Elder Financial Abuse
Elder abuse takes many forms. While physical abuse occurs regularly, the criminal code addressees that issue (imperfectly, but addresses nonetheless). Financial abuse, however, is much harder to address. In the case of physical abuse, physical injuries would (in most cases) spark an investigation. The police get involved, and the prosecution office handles the court case. The state incurs the cost, and prosecutes when appropriate.
Conversely, police are reluctant to get involved in family disputes where an elderly individual’s assets are in question. They see this as a civil matter. Therefore another party – usually another family member or close friend – must take the offending family members (or acquaintances) to court. They must hire a lawyer and file an application in court at considerable expense.
Financial abuse is also significantly more difficult to detect. Individuals who suspect bad behaviour are not equipped to investigate in the same manner as the police. So often, this type of abuse either goes undetected or, if suspicions arise, are never fully investigated.
This type of abuse can manifest itself in many different ways. I remember a situation where an elderly individual, who was still competent, but easily influenced, regularly gave money for a period of several months to someone he just met. That person asking for money told the elderly individual that he had come on hard times and needed money. He relied on the elderly person’s generosity. We never found out how much money he handed over, but I suspect it was in the thousands.
The abuse also manifests itself when someone close to the elderly person – either a child, family member, or close acquaintance – exerts influence on the individual to change his or her will and power of attorney. The power of attorney allows the person appointed – the attorney – to manage the person making the document – the donor’s – legal affairs. The attorney therefore can access all of the donor’s assets and dispose of them – meaning they can take money out of bank accounts and sell persons assets.
While the attorney can only do so for the benefit of the donor, unless someone is checking the attorney’s actions and verifying the transactions, the attorney acts without supervision. We must simply trust the attorney. While the attorney remains liable for his or her actions, someone else must force the attorney to defend his or her actions and decisions.
People can also exercise influence (in law this is called, undo influence) by manipulating vulnerable individuals into changing their wills. In these cases the manipulator becomes the sole or main beneficiary. This complicates matters even more because the deceased is no longer available to provide evidence as to his or her intentions. Courts must attempt to determine what the decease wanted from other evidence.
In the case of Sheen et al v Sheen this scenario played out. After reviewing the evidence Judge Glowacki determined that the deceased lacked capacity when making her last will and declared that will invalid. Presumably because the lawyers only presented evidence on the validity of the most recent will. The judge did not rule the validity of any previous document. I suspect that the case settled following this trial.
In this case, the deceased had prepared her last will about 8 weeks prior to her death. According to the will in question, she left all of her assets to her son, and if her son predeceased her, to his wife. In previous wills, she had left her assets to her husband and if he predeceased her, to the son and her grandchildren and great-grandchildren.
The parties also introduced evidence that a more recent will had also been created. This will was dated about a year prior to her death. However no one was able to locate it.
The applicants (the parties bringing the son to court) argued several points including that the deceased lacked capacity , that the son exercised undo influence, and the son’s actions amounted to fraud. In the end, the judge decided the case on the issue of testamentary capacity.
I’ve written about the issue of legal capacity here. But to recap, in order to make a will a person must be legally competent. In 1965, the Supreme Court established the test we still use today. First the testator must appreciate and understand the nature and effect of the act of making a will, the extent of the property of which they are dispensing, and the mortal claims on their estate to which they ought to give effect. I often translate this to my clients as follows;
First, the testator must understand what they are asking the lawyer to do and the effect of the will. Second, the testator must understand what he or she owns; he or she must be able to tell the lawyer the assets they own and where they are located. Finally, the testator must be able to identify the beneficiaries and understand their relationship to him or her.
Facts of this case
The deceased was 79 years old and had been living at home when she suffered from a brain hemorrhage. In the hospital they operated to relieve pressure on the brain. While in hospital, shortly after the operation, she executed a new power of attorney and will. A lawyer attended the hospital and took instructions to prepare the will. As the deceased was weak and could barely talk, the lawyer also relied on the son’s instructions.
Following the evidence, the judge concluded that several factors gave rise to concerns about the deceased’s capacity. In addition, while ultimately he did not decide on the issue of undo influence, he cited factors that raised concerns about the son’s actions. He cited the following concerns:
- Firstly, the persons who benefited from the will gave instructions for preparation of the power of attorney and will and were present when they were executed.
- Secondly, there was an absence of normal documentation used to convert her bank account to a joint account.
- Thirdly, there was an inappropriate instruction given to hospital staff.
- Fourthly, there was an unexplained disappearance from the bedroom in her home of the December 12th, 1997 will.
- Fifthly, the preparations of a new power of attorney and will when Anna-Marie already had them.
The defendant produced 9 witnesses to provide evidence that the deceased had been competent when she executed the documents. However, the judge rejected all of their evidence because it was not specific enough to satisfy the test outlined above. The judge rejected most of the son’s evidence, specifically citing his testimony stating that he knew nothing of the joint bank account, when shortly after the deceased’s death, he transferred all the funds to his own account.
The judge spent some time reviewing the circumstances around the act of making the deceased’s bank account a joint account with her son and his wife. The account card showed the deceased’s as an “X”. While the person who witnessed the card testified it was her signature, she could not recall signing.
Clearly the judge expressed concerns regarding the circumstances surrounding the preparation of the most recent will. As is often the case, this judge decided without rendering a decision on all of the legal arguments put forward. Declaring the will invalid proved to be more expeditious and less appealable than ruling that fraud or undo influence had occurred. The latter two legal principles are more difficult to prove and therefor more open to reversal on appeal.
While in the ned, the son’s actions were undone, the grandchildren had to hire a lawyer and make the application in court. We don’t know the value of the estate, but a significant amount of the funds would have gone to pay for some or all of the legal costs. The judge did not make a decision on who should pay for what, but, in estate matters the party winning the case will often have their legal costs covered by the estate.
Hard costs aside, these cases take an emotional toll on everyone involved. Despite winning, parties often feel empty and remain angry for years. Family relations are often destroyed beyond repair. One person’s greed can destroy families affecting several generations.
Philippe Richer is President of TLR Law Group. TLR has been located in the St. Boniface neighbourhood, in Winnipeg, since 1996. The office serves the middle class and small business within the province. With a focus on estates, wills, real estate, and corporate law, he leads his team in providing accessible legal services. Philippe also authored the business law course for the Knowledge Bureau and instructed the français juridique class at the faculty of Law at the University of Manitoba.