Was Oz Munchkin Victim of Power of Attorney Abuse?

Financial abuse of the elderly is, unfortunately, an increasing problem.  The aging population and increasing rates of dementia are factors that are leaving seniors exposed to exploitation by friends or family members.  Currently, approximately 500,000 Canadians suffer from dementia and that number is expected to more than double over the next generation.  

As I have blogged about previously, having a power of attorney for property in place appointing a substitute decision maker to act when the grantor of the power of attorney no longer has the capacity to make decisions is a good idea.  However, unfortunately it is not uncommon for the person named as attorney to use his position to take advantage of a vulnerable senior and to misuse his authority. 

While examples of power of attorney abuse include the extremes, such as outright theft or changing title to assets, it can also be more subtle – such as an attorney who is also the main beneficiary of an estate not making appropriate expenditures for the incapable person’s benefit so as to protect his own inheritance. 

The recent saga involving the estate of Mickey Carroll, best known for playing a Munchkin in the Wizard of Oz is a good example of the dangers of power of attorney abuse.  Apparently, after Carroll’s death in 2009 his relatives became concerned that there was money missing from his estate. 

They hired a private investigator to look into the situation and the investigator’s findings have resulted in the relatives suing Carroll’s former caretaker and three of her friends for more than $500,000.  In their lawsuit, the relatives allege that during a time when Carroll was suffering from dementia, the caretaker and her friends convinced him to grant a power of attorney in their favour. 

The suit further alleges that after obtaining the power of attorney, the caretaker and her friends convinced Carroll to take out a sizeable line of credit against his home and not long after that he started signing cheques made out to “cash” for tens of thousands of dollars – something that was inconsistent with his prior spending habits. 

The relatives are seeking the return of the missing funds.  In an interview she gave not long after Carroll’s death, the caretaker characterized the allegations of the missing funds as being “foolish”. 

How to Have the "Nursing Home Talk" with a Parent

The aging population has left more and more people with the prospect of having a very difficult conversation: telling an aging parent it’s time to consider moving to a nursing home. 

In the easiest circumstances, the parent acknowledges that the time has come to make the move.  However, this is frequently not the case – for an individual who has lived independently for most of her life (sometimes residing for decades in a home which now carries heavy emotional value), the decision to move to a care facility can be an extremely difficult one.   

The Globe and Mail recently ran an excellent article written by Dr. Joti Samra, a Vancouver-based psychologist, that offered tips on how to broach the topic of a nursing home with an aging parent.  The suggestions include:

  • Plan in advance – think about what you want to say, what the options are, and what timelines might be involved;
  • Give the parent advanced warning about the discussion so she doesn’t feel taken off guard or attacked;
  • Consider whether anyone else should be involved in the discussion – there may be value in involving another relative so the parent feels supported and understands her best interests are at heart.  However, avoid ganging up on the parent;
  • Listen to the parent’s concerns and show empathy.  Acknowledge that this is a very difficult topic for her to consider and appreciate that she may be defensive or sad.  Ask what’s important to her and consider how those issues can be incorporated into a solution about appropriate living arrangements; and
  • Keep in mind that repeat conversations might be necessary – a workable solution might not be achieved after the first conversation so don’t get frustrated or give up hope.

Moving to a nursing home isn’t easy for anyone, but there are times when there might be no other choice – opening the lines of communication early will allow everyone more time to mentally prepare for the change.

When Can Powers of Attorney Be Invalid?

In his recent decision in Baranek Estate, Justice Brown observed that “the so-called ‘battle of competing powers of attorney’ is emerging as a growing area of litigation.  This is a most unhealthy development.”  The facts behind Justice Price’s recent decision in Nguyen-Crawford v. Nguyen would seem to give credence to Brown J.’s complaint.

Nguyen-Crawford v. Nguyen involved a fight amongst the five children of an elderly woman who was impaired by a stroke.  In 1998, powers of attorney for property and for personal care had been executed by the woman in favour of her youngest daughter.  In 2009 (after she had suffered a stroke) the mother granted powers of attorney for property and personal care to her other four children. 

The youngest daughter then commenced an application seeking a declaration that the 2009 powers of attorney were invalid on the basis that her mother was incapable. After conceding the invalidity of the 2009 powers of attorney, the four other children challenged the validity of the 1998 powers of attorney on the basis of incapacity and undue influence. Specifically, they argued that the only translation their mother (who did not speak English) received of the powers of attorney was from the daughter being named. They also asked to be appointed as the mother’s guardians of property and personal care.

