Stealing from mom and dad

Why power-of-attorney abuse against seniors is soaring—and so easy to get away with

Stealing from mom and dad

Joost van den Broek/Hollandse Hoogte/Redux

Léony de Graaf, a Burlington, Ont.-based financial adviser, witnessed first hand how lives can be ruined by the unscrupulous use of power of attorney. She received a call from an 82-year-old client who had been forcefully incarcerated in a Hamilton psychiatric ward. “Rose was still capable of handling her affairs, including her own banking,” says de Graaf. “I had a very strong suspicion that her son, who had a power of attorney [POA] for his mother, was trying to have her deemed incompetent so he could take full control of her assets.” She suspected Rose’s son misled the psychiatrist whom he himself had arranged to evaluate his mother, whose family doctor had recently retired.

De Graaf fought to have Rose (not her client’s real name) released from the facility, advocating for her capacities and a reassessment. The medical team relented and allowed Rose to move into a retirement residence. Unfortunately, even after Rose’s release, de Graaf was powerless to stop the son from redirecting his mother’s investment statements to himself, putting her house up for sale, and eventually moving her west, where he lived. “One of the fastest growing crimes against seniors is POA abuse,” says De Graaf, who chairs the local chapter of a group called Seniors and Law Enforcement Together chapter.

Having a senior declared incompetent is a commonly used legal manoeuvre by POA abusers to nullify the senior’s ability to make choices for themselves, including revoking the POA, says Ann Soden, a Montreal lawyer who specializes in elder law and heads the National Institute of Law, Policy and Aging. Sadly, perpetrators of many types of abuse against seniors are often their own children and others they trust. According to the Canadian Centre for Elder Law, the most conservative statistics suggest one in 12 older Canadians are abused or neglected, with the most commonly reported type of abuse being financial.

With the epic shift of Canada’s aging demographics, POA documents will be used increasingly to appoint trusted family members or others to handle financial decision-making in the event of medical or cognitive impairment. Today, approximately 500,000 Canadians are living with Alzheimer’s disease or a related dementia—within a generation this number will more than double to 1.1 million.

Financial abuse by POA can run the gamut from small amounts of money being pilfered from chequing accounts to making off with entire multi-million-dollar estates. Indeed, most standard POA documents grant such absolute power that abusers are often able to rebuff criminal investigation and prosecution by simply telling authorities they were doing what they thought was best or that they didn’t realize they were improperly managing the money.

Many experts are now sounding warnings of an impending flood of POA abuses. “This is a community issue that is going to have massive economic repercussions,” says Harold Geller, a civil litigator with Ottawa-based Doucet McBride LLP. “Regulators, government and to some extent professional organizations have failed to act,” he says. Lynne Butler, a lawyer and will and estate planner at Scotia Private Client Group, adds that one of the reasons POA abuse is rampant is because it’s happening in the shadows. “No one is watching or supervising the POA’s actions.” She says lawyers who specialize in this area have begun beefing up their documents to provide more protection for the clients. “Our current system of powers of attorney is based on an honour system, which really only works for the people who are honourable. Unfortunately, there are too many people who are not.”

There is currently no meaningful oversight over POAs’ actions (especially when that POA is an adult child) and setting up a system would likely cost billions and take years, say experts. But a solution may already exist within the ranks of Canada’s accountants, lawyers, doctors and financial advisers, with the latter possibly being the keystone in a system of checks and balances. Rhonda Latreille, founder and CEO of Age-Friendly Business (which offers courses for Canada’s professionals on a multitude of issues related to aging) says professionals could do so much more to curtail financial abuse if only they had the relevant information and tools and were emboldened to do the right thing.

Experts suggest a few simple ways seniors can protect themselves. They can, for instance, include a clause in a POA document stipulating that a POA is to continue using the same financial adviser (as long as they’re willing and in good professional standing). If the named adviser is unwilling or unable to continue in this role, then a predetermined individual (not the current POA) such as the senior’s accountant or lawyer could be given the mandate to choose an alternative adviser. Furthermore, the financial adviser would still need the POA’s approval for any proposed portfolio transactions.

