As Attorney for Property, You Can Be Taken to Court for Not Being Transparent

An attorney for property is the person named in a Power of Attorney document (POA), to manage another person’s property. The attorney is not usually a lawyer – the term attorney just means the person with legal authority.

Attorneys have a Duty to Keep Accounts

The law requires attorneys for property to keep precise and detailed accounts and records, showing all transactions relating to the person’s assets, income and expenses for all time during which the attorney acts in the role.

Attorneys Have a Duty to Provide Their Accounts for Inspection

The law also requires attorneys for property to be transparent with their accounts – not hide them. The courts have determined that, during the person’s lifetime, the attorney’s accounts are in fact the person’s accounts. For example, the law in Ontario provides that during the person’s lifetime, the attorney for property must disclose their accounts to (1) the person, and (2) to the person’s attorney for personal care, if requested.

There is good reason for this: it is not the attorney’s money or property. It is the person’s money and property. Allowing others to inspect and scrutinize the attorney’s accounts provides an important check and balance that can protect the person from an unscrupulous attorney.

If the attorney refuses or fails to provide the accounts to the person or the person’s attorney for personal care, they can be forced to submit their accounts to court for an audit.

Attorneys Can Be Court-Ordered to Submit their Accounts for a Formal Court Audit

Where the future beneficiaries of the person’s estate become concerned, rightly or wrongly, that the attorney for property is or was improperly managing the person’s property, those future beneficiaries can ask the court for an order requiring the attorney to submit their accounts to the court (and to the beneficiaries) for a formal audit.

An audit is pretty similar to being sued–during the process of an audit, as the attorney is often accused of improperly managing the assets.

When an attorney is required to submit to a formal audit, the attorney will often need to have their accounts prepared by a professional in a specified format under the Rules of Court. This can be expensive and time-consuming.

Then, the beneficiaries and the court can scrutinize every transaction in the accounts.

The risk to the attorney who doesn’t property account for every penny, is that they can be ordered to repay any amounts the court determines were not spent for the person’s benefit.

Attorneys for Property Must Often Account After the Person’s Death

Similarly, upon the person’s death, it is common for the executor or beneficiaries of their estate to obtain a court order requiring the attorney for property to submit their accounts to court for a formal audit. The court order often requires the attorney to account for every asset and every penny in and out, over a long period of time.

Imagine it: if you act as attorney for property for 15 years leading up to the person’s death, you may well have to account in court for every transaction covering those 15 years. This is because the beneficiaries are entitled to their share under the person’s estate and, they will often argue, the value of the estate could have, should have, or would have been higher if you had done things differently as attorney for property. It’s a very difficult position for an attorney to be in!

Most attorneys are not aware that they will have to be so transparent with others, even for years into the future. It is critical that attorneys for property protect themselves by keeping detailed accounts and all supporting invoices, receipts, bank statements and other documents evidencing all financial transactions.

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