Handwriting analysis of the signature on a will

Have you ever wondered about how a real life court would deal with handwriting experts? I say "real life" to distinguish actual courts from our dramatic and exciting - but fictional - counterparts on TV. Handwriting is an issue from time to time when there is a question about whether the signature on a will is really that of the deceased, and when that happens, handwriting experts are usually called in.

Justin de Vries, who blogs at www.allaboutestates.ca, has provided an excellent overview of recent law in this area. Click here to read his article.

The bottom line is that forensic handwriting analysis is acceptable to judges, but doesn't necessarily make or break the case. The courts seem to want to be able to make their own judgments about the validity of the handwriting. Mr. de Vries' article is interesting reading, so check it out.

Preventing financial abuse by power of attorney

The general public is gradually becoming aware that financial abuse of seniors is rampant, and growing. We'd like to think that it's as simple as guarding our parents from door-to-door scam artists, but it's not; much of the abuse happens at the hands of family members.

Front and centre in this whole debate is the Enduring Power of Attorney. While a useful tool for seniors, it can become the instrument of financial abuse in the hands of the wrong person. A pair of recent articles in www.advisor.ca address this situation. The article suggests that a trusted, long-term financial advisor can help prevent abuse of a senior by a family member mis-using a power of attorney. I tend to agree. It's an interesting read (and I don't just say that because I'm quoted in the articles!) so click on the links below if you'd like to check out the articles.

Click here for part I

Click here for part II

How does one report a suspected theft by power of attorney?

In my view, a lot of public education is necessary to help all of us spot and deal with individuals who are abusing powers of attorney. Let's face it, most of us aren't sure what someone is allowed to do under a power of attorney so it isn't easy to know whether they are acting improperly. But assuming we are pretty sure there really was wrongdoing, what happens next? This question was recently asked me by a reader:

"Is it possible to report a suspected theft by power of attorney after the grantor has deceased? It appears that the value of the estate has been lessened by this suspected theft. Also, how does one report a suspected theft by power of attorney?"

Theft by someone acting under a power of attorney is a crime under section 331 of Canada's Criminal Code (click the link here and scroll down if you want to read it). Therefore, you report it like any other crime by calling the police. Yes, that does seem harsh when the perpetrator is a family member or friend, but stealing from someone he's supposed to protect is harsh too.

Before calling the police, try to make sure you have the facts, at least as many as are available to you. Talking to the attorney to find out his side of the story would be a good idea. An attorney who willingly answers questions and shows you the books of account might be able to clear up your suspicions. And wouldn't it be nice if only more attorneys actually WERE willing to tell others what's going on instead of becoming hostile every time someone asks a question?

Be aware that there are other reasons why the value of an estate could be lower than you thought it should be, such as a weak stock market, falling real estate prices, or debts that weren't known about by the family. This doesn't mean you have to be able to prove it completely on your own, after all the police will investigate after you make your complaint, but you should have something solid to go on.
Yes, you can report a theft after the grantor has passed away. If you're the executor of the estate and you believe money is missing because of the attorney's intentional actions, you are required by your duty to the estate to find out what happened. If that means calling the police, so be it.

Despicable son gets 10 years for ripping off Mom using Power of Attorney

Having just posted a story about how kids pay for the parents' lack of planning, I'm now going to share with you a story about how a parent paid for trusting her own son. Click here to read the story.

You wouldn't think trusting your own kids would be such a devastating mistake, would you?

In my seminars I always talk about true situations in which parents have appointed kids who never should have been allowed anywhere near Mom or Dad's finances. How do these kids get appointed in legal documents anyway? The parents sometimes don't want to hear or believe anything negative about their own children so they go ahead and appoint them anyway. Sometimes it's pressure from the kids. Sometimes parents think it's the law that they must appoint their children. And then there are those - and there are lots of them - who don't really want the kids in charge but are afraid of offending them if they choose someone else under their Power of Attorney.

I certainly don't mean that the poor mother in this story deserved what she got for appointing her son. It's never the parent's fault if a child steals them blind. That responsibility lies squarely on the child, and in this case I'm glad this horrendous man was sentenced to ten years in jail for what he did to his mom.

