A Power of Attorney can be one of the most important estate planning documents a person signs. It gives someone else the authority to manage financial and personal affairs when help is needed or capacity is lost.
But what happens when an attorney uses the donor's money for a personal transaction?
The decision in DeVenne v. DeVenne serves as a powerful reminder that attorneys are fiduciaries with strict legal obligations. Even when family members believe they are acting with good intentions, courts will closely scrutinize transactions that benefit the attorney rather than the donor.
What Does an Attorney Owe to the Donor?
Many people assume that being appointed as an attorney under a Power of Attorney simply means helping a loved one manage their affairs.
Legally, the role is much more significant.
An attorney generally must:
- Act honestly and in good faith;
- Exercise reasonable care;
- Act within the authority granted by the document;
- Avoid conflicts of interest;
- Keep proper records;
- Maintain accurate accounts; and
- Act in the donor's best interests.
These obligations arise because the relationship is fiduciary in nature.
A fiduciary must place the interests of the donor ahead of their own.
Family Members Are Not Exempt From Fiduciary Duties
One of the most common misconceptions in estate litigation is that family relationships somehow change the rules.
They do not.
Children who act as attorneys owe the same duties as any other fiduciary.
Even when a child provides significant care and support, they cannot simply assume they are entitled to use a parent's funds for personal purposes.
The courts expect attorneys to be able to justify every significant financial decision they make on behalf of the donor.
The Risks of Mixing Personal and Donor Funds
A recurring issue in many Power of Attorney disputes is the commingling of funds.
This occurs when an attorney places the donor's money into accounts they personally control or combines the donor's assets with their own finances.
Even where no wrongdoing is intended, commingling can create serious problems because it becomes difficult to determine:
- Who owns the money;
- How funds were used;
- Whether assets were properly preserved; and
- Whether unauthorized personal benefits occurred.
For this reason, attorneys should generally keep donor funds separate from personal accounts whenever possible.
Proper segregation helps protect both the donor and the attorney.
Making Gifts Can Be Dangerous
One of the most important lessons from the decision is the legal treatment of gifts.
Many attorneys assume they can make gifts using the donor's assets if they believe the donor would have approved.
That assumption can be risky.
Unless the Power of Attorney specifically authorizes gifting, attorneys should proceed with extreme caution.
Questions frequently arise when an attorney:
- Transfers money to family members;
- Makes loans;
- Advances inheritances;
- Assists with property purchases; or
- Uses donor funds for personal transactions.
Courts will often closely examine whether the transaction was truly authorized and whether it served the donor's interests.
Communication Matters
Estate disputes are often fueled by secrecy rather than money alone.
Family conflict can escalate when:
- Information is withheld;
- Documents are not shared;
- Co-attorneys are excluded;
- Financial records are unavailable; or
- Major decisions occur without explanation.
Open and timely communication can often prevent misunderstandings before they become litigation.
An attorney who provides regular updates and maintains transparency is far less likely to face allegations of misconduct later.
Why Record Keeping Is Critical
Attorneys should assume they may eventually be required to account for their actions.
Good record keeping can include:
- Bank statements;
- Receipts;
- Invoices;
- Financial summaries;
- Transaction records; and
- Notes explaining significant decisions.
The burden often falls on the attorney to explain what happened to the donor's money.
Poor records can make even legitimate transactions appear suspicious.
Proper documentation remains one of the strongest forms of protection available to an attorney.
Beneficiaries and Estate Claims
The decision also highlights an important legal distinction.
When an attorney breaches their duties, the harm is generally suffered by the donor or the donor's estate.
As a result, beneficiaries do not automatically obtain personal claims for damages simply because they may inherit less in the future.
Instead, the more common remedy is restoring improperly used assets to the estate itself.
This principle often surprises family members who assume they can sue personally whenever they believe an attorney acted improperly.
Lessons for Alberta Families
Choose Attorneys Carefully
The person appointed under a Power of Attorney should be trustworthy, organized, and capable of managing financial responsibilities.
Keep Money Separate
Avoid mixing personal funds and donor funds.
Maintain Detailed Records
Every significant transaction should be documented.
Communicate With Co-Attorneys
Where multiple attorneys are appointed, transparency is essential.
Avoid Self-Interested Transactions
Any transaction that benefits the attorney personally is likely to attract scrutiny.
The Bottom Line
DeVenne v. DeVenne demonstrates the high standard that courts expect from attorneys acting under a Power of Attorney. Managing another person's finances is a position of trust that requires honesty, transparency, and careful stewardship of assets.
When attorneys use donor funds for personal purposes, fail to maintain records, or blur the line between their interests and the donor's interests, courts have broad authority to order repayment and restore assets to the estate.
How MerGen Law Can Help
At MerGen Law, we assist clients throughout Alberta with Powers of Attorney, fiduciary disputes, capacity concerns, estate administration, estate planning, and estate litigation. Whether you are concerned about the conduct of an attorney or need guidance fulfilling your own responsibilities under a Power of Attorney, we are here to help.
This article is intended for informational purposes only and does not constitute legal advice. Individuals facing concerns about elder abuse should seek professional advice tailored to their specific circumstances.