Monday, November 06, 2006

S. 331 of the Criminal Code: Theft by Power of Attorney

An enduring power of attorney is an extremely useful planning tool. It allows you to appoint someone to manage your finances, and continues in effect even if you become incapacitated, and are unable to manage your own affairs.

As I have written before, the person you appoint in a power of attorney has a legal responsibility to act in your best interests. The person you appoint must not use the power of attorney to benefit himself or herself without your express authority.

Unfortunately, people occasionally abuse powers of attorney. I think some of the most reprehensible cases are those in which children take assets from their mentally incapacitated parents when not authorized to do so. They may rationalize their conduct on the basis that mom or dad would have agreed to give them the assets if capable, or that transferring assets while their mom or dad is alive will save probate fees. Whatever the rationalization, it is still wrong.

People who abuse powers of attorney need to be concerned about criminal prosecution as well as civil suits. In Canada, the Criminal Code, RSC 1985, c. C-46, has a specific offence for theft using a power of attorney. It is set out in s. 331 as follows:

Every one commits theft who, being entrusted, whether solely or jointly with another person, with a power of attorney for the sale, mortgage, pledge or other disposition of real or personal property, fraudulently sells, mortgages, pledges or otherwise disposes of the property or any part of it, or fraudulently converts the proceeds of a sale, mortgage, pledge or other disposition of the property, or any part of the proceeds, to a purpose other than that for which he was entrusted by the power of attorney.

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