Being appointed as an Attorney under a Power of Attorney or as a Personal Representative under a Will is often viewed as an honour and a responsibility. What many people do not realize is that these roles also carry significant legal obligations, particularly when it comes to maintaining records and accounting for money.
A recent Alberta Court of King's Bench decision, Borden Estate (Re), 2026 ABKB 66, demonstrates the potentially serious consequences that can arise when financial records are not maintained and estate funds cannot be properly accounted for.
The Background
Fern Borden appointed her son, Bruce Borden, as attorney under a contingent Enduring Power of Attorney should she lose capacity. Following disputes regarding competing Powers of Attorney, Bruce ultimately acted as Fern's attorney and, after her death in 2019, became the Personal Representative of her estate.
Fern's Will divided her estate equally among her three children. However, questions soon arose regarding estate assets, financial transactions, and Bruce's management of funds while acting both as attorney and later as Personal Representative.
Over a period of approximately seven years, Bruce was repeatedly ordered by the Court to provide a full accounting of his dealings with estate assets. Ultimately, the Court appointed a forensic accounting expert from MNP to investigate the estate's finances.
What Is the Duty to Account?
One of the central issues in the case was the duty to account.
When acting under a Power of Attorney or administering an estate, a person is typically acting in a fiduciary capacity. This means they must act honestly, diligently, and in the best interests of the person or estate they represent.
The duty to account generally includes:
- Maintaining accurate financial records;
- Keeping receipts and supporting documentation;
- Tracking money received and spent;
- Preserving bank statements and investment records;
- Providing information to beneficiaries when required; and
- Being able to explain how funds were managed.
The Court emphasized that both attorneys and Personal Representatives have similar obligations when managing another person's money.
Why Record Keeping Matters
A common misconception is that if a person believes they acted honestly, detailed records are unnecessary.
The Court rejected that idea.
The ability to demonstrate what happened to funds can be just as important as the transactions themselves. Where records are missing, incomplete, or inconsistent, courts may draw adverse conclusions against the person responsible for maintaining those records.
In Borden Estate, the forensic accountant encountered significant gaps in documentation, missing bank records, incomplete accounting information, and unexplained transactions. These deficiencies ultimately played a major role in the Court's findings.
Commingling Funds Can Create Significant Problems
The decision also examined the issue of commingling.
Commingling occurs when estate funds or trust funds are mixed together with personal funds.
The Court acknowledged that commingling is not automatically a breach of trust in every circumstance. However, where commingling occurs alongside poor record keeping and inadequate accounting, it can create significant difficulties in tracing assets and determining ownership.
In this case, estate-related funds moved through numerous personal and investment accounts. Because the transactions could not be properly explained and documented, the Court ultimately concluded that various amounts had to be repaid to the estate.
The Financial Consequences
The consequences were substantial.
Following the forensic review, the Court required Bruce to repay significant amounts to the estate relating to unsupported withdrawals, transfers, investments, and other transactions for which adequate documentation was not provided.
Among other findings, the Court:
- Required repayment of more than $346,000 to the estate;
- Ordered reimbursement of forensic accounting expenses;
- Denied any further compensation for estate administration; and
- Ordered equalization payments to other beneficiaries.
The Court also required smaller repayments from other family members where withdrawals or funds could not be properly accounted for.
Courts May Resolve Uncertainty Against the Fiduciary
One of the most important lessons from the decision is that uncertainty created by poor record keeping may ultimately be resolved against the fiduciary responsible for maintaining the records.
The Court noted that when an attorney or Personal Representative fails to keep proper accounts, preserve documentation, or explain transactions, the resulting uncertainty should not be borne by the beneficiaries.
Instead, the fiduciary may be required to restore funds to the estate if they cannot adequately demonstrate how those funds were used.
Practical Lessons for Attorneys and Personal Representatives
The decision offers several practical lessons for anyone acting under a Power of Attorney or administering an estate:
Keep Estate Funds Separate
Whenever possible, maintain estate funds in clearly identifiable estate accounts rather than mixing them with personal funds.
Preserve Documentation
Retain:
- Bank statements;
- Receipts;
- Invoices;
- Investment records;
- Tax information; and
- Supporting correspondence.
Communicate with Beneficiaries
Providing regular information and updates can often reduce misunderstandings and disputes.
Seek Professional Advice Early
Where administration becomes complex, obtaining legal or accounting assistance early may help avoid larger problems later.
The Bottom Line
Borden Estate (Re) serves as a powerful reminder that acting as an Attorney or Personal Representative involves more than simply managing assets. It requires accountability, transparency, and careful record keeping.
When records are missing and transactions cannot be explained, courts have broad powers to require repayment, deny compensation, order forensic investigations, and impose other remedies designed to protect beneficiaries and the integrity of the estate.
Mergen Law is Here to Help You
At MerGen Law, we assist clients throughout Alberta with estate administration, executor obligations, Powers of Attorney, beneficiary disputes, passing of accounts applications, and estate litigation. Proper guidance at the outset can help fiduciaries avoid costly disputes and ensure that estates are administered in accordance with the law.
This article is intended for informational purposes only and does not constitute legal advice. Individuals facing concerns about estate accounting matters should seek professional advice tailored to their specific circumstances.