Abuse of a power of attorney: when good people do bad things
We all know that bad people can do some very bad things. So, if your estate plan includes a continuing power of attorney for property (as it likely should), and you name someone to manage your affairs in the event you can’t, you’ll undoubtedly be choosing a “good person” to be your attorney, not the bad apple nephew with a spotted past.
But here’s the unfortunate thing: when it comes to a power of attorney, and access to money, some otherwise good people have been known to do some very bad things.
There are usually three reasons for this:
- First, there is opportunity, with a perception that there is little chance of detection, penalty, or consequences.
- Second, there is often rationalization, which can involve a sense that the attorney is “entitled to some financial help anyway” or that they “are the only ones looking after mom” so deserve more than the others.
- Third, there is often a financial need– children in post-secondary school, mounting credit card debt, or other emerging financial stress.
A power of attorney is an extremely powerful document – in many cases, the objective of the grantor is to allow someone else to completely take over management of their property, due to age, potential incapacity, or other reasons. And while the law holds attorneys to a high standard to protect grantors (the attorney has a duty of utmost good faith to act in the grantor’s best interests), the potential for abuse is immense.
If someone suspects an attorney for property is abusing the granted legal authority to commit a financial crime, there are options available to protect the vulnerable person. Theft, fraud and forgery conducted under the guise of a power of attorney can be reported to the police and prosecuted under the Criminal Code. In addition, in Ontario, the Public Guardian and Trustee can be contacted to protect an incapable person being victimized by financial abuse.
In terms of steps that you can take in advance to safeguard your assets from abuse, this article highlights a recent Ontario case of theft under a power of attorney and outlines some protection steps that individuals can include in their power of attorney to help guard against theft or fraud.