Understanding Attorney Compensation in Nova Scotia

When appointing an attorney under a Power of Attorney in Nova Scotia, it’s essential to establish clear terms about their compensation. The Powers of Attorney Act allows attorneys to claim reasonable compensation if explicitly authorized in the Power of Attorney document or approved by the Court. But what does "reasonable compensation" mean in practice?

While Nova Scotia doesn’t prescribe specific rates, comparable guidelines from other jurisdictions, like Ontario, offer a helpful framework. Below, we outline a widely-used fee structure, explain its components, and discuss its application.

Fee Structure for Attorney Compensation

1. 3% on Capital and Income Receipts
This fee applies to all funds or property the attorney receives on behalf of the donor. Examples include:

• Income (e.g., rental income, investment dividends).
• Proceeds from asset sales (e.g., real estate or personal property).

This fee compensates the attorney for managing incoming resources.

2. 3% on Capital and Income Disbursements
This percentage applies to amounts paid out on the donor’s behalf. Examples include:

• Payments for the donor's care, such as health services or daily living expenses.
• Settling liabilities like taxes or outstanding debts.

This fee recognizes the attorney's effort in overseeing the disbursement of funds.

Key Distinction: The first fee addresses receipts (incoming funds), while the second addresses disbursements (outgoing payments). Both reflect the transactional work attorneys perform.

3. 0.6% Annual Care and Management Fee
This is an annual fee based on the average value of assets under the attorney’s management. It compensates for ongoing responsibilities, such as:

• Monitoring bank accounts.
• Overseeing investments.
• Managing real estate or other property.

This fee accounts for the continuous oversight and safeguarding of the donor’s financial well-being.

Legal Considerations

In Nova Scotia, the Court has the authority to allow or disallow all or part of an attorney’s claimed remuneration to ensure it is reasonable and aligns with fiduciary duties. Attorneys must also maintain detailed records and provide accountings upon request to ensure transparency.

Practical Steps

1. Set Terms in the Power of Attorney: Clearly outline compensation provisions, whether adopting a standard fee structure or setting specific terms.
2. Maintain Records: Attorneys must document all transactions and decisions to justify any remuneration claimed.
3. Consult Legal Counsel: If you’re unsure about fair compensation or compliance, seek professional advice.

Final Thoughts

Attorney compensation should balance fairness to the attorney with the donor’s financial needs and interests. By adopting a clear, reasonable fee structure, you can ensure that the arrangement works for everyone involved while staying compliant with Nova Scotia law.

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