Powers of Attorney are intended to protect vulnerable individuals when they need help managing their affairs. However, when family members disagree about how a Power of Attorney has been used, disputes can quickly escalate into litigation.
A recent court decision highlights the importance of transparency, record keeping, and understanding the legal responsibilities that come with acting as an attorney.
The case serves as an important reminder that a Power of Attorney is a tool for managing another person's affairs, not a license to use their money for personal purposes.
What Does a Power of Attorney Allow?
A Power of Attorney authorizes someone to make financial decisions on another person's behalf.
Depending on the document, an attorney may be able to:
- Manage bank accounts;
- Pay bills;
- Handle investments;
- Access government benefits;
- Arrange for care expenses;
- Buy or sell property; and
- Manage day-to-day financial affairs.
These powers can be extremely broad.
However, with that authority comes a fiduciary duty to act solely in the best interests of the person who granted the Power of Attorney.
Family Disputes Often Begin With a Lack of Communication
One of the themes that emerged from this case was the breakdown of communication among family members.
When multiple family members are named in estate planning documents, disputes can arise if:
- Important decisions are not disclosed;
- Financial information is withheld;
- Records are not shared;
- One family member assumes exclusive control; or
- Other interested parties are left out of the process.
Even when a person believes they are acting appropriately, a lack of communication can create suspicion and mistrust.
Many estate disputes begin not because money is missing, but because family members feel excluded from important decisions.
Attorneys Must Act in the Donor's Best Interests
The court emphasized a fundamental principle of Power of Attorney law:
An attorney must act in the best interests of the person who granted the Power of Attorney.
This duty generally requires an attorney to:
- Act honestly and in good faith;
- Exercise reasonable care;
- Avoid conflicts of interest;
- Protect the donor's property;
- Keep proper records; and
- Preserve assets for the donor's benefit.
These obligations continue even when the donor loses capacity.
When an attorney begins making decisions based on their own interests rather than the donor's interests, legal exposure can quickly follow.
Why Separate Accounts Matter
One of the most common mistakes attorneys make is failing to keep the donor's funds separate from their own.
Mixing funds creates a variety of problems:
- It becomes difficult to track transactions;
- Questions arise about ownership;
- Record keeping becomes more complicated; and
- Allegations of misuse become easier to make.
Even where no wrongdoing occurs, commingling funds can create unnecessary uncertainty.
Best practice is generally to maintain separate accounts and detailed records of every transaction undertaken on behalf of the donor.
Can an Attorney Make Gifts?
Many people are surprised to learn that attorneys often have limited authority to make gifts.
Unless a Power of Attorney specifically authorizes gifting, attorneys should exercise extreme caution before:
- Giving money away;
- Making transfers to family members;
- Providing financial assistance to themselves;
- Advancing inheritances; or
- Using the donor's assets for third-party transactions.
Courts frequently view gifts made by attorneys with skepticism, particularly where the attorney personally benefits.
The safest approach is to assume that personal gifts are prohibited unless the document clearly permits them and the circumstances support the transaction.
Record Keeping Is Essential
A recurring theme in estate litigation is inadequate record keeping.
Attorneys should maintain records regarding:
- Bank accounts;
- Investments;
- Income received;
- Expenses paid;
- Transfers completed;
- Property transactions; and
- Reimbursements claimed.
If questions arise later, the attorney may be required to explain exactly what happened to the donor's assets.
The burden often falls on the attorney to account for their actions.
When records are incomplete, courts may draw negative conclusions.
Beneficiaries Do Not Always Have Personal Claims
An important legal principle highlighted by the case is that an attorney's duties are generally owed to the donor, not directly to the beneficiaries of a future estate.
This distinction can be confusing.
A beneficiary may be affected by an attorney's actions because those actions impact the size of the eventual estate.
However, the proper remedy is often to restore assets to the estate rather than awarding damages directly to a beneficiary.
In many situations, the objective is not to compensate an individual beneficiary but to return improperly used funds to the estate as a whole.
Estate Litigation Often Focuses on Accountability
When disputes arise, courts frequently focus on one central question:
Can the attorney account for what happened?
Attorneys who can produce detailed records and clear explanations are generally in a much stronger position than those who rely on memory or informal arrangements.
Good documentation often determines the outcome of estate disputes.
Practical Lessons for Families
Choose Your Attorney Carefully
The person appointed under a Power of Attorney should be trustworthy, organized, and capable of handling financial responsibilities.
Discuss Expectations Early
Family disagreements can often be reduced through clear communication before problems arise.
Keep Detailed Records
Documentation helps protect both the donor and the attorney.
Avoid Personal Benefits
Transactions that benefit the attorney personally will receive heightened scrutiny.
Review Estate Planning Documents Regularly
Wills, Powers of Attorney, and Personal Directives should be reviewed periodically to ensure they continue to reflect the donor's intentions.
The Bottom Line
DeVenne v. DeVenne is a reminder that acting under a Power of Attorney is a serious responsibility. Attorneys must remain focused on the donor's best interests, maintain proper records, avoid conflicts of interest, and ensure that every financial decision can be explained and justified.
When those responsibilities are not met, courts have broad authority to require repayment of funds and restore assets to the estate.
MerGen Law is Here to Help You
At MerGen Law, we assist clients throughout Alberta with Powers of Attorney, estate administration, fiduciary disputes, capacity concerns, estate planning, and estate litigation. Whether you are acting as an attorney, questioning the conduct of an attorney, or dealing with a dispute involving a loved one's finances, we are here to help.
This article is intended for informational purposes only and does not constitute legal advice. Individuals facing concerns about estate disputes should seek professional advice tailored to their specific circumstances.