What is a Power of Attorney?
An important tool in estate planning can include a power of attorney, or “POA”, for personal care and for property, which is a legal document in which you give someone you trust the right to make decisions for you if something happens and you are no longer able to look after matters on your own.
A POA for personal care allows the named person to make health care, housing and other personal decisions if you become mentally incapable of making these decisions, while a POA for property allows the person to made decisions about your financial affairs.
But, what if the person you named turns out to be untrustworthy?
An Ontario Court of Appeal decision outlines the potentially criminal consequences a person may face when they abuse their powers under a POA.
Criminal Charges Laid for Abuse of Power of Attorney
The man who created the POA at issue, Mr. C, had entered a long-term care facility in February 2004. He had dementia and his condition worsened as time passed. Mr. C’s wife had a power of attorney over his property and she took care of him after he entered the long-term care facility.
The accused had known Mr. C and his wife when he was a boy and visited them regularly as they got older. He was named as the substitute power of attorney for Mr. C. The accused was also named as the residual beneficiary in both Mr. C and his wife’s wills.
The wife died in September 2004 and the accused assumed control over Mr. C’s property under the power of attorney, which he retained until July 2011. During those seven years, the accused moved into the couple’s home and treated it as if it was his own, dissipated all of Mr. C’s assets, and spent almost the entirety of the income earned by Mr. C’s assets during that time period. In total, the accused diverted over $378,552 to his own use and benefit. Additionally, he did not care for Mr. C or even see him for several years before his death. Finally, because the accused had repeatedly failed to pay Mr. C’s monthly bills at the long-term care facility, the facility downgraded Mr. C’s accommodation.
Mr. C died in 2013.
Accused Is Charged with Fraud and Theft
The accused was subsequently charged with one count of fraud contrary to s. 380 and one count of theft contrary to s. 331 of the Criminal Code in relation to Mr. C’s property.
On the theft charge, the Crown alleged that the accused had misused his power of attorney over Mr. C’s property.
While the accused did not challenge the fraud charge, he did contest the theft charge. The accused testified that before the wife’s death, she had told him that if he assumed Mr. C’s power of attorney, he would be entitled to use the money as if it was his and could therefore do as he wished with Mr. C’s property.
The accused’s attorneys therefore argued that:
- the terms of the power of attorney gave the accused the power to use the money for his own purposes; and
- even if under the power of attorney the accused was not authorized to use the money for his own purposes, he honestly believed that he was entitled to do so, thereby negating themens rea component of the offence of theft.
Trial Judge Finds Accused Guilty
The trial judge convicted the accused on both counts, finding, in part, that the accused had been in a fiduciary relationship with Mr. C, which required him to exercise the powers given to him under the power of attorney for Mr. C’s benefit, and that the accused had failed in his fiduciary duties.
On the theft charge, the trial judge imposed a sentence of two years less a day and made a restitution order in favour of the estate of Mr. C in the amount of $378,552. On the fraud charge, the trial judge sentenced the accused to six months concurrent and made a restitution order in favour of Veterans Affairs Canada in the amount of $2,224. The trial judge also made an order under s. 380.2(1) of the Criminal Code prohibiting the accused from ever seeking, obtaining or continuing any employment or becoming a volunteer in any capacity that would involve authority over the real property, money or valuable security of another person.
The accused appealed the decision.
Court of Appeal Dismisses Appeal
On appeal, the accused’s counsel accepted that the funds had been used in violation of the terms of the power of attorney. However, counsel argued that the Crown could only establish the required mens rea by demonstrating beyond a reasonable doubt that the accused knew he was not entitled to use Mr. C’s property for his own purposes and without regard to Mr. C’s needs. Counsel argued that the accused’s evidence that the wife had told him that he could use the money as if it was his provided a basis for a reasonable doubt on the mens rea issue.
The Court of Appeal rejected counsel’s arguments, stating:
“First, I do not read the [accused]’s evidence as an assertion that he believed he could do whatever he wanted with [Mr. C]’s assets. As I read his evidence, particularly his cross-examination, he acknowledged that he understood from his conversation with [the wife] that he could use the money as if it were his own, but that he was also obligated to take care of [Mr. C]’s needs. By his own admission, the [accused] knowingly failed to take care of those needs. Second, even if the [accused]’s testimony provided a basis for doubt on the mens rea issue, the trial judge rejected the [accused]’s evidence, leaving nothing in the evidence to support the [accused]’s contention that he believed he could use the money without regard to [Mr. C]’s best interests.”
As a result, the court dismissed the conviction appeal. The sentencing appeal was also dismissed, with the exception of vacating the prohibition order made under s. 380.2(1) of the Criminal Code.
Get Help
Protecting your assets and ensuring your family and other loved ones are provided for in the future is not something most people want to think about. However, effectively managing your wealth and protecting your spouse, children, and your estate is something that everyone should do at some point to ensure that your express wishes are carried out.
An effective estate plan goes far beyond just creating a will. You should also consider securing other important legal tools including powers of attorney (for personal care and for property), trusts (including Hansen trusts if you have disabled children or other dependants), as well as the designation of beneficiaries on life insurance policies, pensions, and other key documents.
At Campbells LLP, we are proud of the strong, long-lasting relationships we build with the clients for whom we craft Wills and estate plans. With our help, you can ensure that your family and loved ones are taken care of, that your wealth is distributed as you wish, and that the risk of any potential litigation is minimized. Our overall mission is to provide the right solution for each and every one of our clients. Contact us online or at (905) 828-2247 to learn more about our services.
