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Monday, September 17, 2012

Should parents be forced to protect themselves against financial abuse by their kids?

A recent editorial in the Canadian Medical Association Journal has made some suggestions for changes they'd like to see implemented across the country to help combat elder abuse. Recently I read a very good article in that discusses the suggested changes. Click here if you'd like to read that article.

One of the points made in the article is that locking up those who abuse seniors is not enough, and that the underlying causes of the abuse must be addressed. I agree with both parts of that statement, but my experience with elders who have been (or are currently being) financially abused makes me believe that there is still more to the puzzle of preventing elder financial abuse.

Here's the issue. Many older people either know or suspect that they are being financially abused by their kids who are acting under powers of attorney. But they wouldn't call the police or confront the child or in any other way even suggest that one of their own children could be doing such a terrible thing. They explain it away in terms of the child having lost everything in a divorce, or having lost his or her job, or simply being the baby of the family. In other words, they are so busy parenting this supposedly adult person that they put the child's welfare ahead of their own.

I have personally spoken with elderly persons whose children, grandchildren, nieces or nephews have drained the older person's accounts, leaving the older person with little or no resources to live on. Locking up abusers isn't an option because these abusers won't ever be accused; their parents, grandparents, aunt or uncle will never, ever, speak out publicly against them.

I'm a parent. I get the concept of parents helping out the kids. But parents who draw up legal documents placing the kids in charge of the money are simply not willing to include clauses in the documents to help reduce the possibility of financial abuse. They feel that including these clauses would insult the child or send a message of mistrust.

This seems overly selfless to me. I would not want to be 85 years old and living on public pensions because my child stole my life savings, and I didn't prevent it because I didn't want to insult her.

My perspective, not surprisingly, is about what the legal profession can do. I've had so many conversations where I've tried to introduce checks and balances into power of attorney documents, only to have the parent refuse to even consider the possibility that a child could misbehave.

My son/daughter would never do that, they say. Sometimes they're right. Other times they underestimate the lure of easy money when the child has lost a job, or has a gambling addiction, has a spouse applying pressure, or simply feels entitled.

I suggest to the parent that they include a clause compelling a child acting under a power of attorney to give a full financial accounting to the other kids once a year. I suggest that the document direct that anyone who acts as power of attorney and is found to have taken money should forfeit that amount of money from their inheritance. I suggest that they use a trust company as a co-power of attorney to provide expertise and a second set of eyes.

Once I say the clauses are optional, the parent opts out.

Perhaps we as lawyers need to build non-optional clauses into our power of attorney documents. Maybe we need to insist that clients protect themselves as best they can by refusing to prepare powers of attorney that don't contain safeguards. Can this be done? Should it be done? We as lawyers have to let the clients choose their own paths, but are we doing enough to make clients aware of the dangers of signing powers of attorney documents that don't contain any safeguards?

Insisting on preparing only those documents that contemplate a child committing elder financial abuse would be a major sea-change for the legal profession, but we all need to contribute what we can to the solution.

1 comment:

  1. My mom recently passed away in Ontario. She had expressed to me over the years her net worth but three years ago was instituted due to illness and passed away early this year. Her will was probated by her lawyer who is also the executor and I am co-executor or in Ontario they don’t call it that if there was some issue with the executor I would step in to take over. My question is how can I be certain that the GIC numbers of accounts that my mother had are accurate and are all accounted for? The lawyer has accounted for all of them which he has noted in a letter but there is no back up paperwork to prove that is everything that she possessed and according to the figures he has provided the total amount differs about $150,000 less than what she had told me she possessed. I live in BC and don’t have her paperwork as one of my brothers is in possession of all of her paperwork and he will not give me access to view that even though I was “co-executor “of her estate. How can I find out what all of her assets were?


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