Power of Attorney Duties PEI

Being named as someone's attorney under a Prince Edward Island power of attorney is not an honour — it is a legal obligation with real consequences for getting it wrong. The Powers of Attorney and Personal Directives Act and the broader fiduciary framework impose strict duties that many families do not discover until a dispute or an audit forces the issue.

The Core Fiduciary Duty

An attorney under a PEI power of attorney is a fiduciary. That means every decision must be made in the principal's best interest — not the attorney's interest, not the family's collective interest, and not what the attorney thinks would be most convenient. The standard of care requires the attorney to act with the diligence, honesty, and good faith of a reasonable person managing someone else's property.

If the attorney happens to have professional expertise — an accountant, a financial advisor, a lawyer — the standard of care rises. Under the Trustee Act (2025), trustees and corporate attorneys with specialized knowledge are held to the higher duty that their profession implies. You cannot act as a casual family member when your professional background means you should have known better.

Record-Keeping and Accounting Obligations

The Act and its regulations require attorneys to maintain detailed, written records of every financial transaction conducted on the principal's behalf. This is not optional record-keeping that only matters if someone asks — it is a standing obligation from the moment the attorney begins acting.

Opening inventory. Immediately upon beginning to act, the attorney must compile a comprehensive inventory of the principal's assets (real property, financial accounts, personal property) and liabilities (mortgages, credit cards, loans). This snapshot establishes the baseline against which all future transactions are measured.

Ongoing transaction ledger. Every transaction must be documented: income received (pensions, investment dividends, rental income), payments made (care fees, utilities, property taxes), reimbursements to the attorney for out-of-pocket expenses (with physical receipts), gifts given on behalf of the principal, and any investment activity (purchases, redemptions, interest received).

Document preservation. The attorney must retain all supporting records — bank statements, utility invoices, tax filings, real estate appraisals, correspondence with service providers. Digital copies are acceptable, but the attorney should maintain a system that can produce specific records on demand.

Passing of Accounts

Under Section 16 of the Act, any interested person — an adult child, a sibling, a spouse, a close relative — can petition the Prothonotary of the Supreme Court to order the attorney to submit a full, written accounting of all transactions conducted on the principal's behalf.

If the attorney fails to comply with the order, or if the Prothonotary refuses to issue one, the matter can be formally appealed to the Supreme Court. A court-ordered passing of accounts is a forensic exercise: every dollar that came in, every dollar that went out, and documentary proof for each entry.

Attorneys who keep sloppy records or fail to account for expenditures face personal liability for any shortfall. The court can surcharge the attorney — meaning the attorney must repay the principal's estate from their own funds — for any amount that cannot be justified with receipts and records.

Compensation: What the Attorney Can Take

Unless the power of attorney explicitly authorizes compensation, the attorney is entitled only to reimbursement for reasonable out-of-pocket expenses incurred while managing the principal's affairs. That means travel costs to attend bank meetings, postage for mailing documents, filing fees at the Registry of Deeds — not a percentage of the estate.

If the document does authorize compensation, the rate should be clearly stated. Court-appointed trustees under the Adult Guardianship and Trusteeship Regulations receive 2.5% of all funds received plus 2.5% of all payments made. That formula provides a useful benchmark for private powers of attorney, though the principal can set any rate they choose.

The attorney must record every compensation payment in the transaction ledger, with the exact amount, date, and basis for the charge. An attorney who takes compensation without authorization, or who inflates expenses, is breaching their fiduciary duty and exposing themselves to a surcharge claim.

Gifting Restrictions

An attorney can make gifts on behalf of the principal, but only within strict boundaries. Gifts must align with the principal's prior established pattern of giving — birthday gifts to grandchildren, charitable donations to organizations the principal has historically supported, holiday gifts at similar values to what the principal has given in the past.

Gifts that deviate from the principal's patterns, that benefit the attorney or the attorney's family, or that could compromise the principal's financial security are fiduciary breaches. The attorney must record every gift in the ledger: the date, the recipient, the value, and the reason.

What Happens When Duties Are Breached

A breach of fiduciary duty exposes the attorney to several consequences:

• Surcharge: The court orders the attorney to repay the principal's estate for losses caused by mismanagement, unauthorized spending, or missing funds
• Removal: The court removes the attorney and appoints the Public Guardian and Trustee or a suitable substitute
• Criminal liability: Serious breaches — embezzlement, fraud, theft — can result in criminal prosecution under the Criminal Code (Canada)
• Set-aside transactions: Transactions executed without valid authority — including by a disqualified attorney — may be set aside, and the attorney can be required to restore the principal's funds

The threshold for reporting suspected abuse is low. Under the Adult Protection Act, health and social service professionals have a mandatory duty to report any reasonable suspicion of financial exploitation of a vulnerable adult.

The Prince Edward Island Power of Attorney Kit includes an attorney transaction log and opening inventory template designed to satisfy the Act's accounting requirements from day one.

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