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Although choosing a person to hold power of attorney (POA) often is an afterthought for many clients, a recent decision from the Ontario Superior Court of Justice illustrates the importance of having the right person appointed to that role.

That’s because if the appointment of the POA subsequently is challenged, a court generally will strive to preserve the appointment, viewing it as evidence of the grantor’s wishes rather than substituting another person who takes issue with the POA’s actions.

The court’s decision, delivered in mid-September, dealt with the case of an elderly woman who had been assessed as incapable of managing her affairs because of dementia. The woman had appointed her brother, while she was capable, as POA over her assets, which were worth about $700,000 at the time of the trial. However, one of the woman’s daughters alleged that the brother had mismanaged her mother’s affairs, and brought forth an application to replace her uncle as POA.

In refusing the daughter’s request, the court emphasized the uncle’s clear reasons for making his decisions – and recognized the records to back up those decisions. The court’s ruling also noted that although the daughter was to be commended for her concern about her mother, she “must learn to leave the decisions relating to her mother to [the POA] and stop involving her mother in whatever dispute [the daughter and the POA] might have.”

Paul Trudelle, partner with Hull & Hull LLP in Toronto, notes that courts want to see transparency from a POA, which can help to ease tensions among family members. He also suggests that a POA seek advice from professionals, including financial advisors, about his or her obligations and choices in matters such as investments.

What’s most important in discharging the duties of a POA, Trudelle says, are the interests of the incapable person.

The court’s decision presented a portrait of an unhappy family at war over appropriate and caring treatment of an incapable member. After the elderly woman was moved to a long-term care facility and subsequently declared incapable in the autumn of 2016, her brother took over the management of her personal and financial affairs in his role as POA.

Within a year, the relationship between the POA and the woman’s daughter was fraught with conflict. The daughter complained that the nursing-home care her mother was receiving was inadequate; that more of her mother’s funds should be made available; that the POA was liquidating her mother’s assets; and that he was “inaccessible and unconcerned with providing proper care.”

But the daughter’s case ran aground as the result of actions the court disapproved of. First, the daughter asked for permission in mid-2017 to take her mother to Seattle to visit another daughter, who was seriously ill. The POA withheld permission because there wasn’t adequate medical insurance for the mother while she was in the U.S.

The daughter then obtained a passport for her mother using false information, and told the POA she was taking her mother to a cottage in Ontario for the weekend, but took her to Seattle instead. (The passport was revoked due to the mother’s lack of capacity to apply for it.) This act was fatal to the daughter’s case.

“[Clearly, the daughter] is prepared to ignore the power of attorney, the truth and the law to get her way,” the court’s ruling states. “That fundamentally destroys her evidence with respect to the balance of her case.”

Second, the daughter was held at fault for accessing the funds of an elderly parent in a manner that the parent, or a representative, didn’t authorize: the daughter took her mother to the bank and had her withdraw $10,000 despite her lack of capacity.

The lack of authority to make the transaction was so transparent that the bank subsequently acknowledged its error and replaced the funds voluntarily. The court’s ruling states: “There is no explanation in the record for those withdrawals. There is no explanation as to why [the daughter] would think that she would have the authority to have those funds removed. Clearly, [she] cannot be trusted to deal with the financial welfare of [her mother].”

“[POAs] have to justify [their] actions,” Trudelle says. “The [POA] was able to provide a fulsome explanation of why he was doing certain things. I think that had significant sway with the court.”

Trudelle emphasizes the need for POAs to maintain a clearly documented trail, as the POA in this case did. “Have your accounts ready,” Trudelle says.

The court’s decision comes at a time when the legislation governing POAs is receiving heightened attention from regulators, which are becoming increasingly concerned about the misuse of POAs, which carry sweeping powers over vulnerable people’s affairs.

This past April, the Ontario Securities Commission released its Seniors Strategy, a road map for reforms designed to enhance financial protection for the elderly. The Seniors Strategy includes a recommendation to break down organizational silos to help design new policies and programs in matters such as POAs. That document follows more specific 2017 recommendations from the Law Commission of Ontario aimed at modernizing POA legislation in several areas, including transparency and accountability.

Of course, families may not agree sometimes about how a vulnerable member should be cared for. Although such concern may have been present in this case, Trudelle says, that doesn’t justify the daughter’s unlawful actions: “If you’re doing that sort of thing, that can be fatal to your case.”