July 25, 2020

There is growing concern about the financial exploitation of the elderly by their attorneys for property. The combination of a cognitively impaired grantor (a person who appoints an attorney for property) paired with an attorney who has unfettered access to all of the grantor’s property creates the potential for financial abuse by attorneys.

A power of attorney for property gives attorneys access to the grantor’s property and the ability to start managing finances on the grantor’s behalf (often without a triggering event to facilitate its use). With a few expectations, such as, making decisions testamentary in nature, attorneys have almost no restrictions to actions they can take on behalf of a grantor. For example, an attorney can sell a grantor’s real property, remove all the funds from the grantor’s banks accounts, and change how the grantor’s investments are held

However, attorneys for property are fiduciaries with obligations to the grantor including the obligation to account to the grantor. When a grantor becomes incapable, those accounting obligations continue with a third party reviewing the accounts on behalf of the grantor. In situations where a grantor has been financially exploited, there are several remedies available to the grantor or someone acting on the grantor’s behalf.

If an attorney misappropriates funds, one option is to seek that criminal charges be laid against the attorney. The Criminal Code of Canada includes a number of charges that apply, including the charge of theft by power of attorney. However, the police may be reluctant to file charges and may advise the wronged party pursue the matter civilly for several reasons. If the grantor is not the complainant to the police, the police may be less likely to pursue the matter. Often when the police speak to the grantor, the grantor will deny money was taken and will not assist with a criminal investigation. It is also up to the police to pursue charges and if the complainant has cognitive issues or there are problems with obtaining their evidence, the Crown may be less likely to pursue the matter in court. Finally, criminal charges impose a punitive remedy but the recovery of funds or property may not be possible without civil proceedings.

Pursuing the matter civilly offers an opportunity to demand an accounting of the attorney, the removal of the attorney, and the return of property and/or funds. The civil standard of evidence also takes cognitive frailties into consideration. The court can also void the power of attorney document and appoint a guardian. The Substitute Decisions Act outlines a fiduciary’s obligations including the duty to account to the grantor.   However, civil proceedings are often expensive. An attorney who has breached their fiduciary duties by misappropriating funds may also try to make him or herself judgment proof. While both options provide some relief to the grantor, they do not guarantee that the grantor will be made whole.

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