Accounting for Law
Estates & Wills & Trusts

Choose a power of attorney you trust

The first step in avoiding power of attorney fraud lies in who you appoint to take on the role, says Toronto estate and trust litigator Felice Kirsh, noting this type of financial abuse can be difficult to spot before damage is done.

“I think the starting point is that you only appoint someone that you trust,” says Kirsh, partner with Schnurr Kirsh Schnurr Oelbaum Tator LLP. “It’s a very important decision. If you don’t trust the person, don’t appoint him or her. That’s where the trouble starts.”

A recent case in Saskatchewan saw a 48-year-old woman charged with theft and fraud, with authorities alleging she used her power of attorney to steal more than $200,000 from her mother, CBC reports.

“The problem is that often the person who grants the power of attorney is older by the time the abuse is happening, so the chances of such person finding out is quite difficult,” says Kirsh. “If they do think there’s something happening they should go see a lawyer, but the more likely scenario is that someone else in the family may figure it out.”

In her experience, Kirsh says someone who is stealing money “is not just going to stop.” The most common instances of fraud tend to involve small amounts of money being taken at regular intervals, she adds.

“A typical scenario would be a power of attorney taking out a certain amount of money per week for groceries for their mother, for example, but buying some items for themselves as well,” says Kirsh. This type of behaviour makes it difficult to spot a pattern, says Kirsh. “It could go on for years, and it’s only after the person dies and you see where their assets are at and someone says, ‘Where did our mother’s money go?’

“Most people are not going to take $50,000 out of someone’s bank account; although that does happen, and it’s often easier to find and sometimes easier to stop."

In Ontario, a family member who is suspicious of the actions of a power of attorney can seek an accounting of the attorney's actions under the Substitute Decisions Act, says Kirsh. In some instances, leave of the court is required to get an accounting.

"A person acting as a power of attorney is a fiduciary and must account for every penny in and out," says Kirsh.

While an option exists to appoint more than one attorney, Kirsh says it’s not always a guarantee in an attempt to avoid financial abuse.

“If you don’t trust one of your attorneys, why would you appoint him or her,” she says. “I think most times one is enough. You have to pick someone you trust who is going to be absolutely honest with your money.”

Many instances of abuse involve people who give power of attorney to neighbours, friends or caretakers, says Kirsh.

“It’s a very significant problem and I definitely think it will only increase as the population ages,” she says. “It’s a job that people have to take seriously. If you are an attorney for someone, you have to keep records of all transactions. You’re acting for someone else, and you can only use their money in their best interest, not yours.”

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