Nova Scotia introduces the new Adult Capacity and Decision-making Act

The Nova Scotia Adult Capacity and Decision-making Act (the “Act”) came into force on December 28, 2017. This new Act replaces the Incompetent Persons Act, which the Supreme Court of Nova Scotia struck down for being unconstitutional because it granted complete control to a guardian even when the incompetent person had some capacity to act on his or her own.

The new Act recognizes that all adults have the right to make their own decisions about managing finances or determining health care needs. The Act’s interpretation and administration is governed by four principles:

An adult is entitled to make his or her own decisions, unless the adult’s incapacity to do so is clearly illustrated

Making “risky” or “unwise” decisions does not mean that a person is incompetent

A person’s ability to communicate is not relevant to determining their ability to make decisions

The decisions and actions a person’s representative (formerly referred to as a guardian) takes must be the least intrusive and restrictive possible. The representative’s duties and obligations must be clearly defined.

Because guardians under the new Act are referred to as representatives, guardian orders made by the court before this legislation came into force will become representation orders.

If a representative was appointed as a guardian under the previous act and believes that a person is competent to make some decisions, he or she may need to return to court to have the initial guardian order reviewed.

Any person, including the adult whose competency is in question, can ask the court to review an order. This means there is the potential for more litigation as people’s capacity to make decisions is questioned. To make decision about a person’s competency, the court requires a capacity assessment by a recognized assessor who will assess whether a person is able to make decisions about his or her finances and/or health care.

We’re interested to see how the courts will apply and interpret this legislation and determine how capacity applies in some situations and not others.

What this means for advisors and their clients

This new legislation is not going to solve the issue of determining a client’s capacity. But your clients’ good planning can avoid the potential of having to have a representative appointed through a court process.

If you’re in Nova Scotia, you should revisit capacity planning with your clients. If an adult has an Enduring Power of Attorney and a Personal Directive already in place, he or she may not need to have a representative appointed. That could save your client time and money and give you both peace of mind.

Without these documents in place, an assessor would most likely have to determine whether a client can still provide instructions to you, and whether the client is competent to make common transactions such as making or changing a beneficiary designation, purchasing a life insurance policy, and transferring ownership. An assessor would also be called to determine whether an incompetent irrevocable beneficiary can give you consent for policy transactions.

February 2018