For those acting under a power of attorney for property, one duty stands above all others: the fiduciary duty.
Attorneys for property are granted extraordinary power under Ontario’s Substitute Decisions Act. In addition to the grantor’s home and its contents, a POA appointee is also handed control of their financial income and outgoings, with access to, and decision-making power over, bank accounts and investments. In fact, it’s no exaggeration to say that they can do anything they wish with a grantor’s property, other than making a will on their behalf.
The fiduciary duty is a kind of check on that power, requiring the attorneys to act in the grantor’s best interests. Sadly, it’s not always enough to stop POA misconduct, and an unscrupulous attorney who succumbs to temptation can do some serious damage, as one recent case demonstrates.
The decision centres around a mother whose two daughters acted as her co-attorneys for property and personal care between 2004, when she was diagnosed with Alzheimer’s and 2020, when she died. According to the ruling, it was only after the mother’s death that one of the co-attorneys discovered her sister had been using the deceased’s money and investment funds for her own benefit, to cover her home expenses, loans, gifts to her son, family vacations and restaurant trips, among other spending.
The judge in the case found that the daughter had breached her fiduciary duty as POA over a period of many years, pegging the final total of her debt to the estate at around $320,000, accounting for the unauthorized withdrawals and interest.
Although the judge would not go as far as disentitling the POA entirely from her inheritance as a result of her misconduct, she did rule that the daughter’s share in the estate could be set off against the amount owing, plus a further $60,000 in costs.
For testators, the point of this story is not to scare you off from appointing attorneys for property or personal care. The potential for abuse will always be there, but in the right hands, they can be invaluable.
In fact, they can be drawn up so quickly and inexpensively, that I would go as far as saying that they are some of the most underrated instruments in the legal world, considering how critical they can become to the grantor’s life.
Sadly, many people don’t realize how much they need one until it’s too late. POAs are designed to kick in when a person becomes incapable of handling their own affairs, which means you need to have them in place ahead of time. Once a person reaches the point of incapability, they can no longer sign a valid POA, which can leave family members in a very difficult position.
The whole process can become quite expensive if the Office of the Public Guardian and Trustee has to become involved, and the court ends up making final decisions.
Although they don’t get a say over finances, attorneys for personal care also carry heavy responsibilities, taking decisions over the person’s health care broadly, including nutrition, shelter, clothing, hygiene, and safety.
You don’t have to pick the same person to perform both roles, but each document carries extraordinary power, so whoever you do choose to appoint should be someone you have absolute faith in.
Disclaimer: The content on this web site is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this website are advised to seek specific legal advice by contacting members of Laredo Law (or their own legal counsel) regarding any specific legal issues.