Pursuant to s. 8 of the Substitute Decisions Act, 1992 (“SDA”) an individual is capable of granting a continuing power of attorney for property if she understands, amongst other things, the nature and extent of her assets as well as the obligations of an attorney for property.  Pursuant to s. 47 of the SDA, an individual is capable of granting a power of attorney for personal care if she is able to understand whether the proposed attorney has a genuine concern for the person’s welfare and appreciates that the attorney might need to make decisions for the person. 

Here, Price J. found that although the mother was not under disability in 1998 and had the capacity to sign powers of attorney there were suspicious circumstances surrounding the execution of the documents.  The mother was dependant on the daughter being appointed and the daughter had provided the only translation of the powers of attorney and the legal advice given concerning them.  As a result, he found that the circumstances of undue influence were such as to render the powers of attorney invalid. Ultimately, he appointed the four other children as the mother’s guardians of property and personal care.   

How to Be Appointed as a Minor's Guardian of Property

In Ontario, a minor cannot receive money until he or she turns eighteen.  However, there are times when children become entitled to property (such as an inheritance, insurance proceeds, or accident benefits) prior to reaching the age of majority. 

It comes as a surprise to many parents that they are not automatically entitled to take control of property to which their child is entitled.  Instead, generally speaking, the money has to be paid to the Accountant of the Superior Court of Justice (referred to as a “payment into court”) until the beneficiary has turned eighteen (an exception to this is when the amount in question is less than $10,000).     

In situations where a parent (or both parents) wishes to administer a minor’s funds, s.47(1) of the Children’s Law Reform Act (“CLRA”) provides the authority to bring a court application, on notice to the Office of the Children’s Lawyer, to be appointed as guardian of property.    Where more than one person is appointed as guardian of property, those people are jointly responsible for the care and management of the minor’s property. 

Pursuant to s. 49 of the CLRA, the court is to consider all the circumstances, including the following:

  • The ability of the applicant(s) to manage the child’s property;
  • The merits of the plan proposed by the applicant for the care and management of the child’s property; and
  • The views and preferences, where ascertainable, of the child. 

A parent is entitled to compensation for acting as guardian of property, however the amount must be authorized by the court (if the terms of compensation have not been set out in a management plan, then a parent who wishes to receive compensation should bring an application to pass accounts).

It is essential that anyone acting as a guardian of property for a minor understand that they have an obligation to be able to account for their dealings with the minor’s funds.  In this regard, careful records (with supporting documentation) should be kept of all transactions that take place.  I always recommend that prior to acting as a guardian of property, parents speak to a lawyer to ensure they understand the full extent of their obligations. 

When Can a Capacity Assessment be Ordered by the Court?

The Superior Court of Justice’s recent decision in Urbisci v. Urbisci discusses the circumstances under which the court should require an individual to undergo a capacity assessment against his or her will. 

By way of background, the applicants were the daughter and estranged husband of the alleged incapable person (“Maria”).  They sought a court order requiring Maria, who had an incurable brain tumor, to submit to a capacity assessment.  Maria opposed the order.    

Section 2 of the Substitute Decisions Act, 1992 (the “SDA”) provides that absent reasonable grounds to believe to the contrary, an individual is presumed to be capable.  However, pursuant to s. 79(1), if an individual’s capacity is in issue in a proceeding under the SDA and the court is satisfied that there are reasonable grounds to believe a person is incapable, it can order a capacity assessment. 

The court has long rejected the idea that it was harmless to require an individual to undergo a capacity assessment.  The decisions of Strathy J. in Abrams v. Abrams and Pattillo J. in the unreported decision of Flynn v. Flynn, both discuss the intrusive and demeaning nature of the process.   

Brown J., the judge hearing the application, proceeded to set out some of the factors the courts have turned their minds to when determining whether there were reasonable grounds to believe that a person was incapable, including:

  • The wishes of the person sought to be examined;
  • The nature and quality of both medical and non-medical evidence regarding the person’s capacity;
  • Where there has been a previous assessment, the assessor’s qualifications, the comprehensiveness of the report, the report’s reliability, whether there is evidence of bias, and whether the evidence considered was appropriate;
  • The probative value of the assessment vis-à-vis the issue before the court;
  • The potential harm that might result if the assessment does not take place; and
  • The urgency of the capacity assessment.