But do what you can to protect yourself! Any parent who is thinking of making a Power of Attorney and appointing one or more of the kids should think carefully before doing so. Try to assess your child as realistically as possible (I'm a parent too; I know that's hard to do). Try to put the "he'd never take my money; he's my son" thinking aside and assess the situation more like hiring a person for a job. For example, ask yourself some questions about the child you're thinking of appointing. How has the child dealt with money during his or her life? What is his or her current financial status, and how secure is that status? Is the child always asking you for money? Does he or she have a steady income? Has he or she ever been involved in fraud or shady deals? Is he or she a spendthrift?

Asking these questions won't protect every trusting parent, but I certainly hope reading this post will prevent even one person from finding himself or herself penniless at the hands of a greedy child.

Two RI men charged in $25 million investment fraud using identities of terminally ill

If this turns out to be true, what a relief to get these two off the streets. A lot of creativity and planning went into the scheme described in this story of two estate planners getting rich off stealing the identities of the terminally ill. Click here to read the article from http://www.businessweek.com/.

Don't be victimized by estate abuse

This article from http://www.canadiancapital.ca/ talks about the estate of Paul Penna, in which millions of dollars went missing in the hands of a group of executors. Click here to read the article. While I agree with the article's conclusion that the choice of executor is crucial, I don't agree with all of the opinions and recommedations given by the people quoted in the article. In any event, it's an excellent article and contains plenty of food for thought.

Watch out for financial exploitation of the elderly

I found this article from http://www.rightathome.net/ interesting as it talks about the various people who have used both tried-and-true and innovative ways to steal money from the elderly. It relies on statistics from a new MetLife study, which are American figures but still relevant to us here in Canada. It talks about how and why financial advisors might be in a position to help defend the elderly against fraud. Click here to read the article.

What happens to a power of attorney when the person giving it dies?

A person who signs a power of attorney document giving authority to someone else is called a donor. The donor uses the power of attorney to name someone to make decisions when the donor is no longer able to do that for himself of herself.

The power of attorney document is only in effect while the donor is alive. As soon as the donor dies, the power of attorney is revoked. The person named as executor under the donor's will takes over as being the person in charge. If there is no will, the power of attorney still comes to a stop, even if it means that there isn't anyone in charge until the court appoints an administrator.

A person looking after a donor's money or property is obligated to account to the donor's executor if the donor dies. This means that the person acting under the power of attorney has to give a full accounting of all the financial steps he or she took with the donor's money. This is why someone acting under a power of attorney should not only keep detailed financial records, but should also keep copies of receipts, cancelled cheques and other paperwork that backs up his recollection.

If a person acting under the power of attorney was negligent or fraudulent, this is often discovered at the time the accounting must be produced (a power of attorney who steadfastly refuses to account for his actions is a red flag).

Bank retiree charged in $200K seniors fraud

Update: I see that the National Post has more information in its story on this event. Click here to read it.

The link below goes to a story on the CBC News website. I don't have any additional information about the situation, but it occurs to me that some of the victims of this crime might well have been suffering from various stages of dementia. If there is anyone out there whose parents are aging and beginning to lose the ability to deal with finances, perhaps you should find out whether you can help your parents out. If they don't want you involved in their finances, or you don't have the time or ability to take care of this, perhaps connect your parents with an accountant or bookkeeper who will keep track of finances, or suggest that your parents have a custodial type of account.

CBC News - Toronto - Bank retiree charged in $200K seniors fraud

Fraudulent executor goes to jail

Those of you who have asked me what happens to executors who refuse to do their jobs properly will find this interesting. A judge in Ontario has jailed an executor for 14 months for defrauding an estate and for failing to comply with the court's orders. Click here to read an article about this from All About Estates.

Can Power of Attorney add himself to a bank account?

The scope of the powers of an attorney under an Enduring Power of Attorney, Continuing Power of Attorney, Durable Power of Attorney, or Power of Attorney for Property continues to be a mystery for many. This is why I'm always glad to receive questions about it.

Recently I was asked whether a person acting under a Power of Attorney can add himself to a bank account, presumably a bank account of the person he represents. The answer is both "yes" and "no", depending on what you mean by "add himself".

The idea of a Power of Attorney is to give someone else access to your money on your behalf. It's not in any way intended to give someone else ownership of your money or allow them to use it for themselves. So if "adding himself" to an account means that he becomes able to deposit your money, pay your bills, direct your investments, etc  then yes, he can add himself. This is what he is supposed to do for you.

As I said, Power of Attorney does not convey any ownership. Therefore if "adding himself" means putting his name on the account as a joint owner, then no he cannot add himself. Putting his name on as a joint owner means he has taken ownership of the money, as either owner of a joint account has the legal right to all of the money in the account.

