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Fraudulently using a power of attorney for personal benefit - consequences

Many of us have (and we all should have) enduring powers of attorney to assist us when we are incapable of acting for ourselves. We select a person we trust to manage our property. Usually this is a family member.

In a perfect world the person we select would act only in our best interests.

Sadly that is not always the case.

Sadly sometimes those who are given the power of attorney abuse their position. Charitable organisations such as Age Concern are working hard to advise the elderly about Elder Abuse, which includes not only physical and emotional abuse but also financial abuse.

I saw a case referred to recently on the www.stuff.co.nz website which illustrates the problem very well:

http://www.stuff.co.nz/business/money/71256493/Inheritance-lost-Son-spends-estate-money-before-nephew-can-get-his-share

In that case the elderly gentleman provided a power of attorney in favour of his son and moved into his son’s house in early 2006. He had assets of around $330,000.00 when he moved in. In September 2008 he was moved into a Rest home with about $10,000.00 in his accounts. When he died a few years later he had a little over $1,000.00

His son had spent the rest. Most was spend on himself or transferred to himself. He purchased himself a car, travelled to Australia with his wife, and took two cruises with his wife. The Judge found that the son knew that he was only entitled to inherit half of his father’s money after his death, so avoided that by transferring virtually all of it, while his father was alive, to himself and his wife. The defence – which was rejected by the Judge – was that the elderly gentleman wanted his son to enjoy the money.

The Court found that the behaviour of the son had been unconscionable and ordered some $280,000.00 repaid to the gentleman’s estate. The son was allowed to retain some $50,000.00 on account of the cost of having his father living with him.

This is a strong case for those who believe members of their family are being taken advantage of. Prior to this decision it was often difficult to recover this type of spent money. Those holding powers of attorney should be on notice that they must act in the interests of the donor. It is also hoped the decision will give confidence to those who decide to grant powers of attorney.

If you have any questions about this case, or believe you need assistance with a similar situation, please contact Graham: (09)4077099 or gad@lawnorth.co.nz

• Posted By: Graham Day on Fri, 21st Aug 2015 @ 14:20:14

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