Ultimately, Brown J. decided not to order the capacity assessment.  He found that although Maria’s health was declining, the evidence suggested that she still had the capacity to manage her own affairs. Particularly persuasive were medical records and opinions filed by Maria’s various doctors suggesting capacity; evidence of her capacity provided by her estate planning lawyer; and supportive evidence provided by disinterested family and friends.

Establishing a Litigant's Capacity on Motions for Court Approval of a Settlement

Sometimes, legal proceedings must be commenced or defended by a litigation guardian on behalf of someone who is mentally incapable.  Recent endorsements in Carano v. Manduck underscore the importance of establishing that a litigant remains incapable when asking the court to approve a settlement on the litigant’s behalf.   

In Carano v. Manduck, a plaintiff had been severely injured in an automobile accident and the Public Guardian and Trustee had been appointed as his litigation guardian. The litigation settled and the parties sought court approval of the settlement.  The affidavit filed in support of the motion made reference to the fact that the plaintiff had been tested and found capable of managing property.

Given the evidence of capacity, Wilkins J., the motions judge, found that it had to be established that the plaintiff approved of the settlement (and apparently there was evidence that he did not approve). 

Supplementary materials were filed and the motion subsequently came before Brown J. in August 2010.  There was evidence that in June 2008  a doctor had provided an opinion that the plaintiff was unable to make decisions about the settlement, while in December 2008 and April 2009 there were opinions that the plaintiff did have capacity.

Brown J. found that the opinion evidence had become stale-dated and declined to make any findings regarding capacity.  He found that if the litigant was capable, the court lacked jurisdiction to make determinations about his financial affairs.   Brown J. also emphasized the necessity of including evidence of a party’s current level of capacity on any motion for court approval of a settlement on an incapable party’s behalf.    

Brown J. acknowledged that there would certainly be circumstances where a litigant’s incapacity would remain static throughout a proceeding (such as when the party had been catastrophically injured).  However, he also noted that injuries can resolve themselves and capacity can improve over time.    

Counsel proceeded to file further submissions on the issue of the plaintiff’s capacity.  After having considered the additional evidence (which included an August 2010 assessment), Brown J. found that the plaintiff was incapable of making property decisions and, after reviewing the terms of the settlement, approved it on the plaintiff’s behalf.   

The endorsements in Carano v. Manduck stand as an important reminder that once incapable doesn't mean always incapable.  When a court is being asked to approve a settlement on an incapable litigant's behalf, it is absolutely essential that evidence is provided to satisfy the court the litigant remains incapable and the court has jurisdiction to approve the settlement.

Consent and Capacity Board Appeals - Naming and Paying an Amicus

The Consent and Capacity Board (“CCB”) is an independent provincial tribunal in Ontario.  A large part of its mandate involves reviewing a person’s involuntary admission to a psychiatric facility pursuant to the Mental Health Act or a person’s capacity to refuse medical treatment pursuant to the Health Care Consent Act

An individual has the right to appeal the decision of the CCB to the Superior Court of Justice.  Appeals of CCB decisions in Toronto are currently subject to pre-hearing case management, during which the court has the discretion to appoint an amicus (the role of which is to help the court understand the legal and factual issues raised by the patient).

Brown J.’s recent decision in Cavalier v. Ramshaw addresses the issue of payment of amicus appointed by the court. 

Initially, an amicus was either nominated by the parties (subject to court approval) or, at the court’s request, the Ministry of the Attorney General (“MAG”), in conjunction with Legal Aid Ontario (“LAO”), would forward names of counsel from LAO’s Consent and Capacity panel to the court for approval. 

Counsel was to be paid according to LAO’s “standard administrative terms”. However, this proved problematic, because LAO caps hours spent by counsel on CCB appeals at 16, when, in reality the time involved is significantly more (generally between 30 – 50 hours for an average appeal).  

MAG’s position in Cavalier v. Ramshaw was that the amicus should be subject to the LAO cap, unless LAO exercises its discretion to allow more time spent.  Brown J dismissed this argument on the basis that if the court imposed an unrealistic cap on the time spent, many very qualified lawyers would not offer their services. 

