Abuse Under a Power of Attorney

Being appointed as attorney under a power of attorney is an important responsibility.  The attorney is entrusted to access and manage the financial assets of the person who has appointed them (the “Donor”).  In handling the Donor’s property, an attorney is required to act in the best interests of the Donor.  This duty is often referred to as a fiduciary obligation.  But what happens if the attorney does not comply with that obligation?  This CBC news article highlights a situation where an attorney acting for an elderly woman abused their position.  Unfortunately, theft under power of attorney is an all too common occurrence. 

An attorney who handles the Donor’s property in any way that does not comply with their fiduciary obligation has broken the law.  The following examples illustrate situations where an attorney would be in breach of their legal obligations:

• Where an attorney sells assets of the Donor (such as their house) and keeps the proceeds (or a portion of the proceeds) for themselves;
• Where an attorney transfers assets held by the Donor into their own name;
• As alleged in the above news article, where an attorney withdraws amounts from the Donor’s accounts for their own benefit rather than the Donor’s benefit.  These amounts can be small or large. 
• Where an attorney uses the Donor’s bank cards to pay for their own personal expenses; and
• Where an attorney withdraws funds from the Donor’s accounts and deposits them into an account that is in the attorney’s name. 

This is sometimes done without an intention of any wrongdoing.  We sometimes hear of attorneys transferring funds belonging to the Donor into their own account for one reason or another (for example, they say they have access to better interest rates) and contend they are holding these funds for the benefit of the Donor.  Nonetheless, because the funds are no longer in the Donor’s name, the funds are considered to have been misappropriated.

WHERE TO START

Attorneys are required to keep detailed records of their management of the Donor’s assets.  If you suspect an attorney is stealing from a loved one, you can request that they provide you with those records.  It is often helpful if that request comes from a lawyer’s office.  Our office can assist you in making a demand for an ‘informal’ accounting.

WHEN ASKING NICELY HAS FAILED

If the attorney is unwilling to provide these records informally, it may be necessary to bring a court application to compel the attorney to pass accounts.  The Powers of Attorney Act allows “any interested person” to bring this kind of application. 

If the application is successful, the Court directs the attorney to provide evidence demonstrating how the Donor’s assets have been handled.  Among other things, the attorney is generally expected to provide bank statements for the period they controlled the Donor’s finances.  Once those documents have been provided, it is possible to get a better idea of how the Donor’s money has been spent – although it is often necessary to make requests for more information about specific transfers. 

If the records demonstrate that funds have been stolen or mishandled, it may be necessary to make a further court application compelling the attorney to repay the stolen money and requesting that the attorney be removed and replaced with someone new. The benefit of undertaking a court application is that it obliges the attorney to supply their management records, providing an opportunity to scrutinize what they have done.  The drawback, of course, are the legal fees.  However, if it is shown that the concerns of the person who is making the application were justified, the Court may direct that their legal fees (or a portion of them) be reimbursed either by the attorney or the Donor’s estate.  Please feel free to contact our office if you have concerns about an attorney you want to discuss.