A Power of Attorney and A Parent's Autonomy

As children grow up, they sometimes struggle with their parents for greater independence and the right to make their own decisions, while their parents worry about them. Sometimes, later in life, the roles are reversed. The children worry, and the parents must assert their autonomy.

This kind of issue can arise when a parent gives his or her children a power of attorney, allowing the children to handle financial transactions for the parent. The children may decide that they need to take control, fearing that the parent is not managing his or her affairs well. Not surprisingly, the parent may see things differently.

This is what happened in a Supreme Court of British Columbia decision released yesterday. The case is McMullen v. Webber, 2006 BCSC 1656.

Mr. George McMullen is 86 years old. He had granted a power of attorney to his three children in 2001. Any two of them were permitted to use it to manage his financial affairs, including dealing with his condominium.

After his wife passed away in 2002, his two daughters became concerned about his financial decisions. His handling of money changed. He depleted his investments, and went into debt. He met a 42 year old woman in Hawaii, and his daughters believed that he was giving her money. They believed that she was taking advantage of him. His daughters felt that his judgment was impaired.

In order to protect Mr. McMullen, his daughters used the power of attorney to transfer a 99% interest in his condominium into their husbands' names. (One of the daughters gave evidence that a one percent interest was left in their father's name so that it could not be mortgaged or sold without his consent, but I would guess that the fact he would still qualify for a homeowner's grant if he kept a one percent interest on title might have been a factor.)

The judge in this case, Madam Justice Fisher, found that the daughters were genuinely trying to protect their father's condominium for him. They were not acting out of any improper motives.

Mr. McMullen was seen by a number of physicians, including his family doctor, a geriatric specialist and a psychiatrist. All of them opined that he was capable of managing his affairs. One of them diagnosed him with depression.

Madam Justice Fisher held that the transfer of the condominium was a misuse of the power of attorney, and ordered it transferred back into Mr. McMullen's name. His daughters were not entitled to transfer the condominium without his knowledge or consent. They breached their fiduciary duties (or duties of loyalty) to him by transferring the title.

Mr. McMullen's right to make his own decisions trumped his daughters' concerns. Madam Justice Fisher wrote at paragraph 68,

Mr. McMullen may be making improvident decisions, according to his family, but the law entitles him to do so, provided he is capable of making financial decisions and does not harm others. There is no question that it has been, and continues to be, extremely difficult for Mr. McMullen’s family to watch him make what they see as questionable decisions, but unless and until Mr. McMullen is declared incapable of managing his financial affairs, his attorneys are not entitled to step in and make decisions for him without his knowledge and consent.

I take three points from this case.

First, it is important to keep in mind that an enduring power of attorney is meant to allow another person to assist with financial matters, but does not prevent the donor (or the maker) from making his or her own decisions.

Secondly, there are some people who may be mentally capable of managing their affairs, but vulnerable to undue influence and financial abuse. The law may provide a remedy after financial abuse has happened, but it can be difficult for concerned family members to take steps to prevent the abuse before it happens.

Thirdly, just as parents have to let their young adult children make their own decisions, children need to respect their parents' right to autonomy in later years.