15 ways to stay out of trouble when acting as Power of Attorney

Individuals acting on behalf of a family member or friend under an Enduring Power of Attorney can be held liable for fraudulent use of the assets, and for preventable mistakes. And mistakes are certainly easy to make. Many people acting under Enduring Powers of Attorney tell me that they don't know of reference materials that clearly set out what they are supposed to do and what they are not supposed to do to stay on the right side of the law.

This is my list of suggestions for anyone acting under an Enduring Power of Attorney (a.k.a. Continuing Power of Attorney, Power of Attorney for Property) to help stay out of legal trouble while at the same time doing a good job for the donor who appointed them:

1.  Read the document that appoints you to look for details about powers you have and any restrictions placed on you. If you're not sure whether you can do a specific thing, ask a lawyer.

2.  File income tax returns as required and make sure they're on time. Losses to the estate such as penalties and interest on unpaid  taxes are your personal responsibility.

3.  Pay the donor's bills as they become due. Avoid paying interest or late fees. If you're forgetful or busy, set up automatic bill payments.

4.  If you want to sell real estate, get an independent appraisal from a qualified appraiser to explain why you set the price as you did. Note that in some Canadian jurisdictions you will need a court order to sell real estate, depending on what specifics are included in your document.

5.  Shop around when making a major purchase or planning renovations on behalf of the donor and get written quotes. Keep receipts.

6.  When it's recommended that you get court approval for something, get it.

7.  Hire professionals (e.g. appraisers, lawyers, accountants, investment advisors) to help you.

8.  Insure real property and valuable personal property. Put valuable personal property of the donor in a safe place (e.g. safe deposit box) that is not accessible to other people.

9.  Don't mix the donor's property with your own.

10.  Don't put the donor's property in your own name.

11.  Don't use the donor's money to pay your personal bills or invest in a business venture for yourself. Don't borrow money, planning to pay it back on your next payday or some unnamed future date. Keep in mind that the Canadian Criminal Code recognizes a crime called theft by someone holding power of attorney.

12.  Find the donor's Will and store it safely. If you need to distribute items, for example when the donor moves from a house to long-term care, follow the Will as closely as you can. If the donor passes away, give the original Will to the executor named in the Will.

13.  Don't pay yourself a wage for being the Attorney unless you are sure that you are specifically authorized to do so by the document or by the court.

14.  Maintain meticulous records. They don't have to be fancy, but they do have to be accurate, complete and up-to-date.

15.  Respond to reasonable questions that are raised by other members of the family who are concerned about the donor. Providing answers can allay fears and prevent speculation and leads to squabbles and lawsuits.

These tips are condensed from my book called "Protect Your Elderly Parents".