With an aging population, extended life expectancies, and a higher likelihood of incapacity, it becomes crucial for individuals to be mindful of the potential for financial abuse when designating a power of attorney.
A power of attorney is a legal document through which the grantor gives one or more people the ability to manage their affairs (property or health care related). The power of attorney is signed while someone is mentally capable – meaning that they understand all of the relevant information discussed and can rationalize their actions and understand the consequences.
Often, people who appoint an attorney choose to select family members, loved ones or close friends on the impression that these people have the traits of honesty, integrity and accountability. However, this is not always the case. Unfortunately, financial elder abuse is a top crime in Canada and often happens when the attorney is given to an alleged trusted person. At the same time, the grantor (one who has signed a power of attorney) falls mentally incapable.
Elder financial abuse occurs for various reasons, with the most prevalent ones being driven by greed and a sense of entitlement. When someone is appointed as an attorney, it becomes their duty to care for the grantor. As this responsibility grows, the attorney might feel justified in seeking excessive compensation for their management services.
Another factor contributing to elder financial abuse is the absence of sufficient oversight. When an individual assumes the role of attorney, they gain the legal authority to access the grantor’s finances. From the bank’s perspective, no illicit activity is taking place. Moreover, there are no third-party entities or boards to which a power of attorney must justify their expenses. Consequently, it becomes simpler for the attorney to withdraw funds in varying amounts, whether small or substantial.
On March 3, 2020, CBC published an article[1] focusing on the elder abuse of a 97-year-old woman with dementia. In 2016, Fisher was 94 years old, living in Toronto in her own apartment- she was in the early stages of dementia when she decided to appoint Theresa Gardner as attorney for property to make her life easier. Though the two were not close, they had known each other for decades, which led to trust.
Once Gardner was appointed attorney for property, she moved Fisher out of her apartment and into a seniors’ residence in Ontario. One of Fisher’s friends, Lewis, recalls feeling uncomfortable with the idea and asked Fisher if she could check her bank accounts to ensure that all her assets were secured with the bank. Fisher opened her wallet and inside read, “Theresa Gardner has my bank cards and won’t give them back,”- recalls Lewis, Gardiner’s friend. Eventually, it was discovered that Gardner had written herself multiple cheques from Fisher’s account. Unfortunately, Gardner denied claims that she abused her position and was protesting that Fisher would have wanted her to have that money. However, later Gardner confessed that she took out the money in various chunks because her husband was terminally ill and needed financial support.
Fisher’s situation and the abuse she experienced serve as a typical example of what can occur when a suitable power of attorney is not designated. To minimize the potential for financial abuse, it is advisable to collaborate with an attorney to create comprehensive documents outlining your preferred care arrangements. Once these provisions are documented in a legally binding form, the appointed individual is obligated to adhere to them. If you have any inquiries about preventing elder financial abuse, please feel free to reach out to me for assistance.
PLEASE NOTE THAT THE CONTENT OF THIS BLOG IS MERELY FOR INFORMATION PURPOSES AND DOES NOT CONSTITUTE LEGAL ADVICE.
[1] https://www.cbc.ca/news/business/power-of-attorney-seniors-elder-abuse-senior-financial-crime-1.5476820