Brown J. determined it was preferable for the court to select the panel of counsel from whom amicus could be appointed, fix the hourly rate that could be charged, and monitor the hours that were being billed to ensure they were reasonable.  Providing the accounts were, they would be forwarded to MAG for payment. 

Acknowledging the issue of whether the court had the authority to order MAG to pay the legal fees of amicus, he requested that MAG advise the court by mid-November as to whether it was prepared to fund the fees.  In the event that it was unwilling to do so, Brown J determined that there was no point continuing to case-manage CCB appeals and that the old system would return. 

This is a scary thought because under the “old system” appeals languished, typically because the patient did not have the expertise or the capacity to complete necessary court materials.  Until an appeal has been heard, treatment usually cannot be given and a patient who is not improving will frequently remain detained. 

It will be very interesting to see what MAG decides to do.   

"If Dementia Were a Country, It would be the World's 18th Largest Economy..."

Over the past week, the Globe and Mail has been running an interesting series on various issues relating to dementia

According to Alzheimer’s Disease International, an estimated 35.6 million people worldwide suffer from dementia.  By 2030, the number is expected to double to more than 65 million.  

The costs of caring for people with dementia are significant – it is estimated that more than $350 billion per year is spent on medical care and residential care. Unpaid labour by family caregivers has an estimated value of $253 billion.  Twenty years from now, the total costs are projected to exceed $1.1 trillion.  To put these numbers into context, Alzheimer’s Disease International estimates the current costs of dementia to be equivalent to 1% of the global gross domestic product – in geographic terms this amount would be equivalent to that of the world’s 18th largest economy, falling in between Indonesia and Turkey. 

While those suffering from dementia clearly need supportive care and medical treatment, they often also need financial protection. 

The financial risks faced by those suffering from dementia are wide ranging.  In some cases, the extent of an individual’s diminished capacity is not spotted quickly enough (or, if it is, there is no one with the authority to make financial decisions on the individual’s behalf).  This can lead to situations where the person enters into unwise financial transactions or is taken advantage of by unscrupulous acquaintances or relatives.  The Ontario Superior Court of Justice’s decision in the much discussed case of Banton v. Banton (involving an 88 year old retirement home resident who married a 31 year old waitress at the home) illustrates the devastating effects that incapacity can have on the financial decisions someone makes.

In other situations, an elderly person’s diminished capacity can provide a battleground for fighting family members, all of whom are convinced that they ought to be the one to control the individual’s finances.  The ongoing case of Abrams v. Abrams provides a good example of the complexity and scope of litigation that can emerge when family members, all with the stated objective of protecting an incapable person, become pitted against each other.

On a non-litigious note, elder mediation is growing in popularity, although it is still fairly new.  The idea behind elder mediation is to get everyone in the same room with the joint objective of getting the individual with dementia the best care.

Guardianship of Minors: Planning for Your Children's Future

A common concern that people have when planning their estates is what will happen to any minor children they have on their death.  As a result, people who do have minor children when making a will have the option of naming a guardian to take custody of their children on their death. The authority to appoint a guardian and the process that must be followed is set out in s. 61 of the Children’s Law Reform Act. 

It is possible to appoint more than one guardian or to name alternate guardians in the event the one appointed can’t act.  In situations where a couple (such as the testator’s sister and brother-in-law) are named, it is suggested that the will provide they must be together at the testator’s death and, if they are not, who should take custody (to avoid a situation where a couple who was married at the time the will was completed have divorced at the testator’s death). 

While naming a guardian is a good option, it is important for the testator to understand the limitations of such an appointment.  First, an appointment of a guardian will only be effective if, at the time the appointment takes effect, the individual who made it was the only one entitled to custody of the minor – so, if two parents are entitled to custody of a minor and one passes away, the surviving parent will be entitled to custody, not the guardian named in the deceased parent’s will. 

Second, an appointment made by will is only temporary in nature and will be effective for ninety days after the testator’s death.  Before the 90 days expired, the intended guardian must bring a court application seeking to be permanently appointed.  Ultimately, then, it will be up to the court to determine who will be awarded final custody of any minor children – and the court’s concern will be over what is in the best interests of the children, not what the will says.  In situations where appointing the guardian named in a will seems in keeping with the children’s best interests, the court will certainly give importance to the terms of the will – however, again, it is important for anyone making a will to understand that the will won’t necessarily be determinative.