Abuse of Power of Attorney
Granting a power of attorney to someone else gives them considerable power over your finances and property. If there is abuse of this power, the victim of this abuse will often need help from government authorities or the courts to recover money, property or other assets. This webpage sheet advises victims, or those assisting a victim, about what can be done.
There are a lot of specific terms used in this area:
- The Donor is the person who authorizes someone else to act on their behalf under the authority of a power of attorney (they are also now called the ‘adult’).
- The Attorney is the person who acts on the donor’s or adult’s behalf through the power of attorney
- A “Power of Attorney” (“POA”) is the legal document through which the donor grants the power to the attorney to ‘step into the donor’s shoes’ and act on their behalf in legal and financial matters. This authority can be limited by the terms of the document. The authority granted will come to an end if:
- the donor revokes the authority;
- the donor dies; or,
- the donor loses decision-making capacity and cannot revoke the agent’s authority (to protect incapacitated donors who are no longer able to monitor their attorney and take action if abuse occurs – but not if the POA is ‘enduring’).
- An “Enduring Power of Attorney” is a POA that remains legally valid even if the donor loses the legal capacity to revoke the agent’s authority. This form of POA is a useful planning tool for those who want to plan for the possibility of incapacity. This may avoid the appointment of a legal guardian not of the person’s choosing. It is important that you choose someone you trust.
- Incapacity is a legal test of decision-making ability from concerns that most typically arise from: mental illness; developmental disability; acquired brain injury; or, diseases associated with aging such as Alzheimer’s and dementia.
- A “Springing Power of Attorney” is a special kind of enduring POA that does not become effective when the donor signs it, unlike regular or enduring POA’s. Instead, it “springs” into effect at a later time or when a certain event specified in the POA occurs. Often this event will be the determination of incapacity of the donor.
- The Civil Justice System includes lawyers and courts that handle non-criminal cases.
- The Criminal Justice System includes law enforcement professionals, prosecutors, and criminal courts.
Types of Powers of Attorney
- General – effective at once, ends on incapability, revocation or death – less common
- Limited – like general, but for specific purpose(s) and/or limited periods of time – also less common
- Enduring – most common now – active now and continues into incapability until revocation or death
- Springing – somewhat common – not active until incapability (or other ‘trigger’) and with capability trigger, ends if the donor regains capability or death
NOTE: These categories are not mutually exclusive – an EPOA or Springing POA can be limited or have restrictions
Exmples of Abuse
POA abuse is the misuse by the attorney of the authority granted by the donor. It means making a decision or taking an action that is not in the donor’s best interest. An example would be when the attorney spends the donor’s money to benefit the attorney, rather than the donor, without permission. It may also include forging the donor’s name on the POA or coercing someone to make a POA against their wishes. POA’s, whether ‘general,’ ‘enduring’ or ‘springing,’ usually are not subject to oversight by a court or third party. If the donor becomes incapacitated and can no longer monitor the attorney’s actions, this lack of oversight for a broadly written legal document makes it very easy for an attorney to abuse the authority they have been granted. For this reason, a POA has sometimes been called a “license to steal.”
The Attorney’s Duty to the Donor
Just like a trustee, or an agent of a movie star or professional athlete, the attorney under a POA has a legal duty to follow the direction of the person giving the authority, or to act as a fiduciary if the person can no longer direct them. Generally, this means that the attorney is required to act in a trustworthy manner, and to make decisions that are in the donor’s best interest, or that are consistent with the decisions that the donor had made for themselves before losing decision-making capacity. While an attorney will not receive payment for this assistance and may not benefit from their authority, they are required by law to maintain accurate banking and bookkeeping records, and be able to account for all the money and property they handle. Although their actions are not monitored, the Public Guardian and Trustee (“PG&T”) can demand an accounting if they receive a complaint of abuse of an incapacitated adult. NOTE – Under BC law, the attorney is only accountable personally to the donor, and to the PG&T if a demand is made. Even if the donor becomes incapacitated, the attorney is not required to account to other family members.