In fact, it's possible that the Power of Attorney was made specifically to avoid anyone putting the assets into joint names.

Using a Power of Attorney to gain ownership of some or all of someone's else's money is fraud or theft, depending on the circumstances. There is a special crime in Canada's Criminal Code called Theft by Person With Power of Attorney. The only reason more people don't blow the whistle on the activity of fraudulent use of Power of Attorney is that, as I said earlier, most people don't really understand the nuances of how it works.

What if the executor sees fraud by power of attorney?

This is another reader question. I seem to be starting most of my posts this way lately (which is great, keep 'em coming). Someone asked about an executor who believes that the person who had been acting under a Power of Attorney has perpetrated a fraud against the deceased. Specifically, the reader wanted to know whether the executor has the right to look at the Power of Attorney's records.

Yes, he does. When the deceased died, his or her Enduring/Continuing Power of Attorney came to an end. The attorney acting under the Power of Attorney was then under a legal duty to account to the executor for his or her care and management of the deceased's financial affairs. An astonishingly high number of people acting under Powers of Attorney seem to think that they are entitled to do whatever they want with someone else's money, including taking it for themselves, and the accounting to the executor is often where they get caught out.

If I were an executor in this position, I would consider the fact that one day soon I would have to divide the estate among the beneficiaries and explain to them why the estate is smaller than everyone thought. Are they going to believe me when I say the loss was not my fault but that of the attorney, when I made absolutely no attempt to make the attorney explain the loss? I doubt it.

An executor is in a legal position to demand an accounting, and may request additional back-up evidence such as bank statements, receipts, cancelled cheques etc. If the attorney refuses to co-operate, the executor may end up asking the court for help. Fraud is fraud. The fact that a person was appointed attorney under a Power of Attorney makes a theft worse, in my view, because it involved taking advantage of someone who trusted him.

Funeral fraud case in court

You know, I've heard of people targeting seniors with scams, but this guy really takes the cake. I'm glad he's been busted. Click here to read the story.

Executor liability

Most people who act as an executor on an estate do so only once in a lifetime. This means that there are an awful lot of rookie executors out there doing their best to figure out what they are supposed to be doing. It's not easy.

An executor is personally liable for any losses he or she causes the estate. That means that if the executor is negligent or very slow-moving or reckless with any of the assets of the estate and that causes a loss in monetary value, the executor is personally on the hook for repaying the loss. The loss could be penalties and interest on a tax return that the executor filed extremely late for no good reason. It could be the purchase of a house where the executor sold the estate's house for much less than market value because he or she didn't bother getting estimates. It could be covering expenses such as meals or travel that should not be covered as they are not legitimate estate expenses.

This rule can be tough to translate into actual practice, because most people understand that an executor's expenses and legal fees are covered by the estate. This is often taken by inexperienced executors to mean they can charge every meal, every kilometre they drive, every item they purchase, to the estate, and that no matter what they do, they are backed by estate money. However, the estate will pay the reasonable costs and expenses of a proper administration. The estate will not pay for the executor's mistakes that could have been avoided with a little bit of attention. The estate won't pay for the executor's trip to Hawaii.

There is a line that can be crossed by an executor. There comes a point where the executor's behaviour is so unreasonable that it amounts to fraud or neglect. The courts deal with estates like this on a case-by-case basis.

If the executor has simply neglected to take care of things and monetary value has been lost, the executor could repay the loss by reducing or completely eliminating the pay he would otherwise have received for being the executor. If it goes beyond that, and the executor has behaved in an egregious way, foregoing the fee might not be enough. The executor could be held liable in court for losses that must be paid out of his own money.

If you are a beneficiary and you really believe that the executor on an estate you're involved in is causing losses to the estate, make an appointment to see an experienced estate planning lawyer. Take all the paperwork relating to the estate with you. Get an opinion on what, if anything, should be done about the executor.

If you are an executor and you are worried about your own liability, remember that if you are honest, let everyone know what you're doing, and move things along as quickly as is reasonably possible, you are not likely to run into trouble. You can also avoid losses and mistakes by relying on experienced professional help, such as accountants, lawyers, realtors and appraisers. That way you can back up your actions with documented proof of why you took the steps you took.

Most estates are wrapped up within a year (not including receipt of the final tax clearance certificate from Canada Revenue Agency), so this should be your goal. It might take longer if the estate involves selling a business, dealing with real estate in other countries, asking the court for clarification of things in the Will, etc.