Butler says she’s already utilizing such a clause. “My clients love the idea because it gives them a sense of control and a real-world check and balance against a self-serving POA,” she says. The financial adviser De Graaf thinks POAs “might think twice” knowing professionals are watching them. She’d like to see seniors extend this clause to include their family doctor or a capacity assessor of their choice to determine their mental incapacity. And as Rose’s case highlights, the adult child should not be the one to order the assessment. (One negative assessment of incapacity could give the adult child or POA full control over everything, including whether or not to consent to future assessments.)

Alan Atkins, president of NetWealth Consulting Inc. in Barrie, Ont., argues if such a clause were included in more POA documents, it could be a game changer. Currently, if advisers don’t follow a POA’s instructions they risk being sued; if they follow instructions and there are losses to the estate because of the actions of a rogue POA they risk being sued by other beneficiaries of the estate claiming the financial adviser did not live up to their fiduciary duty.

Consumers could also empower their professional advisers, including their accountant, lawyer and bank manager, by declaring in writing that they are free to communicate with one another, thus nullifying privacy legislation that can be exploited to muzzle professionals from sharing their suspicions of POA abuse. As Dan McCormick, a certified financial planner with Investors Group, points out, when a team of two or more professionals and institutions all get different red flags, collectively they could share the warning signs with each other and then confront the abuse.




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Stealing from mom and dad

  1. My fathers doctor signed a poa that had to be renewed every 90  days simple solution that did not cost anything.

    • Not really a solution, just means you’ve got to be quick. Get him declared incompetent within that 90 day period, and you then adjust the POA terms, assuming it gives full control.  Far better to go with the controls listed above — make the condition of the POA coming into effect is your mental/physical state being evaluated by one (or even better, two) doctors that the grantor trusts.

      • One thing that can help is to appoint two people to have the power of attorney (in partnership).  That means they must agree on what needs to be done before anything can go forward. 

        • That’s a recipe for constant fighting, and further trips to court.

          • Well if one person has nefarious intentions, they are unlikely to highlight them by attending court.

          • They don’t have to have ‘nefarious’ intentions….brothers and sisters can get into scraps over lamps and bric-a-brac, so money, mortgages, accounts, cottages etc are a mine field

          • I can’t reply to you below.  The whole point of the article is ways to stop a unprincipled child from stealing all their parents’ wealth & shutting them away in a facility….therefore, perhaps choosing 2 siblings as the partners in your power of attorney is not the best idea.  Perhaps you pick one of your children and a close friend of the family whose scruples you respect.

          • Yeah, I know….maybe it’s differing rules in different provinces, but having been through this twice myself….and with no siblings or others involved…I can tell you it’s an enormous amount of work, involving thousands of decisions big and small…and it would be very difficult to ‘steal’ anything.  It’s difficult even getting help for the elder involved because there are so many barriers in the way.  I understand the need for the barriers…….but it also makes the whole process complicated and more difficult to resolve peacefully.

    • And so did the doctor bill for a medical visit every time he renewed the poa?

      • no

  2. Here’s an article just published about an elderly Victoria, BC woman that goes way further than the Hamilton woman’s story. 

    This woman’s life wasn’t just ruined, she lost her life in a nursing home that was already under police investigation for giving her an overdose of narcotics that would have ended her life had paramedics not intercepted. And the authorities and legal system don’t look so good in this story either.http://www.focusonline.ca/?q=node/249

  3. I have been a widow for 34 years with 4 children I have appointed all four of them as poas  I do trust them, but thet will all have to come to an agreement regarding my care.  They are aware of my wishes.

  4. Excellent suggestions with respect to checks and balances on the appointment of financial advisors.
    Unfortunately, seniors are not aware of the potential for abuse with POA’s. Having a trusted family advisor in the loop could certainly help to prevent abuse.

  5. I saw this first-hand and, though I tried to warn my friend who was 78, it was all to no avail. When I think of it, I get so mad!  Seniors definitely need protection. They can be so vulnerable, especially if they have nobody else in the world and are lonely or just in need of a friend. 

