

Many people mistakenly believe that having a will is enough.

A will only takes effect after death.

It does not authorize anyone to manage your finances while you are alive but incapable of making decisions.

An Enduring Power of Attorney addresses incapacity during your lifetime, while a will governs the distribution of your estate after your death.

Costs and Considerations

Preparing an Enduring Power of Attorney is generally far less expensive and less time-consuming than requiring family members to obtain a trusteeship order after capacity has been lost.

If no Enduring Power of Attorney exists, potential costs may include:

• legal fees;

• Court filing fees;

• medical capacity assessments;

• preparation of Court documents;

• service of required notices; and

• ongoing reporting obligations associated with a trusteeship order.

In addition to financial costs, families often experience delays while waiting for the Court process to be completed, making it more difficult to manage urgent financial matters during an already stressful period.

Preparing an Enduring Power of Attorney as part of a comprehensive estate plan can often reduce these costs while allowing you to choose the person who will manage your affairs if you become incapable.

When Should You Speak With an Estate Planning Lawyer?

Professional legal advice may be particularly valuable if:

• you do not currently have an Enduring Power of Attorney;

• you have recently married, divorced, or experienced another significant life change;

• you have been diagnosed with a condition that may affect future capacity;

• you own significant assets or a business;

• you wish to appoint more than one attorney;

• you need to coordinate your Enduring Power of Attorney with your will and Personal Directive; or

• you have questions about trusteeship or the Adult Guardianship and Trusteeship Act.

An experienced estate planning lawyer can explain your options, prepare documents that reflect your wishes, and help ensure your affairs can be managed smoothly if you ever lose capacity.

How Bridgestone Law Can Help

Losing mental capacity without an Enduring Power of Attorney can create unnecessary stress, delay, and expense for both you and your family. Instead of allowing a trusted person to step in immediately, your loved ones may be required to apply to the Court for a trusteeship order before they can manage your financial affairs. Preparing an Enduring Power of Attorney in advance allows you to choose who will act on your behalf and helps avoid unnecessary court proceedings during an already difficult time.

Bridgestone Law assists individuals and families throughout Calgary and Alberta with Enduring Powers of Attorney, Personal Directives, wills, estate planning, and incapacity planning. Whether you are preparing your first estate plan or updating existing documents, our experienced estate planning lawyers can help you create a comprehensive plan that protects both your finances and your family's future.