Fraud Towards Aged Folks By way of Persevering with Property Authority – Criminal Law

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As people get older and their mental abilities wane, it can be a great relief to have someone else take care of their financial affairs. It often happens in our lives that it becomes difficult to keep track of bills and payments, and to keep track of what is necessary to make financial decisions. A trusted relative or friend may be willing and able to help when such tasks become increasingly cumbersome. A permanent power of attorney for real estate is an excellent tool with which the “grantor” can grant a power of attorney (POA) to a person of his choice who remains responsible for the grantor’s property even if the grantor becomes mentally incapable. That is why it is called an ongoing authority.

scope

With great power comes great responsibility and, on the other hand, a great risk of abuse. The broader the POA, the more vulnerable older people are. S.7 (2) of the Substitute Decision Act (SDA) provides that a grantor can authorize an attorney to do anything that the grantor could do, if able to do so, in relation to property, except for a will submit. The grantor may also choose to limit the level of authority to mitigate some of the risks associated with issuing a POA. For example, the attorney may only be authorized to deal with certain assets, or the start of the power of attorney may be postponed to a certain point in time or a certain event, that is, if the founder becomes mentally incapable. Such restrictions would have to be clearly written in the POA.

The POA loses its power to authorize the attorney to act on behalf of the grantor in property matters as soon as the grantor dies.

Legal requirements

According to s. 8 of the SDA, the grantor is able to give an ongoing POA if the grantor

• knows what kind of property the fellow has and what its approximate value is;
• is aware of the obligations towards the relatives of the approver;
• knows that the attorney will be able to do anything in relation to property on behalf of the grantor that the grantor could do if he is able to do so except make a will, subject to the terms and conditions set out in the power of attorney and Restrictions;
• knows that the lawyer must explain how the lawyer has handled the grantor’s property;
• knows that if the scholarship holder is able to do so, they can revoke the ongoing power of attorney;
• recognizes that if the attorney does not manage the property prudently, its value may decline; and
• appreciates the possibility that the attorney could abuse the authority granted.

Fraudulent systems

A relative, suspected friend, or even a stranger can defraud the elderly victim by signing a POA by misrepresenting its content or scope. Such a POA does not meet the above requirements and is void. Third parties can still rely on the signed POA and do business with the fraudster. While such transactions are void and the asset sold is legally recoverable, there may be insurmountable practical hurdles to recovery. The asset may simply have disappeared if the fraud is discovered. If the asset is land, there are certain legal safeguards against a fraudulent transfer of ownership. However, if a good faith buyer who bought the land from the scammer resells the land and the property is registered in favor of the next buyer, the original owner’s title will be forfeited.

There is a risk of abuse even after the death of the fellow, as third parties with whom the attorney allegedly does business on behalf of the deceased fellow may not be aware of the death of the fellow. You can again reasonably rely on the POA presented to you by the attorney. At this stage, this risk is of course a risk to the estate of the deceased grantee.

These extreme examples are criminal cases as they clearly violate s. 331 of the Criminal Code “Theft by proxy”.

Another scheme can be done with a perfectly valid POA. The lawyer can decide not to act only in the interests of the approver, as he has to do according to the SDA. For example, the attorney has the authority to give gifts and loans to friends of the fellow. The SDA considers this to be in the interest of the grantor. A limitation on such gifts is the undue exhaustion of the grantor’s property to the extent that it is insufficient to satisfy the grantor’s assistance and care. Where to draw this line is obviously controversial and the lawyer has considerable leeway under the law. Another limitation of the attorney’s power of attorney is that, in the event of a dispute, the attorney must demonstrate that he had reason to believe that the grantor would have made the gift based on the grantor’s intentions as expressed prior to his ineptitude were good.

The reality is that older people who do not have the mental capacity to look after their own wealth are also unable to contest abuse of authority. They are helpless and rely on better friends or kind relatives to advance their interests.

The content of this article is intended to provide general guidance on the subject. A professional should be consulted about your particular circumstances.

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