  6. I live in California and my brother has squandered all of her money and is using her social security check for his business he runs out of the house. She doesn’t even get the bills paid or food many times. He has POA and POH but I am petitioning for conservatorship now.
    But I want him to be held liable in criminal court. My Attorney said that they usually don’t prosecute but I think he should be tried in court. Who makes this happen?

  7. This material must be distributed to every senoir in any necessary tongue. That the POA abuser is protected was made clear when the Toronto Star front-paged a 3 part story on POA abuse. All those happy lawyers were so pleased to convey the legal fact thay they were protected by “privacy” from scrutiny: public or family. Did anyone notice any outporing of opinion to the Star from other lawyers?
    This POA legislation must be amended/reformed immediately!! One necessary venue is that all POA must be given out in concept similar to the issuance of a drivers license. After the lawyers “educate” the client, the client is independently filmed and tested for understanding, comprehension and agreement of the language inside the POA they wish to authenticate with the Province. The POA understanding process could be free or very low-cost.
    The BC ombudsperson has a great report for the potential Ontario POA victim to read.

  8. What actions have been taken in the last 2 years?
    Is there not one lawyer in Canada “frustrated” with this rampant legal abuse of seniors? Has this magazine forgotten these issues? Where are more, expanded Gotlieb articles?

  9. i WAS DIAGNOSED WITH A TERMINAO ILLNESS WHICH TURNED OUT TO BE WRONG. WHEN I REALIZED i HAD NOT LONG TO LIVE i GAVE EACH OF MY 2 CHILDREN THEIR INHERITANCE OF $150,000 AND I WAS LEFT WITH $100,000. I DIDN’T DIE, I AM ALIVE AND WELL BUT LIVING IN A CHRONIC CARE NURSING HOME – THE HOUSE OF THE LIVING DEAD, WHILE MY CHILDREN ARE HAVING THE TIME OF THEIR LIVES. THEY MANAGED TO TRANSFER MY REMAINING $100,000 INTO THEIR NAMES AND I HAVE TO ASK FOR ANYTHING I WANT OR WANT TO DO.
    THERE ARE COUNTLESS “HOW TO’S” AND KNOWLEDGE OF THIS SITUATION BUT THE FACT IS, ANY OF THE “HELP” GROUPS ARE USELESS AS IS “ACE” AND THE POLICE. AND I HAD A LAWYER RECENTLY TELL ME IT WOULD PROBABLY COST MORE THAN I HAVE TO RECTIFY THE SITUATION. LOOK FOR AN INCREASE IN SUICIDE AS THIS BECOMES PREVALENT.

    • legislation needs to be amended to protect our seniors with POA’s. My sister and her husband (joint POA’s) has stolen over $140k from my father in 4 years. She died in May and now brother-in-law is sole POA. We have discovered since her death that there is this money missing, no receipts, no documentation and they used most of the $ for their own benefit. We’ve been attempting to get POA changed to me and my Aunt and apparently it can’t be done as the accounting will NEVER pass in the courts. What seems messed up is that with proven theft of this $, we have to fight to get him removed. Laws need to protect for immediate removal of POA, not laws that let him stay on until the Courts find the time to deal with the accounts. You would think that it would be a swift, quick GET OUT and appoint an emergency interim POA, but apparently that can’t happen either. (alberta)

  10. Certainly there is abuse. But you can’t trust anyone, banker, lawyer, anesthesiologist. There is no one on your side regardless of what side you’re on. I ran into this as a care giver and will loose the home of 3 generations, my joint bank accounts gone through small print. The professionals, trying so hard to protect themselves, walk all over the old regardless of everything you think is common sense. My point, give up. What should have been done long ago is affordable legal advice! This business where you pay out 10% of your annual income for nothing has got to stop. Make legal advice affordable – free if you must and stop tying up the costly court time with this heartbraking nonesense.

  11. Me, my will is simple and the bank has a service, and I use it and not the kids. First executor and POA is my wife, failing that its the bank. Banks will get it right as they don’t want to be sued.

    Always make sure two opposing groups get involved. Kids waiting for money, and banks in control but accountable works well.

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