Limiting a POA
It is not necessary to have a lawyer prepare a POA, but a lawyer may help POA abuse from occurring in the first place by writing a POA that limits the attorney’s authority or allows third parties to exercise some oversight of the attorney. See the article on Avoiding Elder Abuse by A Rogue Attorney – Kevin Smith – Scrivener Artic;le – Spring 2013 – written by one of our staff lawyers.
Revoking a POA
If an attorney has already abused a POA, the abuse can be stopped by revoking the POA. Note that this can only be done if the donor still has legal capacity. See the Nidus website for information on POAs, including revoking a POA: www.nidus.ca
Role of the Civil Justice System
The civil justice system’s general role is to prevent harm from occurring to individuals, and to compensate individuals when they are harmed. When there is abuse of a power of attorney, some legal remedies in civil court are:
- Asking a civil court to order the attorney to provide an accounting of how the donor’s money has been spent;
- Suing the attorney in civil court to un-do transactions conducted by the attorney (rescission);
- Suing the attorney in civil court for misappropriating the donor’s money or assets (conversion); or,
- Asking the court to declare the donor to be incapacitated and appoint a committee (guardian) under the Patients Property Act to make decisions on behalf of the donor or a monitor to oversee the attorney’s actions on behalf of the donor. The appointment of a committee, whether it is a family member or the PGT, cancels the POA.
Under the Power of Attorney Act, a concerned person may make a report to the PGT regarding any abuse or undue influence of an attorney. The PGT may recommend that the person apply to court under section 36 of the Power of Attorney Act, and a Judge “may make any order that the court considers necessary….”
Role of the Criminal Justice System
The criminal justice system’s general role is to stop crime, punish people who have committed crimes, and protect society from further crimes. An attorney who violates the fiduciary duty owed to the donor may have committed one or more crimes. The attorney may have violated provincial and federal laws, including laws prohibiting:
- Criminal exploitation
There are also specific provisions in the Criminal Code of Canada regarding abuses by trustees and attorneys under a POA. Police can be asked to investigate alleged criminal conduct by an attorney. Criminal justice professionals who are investigating or prosecuting POA abuse should take action to stop the attorney from spending or doing anything else with the donor’s remaining assets. Asset freezes might be possible. Additionally, prosecutors should ask criminal court judges to order the attorney to return stolen money, assets or other property to the donor – this is called restitution.
Role of the Public Guardian and Trustee
The PGT is a provincial government agency. Part 3, Division 2 of the Power of Attorney Act discusses reporting of abuse of a power of attorney, and remedies available. According to section 34(2) any person may make a report to the PGT if they have reason to believe:
(a) an adult is, or was at the time, incapable of making, changing or revoking an enduring power of attorney,
(b) fraud, undue pressure or some other form of abuse or neglect is being or was used to induce an adult to make, change or revoke an enduring power of attorney, or
(c) an attorney is
(i) abusing or neglecting the person for whom the attorney is acting,
(ii) incapable of acting as an attorney, or
(iii) otherwise failing to comply with an enduring power of attorney or with the duties of an attorney.
The Assessment and Investigation Services (“AIS”) division of the PGT takes reports and reviews allegations of financial abuse of vulnerable adults in the community to determine if substitute decision-making authority is required. Where an older adult is incapacitated and there is immediate risk to the older adult’s assets, the AIS division can investigate actions of a rogue attorney, demand an accounting, and can temporarily freeze bank accounts or prevent property transfers during an investigation. When the PGT investigates, it operates under these principles:
- All adults are presumed to be capable until the contrary is demonstrated;
- No one should have a decision-maker appointed by the Court until other alternatives have been considered; and,
- Everyone is entitled to the least intrusive but most effective support.
If you require further information or you would like to make a referral, you can contact the PG&T Assessment and Investigations Department at 604-660-4507; 1-877-511-4111 or by email at firstname.lastname@example.org.
DISCLAIMER – This web page contains legal information, not legal advice. Every situation is different. You should see a lawyer for specific legal advice about your situation.