Power of Attorney Abuse After Death: Recovering Estate Money in Ontario

You may have opened a parent's bank statements after their death and found large withdrawals, transfers to a sibling, or accounts that are nearly empty. If that sibling was acting under a power of attorney, the question is whether the money can be brought back into the estate.

This article explains, in general terms, the duties an attorney owes, who deals with a claim after death, the ideas courts use for joint accounts, and the practical steps to take. Every case turns on its own facts, so use this as a map, not a verdict.

What duties does an attorney for property owe?

The law treats a guardian of property as a fiduciary who must act diligently, honestly, with integrity and in good faith for the benefit of the incapable person, and who must keep accounts of all transactions. Those same fiduciary duties, and the liability rules, also apply to an attorney acting under a continuing power of attorney for property.

A guardian is liable for damages that result from a breach of duty. In plain words, an attorney who used a parent's money for themselves, rather than for the parent, may be asked to pay it back. Whether a particular withdrawal was a breach depends on the facts, such as whether it paid for the parent's care or was a gift the parent really intended.

What changes when the grantor dies?

A continuing power of attorney for property ends when the grantor dies. After death, the estate trustee, not the former attorney, deals with the property. That matters because the estate trustee is the person who deals with the estate's property from then on. How a claim for money taken during the parent's lifetime is pursued depends on the facts, so it is worth confirming with a lawyer.

If the sibling who acted as attorney is also the estate trustee, there is an obvious conflict. In that situation, beneficiaries sometimes ask the court for help, which may include asking for accounts or for a different trustee. Which route fits depends on the facts and is worth discussing with a lawyer.

Ways to get answers and recovery

• Ask for records. A guardian of property must keep accounts of all transactions, and the same fiduciary duties apply to an attorney under a continuing power of attorney for property, so it is reasonable to ask for them.
• Understand the court's power to review accounts. The court may order an attorney or guardian of property to pass all or part of their accounts, and the list of people who may apply includes, with leave, any other person. Whether that route is open once the grantor has died depends on your situation, so confirm it with a lawyer.
• Use the estate's own accounting process. A court will not require an executor or administrator to account unless a person interested in the estate or a creditor asks, so a beneficiary can apply to compel accounts.
• Ask the court to remove or replace an estate trustee. The Superior Court of Justice may remove a personal representative and appoint another suitable person. Courts treat removing a trustee the deceased chose as a serious matter.
• Protect land. If a claim concerns an interest in land, a certificate of pending litigation must be issued by the court and registered before the claim is notice to non-parties.

One further point applies only if the person you are concerned about was acting as a trustee, such as an estate trustee. In that case, the court may relieve a trustee wholly or partly from personal liability if they acted honestly and reasonably and ought fairly to be excused. That relief does not cover a loss arising from investing trust property.

Joint accounts and transfers before death

Often the money did not simply disappear. It was moved into joint names with the attorney, and the sibling says it was theirs by survivorship. When a parent gratuitously transfers property, including into joint names, to an adult child, the law presumes the child holds it on resulting trust for the parent, and so for the parent's estate. The child bears the burden of rebutting that presumption.

The question is the parent's actual intention at the time of the transfer, and a court may also consider evidence of the parent's conduct afterward. Even where the presumption is rebutted, the survivor does not always keep everything. In one Court of Appeal case, the sons were found to hold joint-account funds under an obligation to share them equally among all five children.

Spouses are treated differently. The presumption of resulting trust applies between spouses as if they were not married, but property held as joint tenants is proof, absent contrary evidence, that they intended to own it jointly, and money on deposit in both spouses' names is deemed held as joint tenants.

Deadlines and what to do next

Most claims must be started within two years after the day the claim was discovered, and discovery is the earlier of when the claimant actually knew or when a reasonable person in their circumstances ought to have known. Claims by or against an estate for torts or injuries, other than libel and slander, must be started within two years of the death. Which period applies to your claim, and when the clock started, depends on the facts and should be confirmed with a lawyer.

• Collect the power of attorney document and any court orders.
• Gather bank, investment and property records for the years before death, if you can lawfully access them as a beneficiary or through the estate trustee.
• Note dates: when each withdrawal happened and when you first learned of it.
• Write down what the parent said about gifts or loans, and who heard it.
• Do not confront the sibling or move money yourself before getting advice.
• Speak with an estate litigation lawyer soon, because time limits may already be running.

Frequently asked questions