Monday, August 5, 2019
POA horror stories can sometimes be prevented
Lynne Butler, BA LLB Canada
Is there anything more disheartening than siblings fighting bitterly over who gets to manage the parents' money, with everyone accusing each other of theft and bullying, and the parent turned into a mere pawn in the struggle?
Unfortunately, it happens a lot more than most people would believe. There are numerous factors that go into the perfect storm of a lawsuit over an Enduring Power of Attorney: a parent with diminished mental capacity, sibling rivalries, poorly drafted (or worse, home-made) documents, and that one greedy person who doesn't mind poking the bear no matter how badly people get mauled.
Another factor is the general lack of understanding among the population about what the POA document allows them to do. Many don't see anything but their name, and take it as blanket authority to take, use, keep, or spend the parent's funds. Most of the time, the parent's lawyer who drafted the document hasn't helped the situation, since the document itself may be full of legalese, or clause after clause of inapplicable boilerplate language that everyone ignores.
I suggest that everyone who hires a lawyer to prepare a POA should insist that the document be readable and understandable by non-lawyers. They should refuse to accept words and phrases they don't understand. They need documents that they can explain, and that their son or daughter can refer to as an actual guide to what they are supposed to be doing. No legalese. No run-on sentences with hundreds of words.
The documents I draft for my clients are intended to be used by lay people, not just lawyers. After this many years in the business, I've heard my share of belligerent bullies demanding to know where the document says they can't live rent-free in Mom's house or use Mom's money to build a swimming pool or buy them a car. So now I make documents that make it clear.
I also provide a "Do and Don't" tipsheet with every POA. It is meant to be used by the person who acts under the POA document and I suggest to my clients that it be given to that person. It's a small thing for me to do, but can have a huge impact on how someone behaves when using a POA. For one thing, they've got an actual guide in their hands that could prevent errors, and for another, they won't be able to wiggle out of trouble later by saying "I didn't know that wasn't allowed." Giving out this tip sheet is a practice I suggest all lawyers start following.
And now, just to illustrate just how bad things can get between siblings who are arguing over a parent's POA, check out this article from the Ottawa Business Journal.
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It tells a couple of stories about families who have basically destroyed themselves by fighting over who gets control of their parents' finances. In one case, while the siblings all fought about who should have control of their 92-year-old mother, one son got her to write a cheque for $50,000 while another helped himself to $350,000 to buy himself a house with a pool.
No document is going to prevent a truly greedy, dishonest person from trying to steal from his own mother. But a properly drafted document can provide transparency and keep everyone in the loop so that it's harder to get away with theft or fraud. It can say that when one of the kids takes money (or can't explain where it went), he or she loses that much off his or her inheritance. It can appoint a neutral third party POA who won't allow anyone to get their hands on the money improperly.
You wouldn't think that parents would have to protect themselves from their own children, but statistics show that they do.