Can Family Challenge a Power of Attorney After Death in Ontario?

After a parent dies, family members sometimes look at the bank statements and see things that do not add up: large withdrawals, a house sold, accounts moved into one child's name. If one person held a power of attorney for property, the question becomes whether those transactions were proper.

This article explains in general terms how the law treats an attorney's conduct once the person who granted the power has died, who can ask for an accounting, and what a family can do while the facts are still being sorted out. It is general information, not advice on your situation.

What duties does an attorney for property owe?

A power of attorney for property lets someone manage another person's finances. That person, called the attorney, is not free to treat the money as their own. Under the Substitute Decisions Act an attorney for property owes fiduciary duties, including the core duty to act exclusively for the grantor's benefit.

In one Court of Appeal matter, the motion judge relied on evidence of unexplained ATM withdrawals and personal purchases to terminate a power of attorney and appoint the Public Guardian and Trustee as guardian of property. Those findings were not tested on appeal, so they show what a court has been willing to do on that evidence, not what will happen in your case.

Who can ask the attorney to account after death?

Under section 42(1) of the Substitute Decisions Act, a court may on application order that all or part of an attorney's accounts be passed. A person outside the listed applicants needs the court's leave to apply under section 42(4). At common law, only the grantor or the grantor's estate could call the attorney to account.

The law on whether third parties can compel an attorney to account is still developing, so the outcome can depend on the facts and who is applying.

What if the attorney is also the estate trustee?

This is a common and awkward situation. The person who managed the money before death is now the one who would normally look into those transactions for the estate. Where the donor has died and the attorney is also the estate trustee, there can be no true accounting between the two roles. Beneficiaries in that position have been allowed to seek leave under section 42(4) to obtain an accounting for the pre-death period.

An estate trustee also has a duty to call in the estate's assets. If money or property left the parent's hands improperly, recovering it may form part of that duty. Where the trustee is the person whose conduct is in question, beneficiaries may need to take steps themselves.

Practical points about timing, proof and cost

• The basic limitation period is two years from the day the claim was discovered.
• A person is presumed to have known of a claim against an estate trustee on the day the act or omission took place, unless the contrary is proved.
• Estate litigation is governed by the ordinary civil costs regime, and costs come out of the estate only where public policy considerations apply.
• Courts may make blended costs orders, where the loser pays part of the other side's costs and the estate bears the balance.
• Where the estate affects a child's interest, the Office of the Children's Lawyer must be served in certain applications, including trustee removal and applications to pass estate accounts.

How the limitation rules apply to a particular attorney's transactions, and when the clock started, depends on the facts. That question is worth putting to a lawyer early rather than late.

When the person is still alive, or serious harm is feared

Sometimes concerns arise before a death. The Public Guardian and Trustee must investigate allegations that a person is incapable of managing property and that serious harm is occurring or may occur, and can obtain access to relevant records. The Office of the Public Guardian and Trustee helpline is 1-800-366-0335.

What to do next

• Find the power of attorney document and note who was named and when it was signed.
• Gather bank, investment and property records for the years before death, if you have lawful access to them.
• Write down dates and amounts of transactions that concern you, and what you were told about them.
• Note the date you first learned of each concern, since timing may matter.
• Do not accuse anyone in writing before you understand the records; speak with a lawyer about options such as an accounting or leave to apply.
• If you are a beneficiary and the attorney is also the estate trustee, ask a lawyer whether seeking leave for a pre-death accounting makes sense.

Frequently asked questions