The term “attorney” is confusing to those who automatically think that the attorney under a power of attorney must be a lawyer. It needn’t be, and the only conditions to be appointed as an attorney are that the individual(s) must have reached the age of majority and must be capable of managing one’s financial affairs. To avoid confusion, note that in some jurisdictions the legal term for attorney is “substitute decision-maker.”
Fortunately, less confusion arises with trusted contact person (TCP).
I correlate a TCP with an emergency contact. The scenario I reference is filling out a form at the dentist’s office that asks who to contact if something goes awry while in the dental chair.
The TCP is part of regulatory measures that came into effect on Dec. 31, 2021, and was established to help financial advisors when they’re concerned that clients are being financially exploited or demonstrating diminished mental capacity and unable to make financial decisions. For example, a client may exhibit memory loss, an inability to communicate their wishes or an unusually dishevelled appearance.
The TCP acts as a resource for the advisor and is someone they can discuss their observations with. Ultimately, the TCP helps protect the client’s financial interests and assets. Additionally, if an advisor is unable to contact or locate the client, the TCP may be able to assist.
While some dealers may have space for only one name on the applicable form, a client is permitted to choose more than one TCP. Further, while there is no requirement that the TCP be the age of majority, it should be someone who can be trusted, understands the client’s personal matters and knows how to contact the client and their family members and loved ones. A TCP should not be the client’s dealing or advising representative on the account.
TCP versus PoA
A TCP can’t make financial decisions on behalf of a client, meaning they can’t initiate or authorize transactions on the client’s behalf. Nor can they make account changes in any form or be given access to accounts and account information.
A PoA can do anything that the grantor (client) could do unless constrained in the power of attorney document and by provincial and territorial law. They may have the ability to authorize the purchase and sale of securities in an investment account.
Each provincial jurisdiction in Canada has legislation governing the powers of attorney, and the rules vary by province. Typically, the duty to act arises when the PoA has accepted the appointment or has acted in a manner consistent with the appointment. In some cases, the power of attorney document will specify a date or an event that triggers the appointment. An example of an event would be a capacity assessment by medical professionals confirming that the grantor is incapable of managing their financial affairs.
Overall, the PoA must act in accordance with a fiduciary standard and abide by the terms and conditions of the power of attorney document. These duties include but are not limited to the following:
acting in the best interests of the grantor
exercising reasonable care and skill in conducting the grantor’s affairs
keeping records of all transactions and accounting for the grantor’s affairs
ceasing to exercise their authority and duties if the power of attorney is revoked
A PoA typically cannot do the following:
make a will on the client’s behalf
change an existing will
change the designated beneficiaries of any registered accounts (RRSP, RRIF, TFSA) or life insurance policies
grant a new power of attorney to someone else
provide gifts, unless allowed per the power of attorney document and authorized in specific jurisdictions, and the gift doesn’t impoverish the grantor
co-mingle the grantor’s assets with their own assets (except for property that is registered jointly)
As with a TCP, a grantor can specify more than one PoA, and there can be PoAs for specific assets.
Nuances of the TCP and PoA selection process
A TCP does not assume the PoA role under a client’s power of attorney document. The PoA is specified in the power of attorney document, and such document will specify the conditions required for the PoA to commence acting in this capacity and what duties and powers the selected PoA has.
A client may designate that their TCP and PoA be the same individual. But an advisor should encourage a client to select a TCP who is not making decisions with respect to the client’s account.
Consider this example. A PoA conducts affairs on a client’s account, but the instructions are inconsistent with the client’s best interests. If the PoA and TCP are the same individual, then the advisor is constrained to share their concerns with an independent third party. Further, a TCP who is not the PoA may provide insight into the client’s support network and help mitigate such a situation.
So, while the TCP has a limited mandate and is unable to directly impact the financial affairs of a client, the indirect impact can be significant.
While the roles and responsibilities of a TCP and PoA are distinct, what isn’t is the characteristics these individuals must have. At a minimum, they must both be trustworthy and responsible.
Michael Kulbak, MBA, CPA, CMA, TEP, is principal of Kulbak Trust Solutions in Mississauga, Ont.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
