Updated on April 18th, 2023
To exercise one's legal rights, a person must know what he or she is doing. A person must have the legal capacity to make those decisions. We, as lawyers, encounter this most often when clients want to create or update their wills and power-of-attorney documents. When loved ones start losing their legal capacity, they become vulnerable.
Watching a loved one suffer from dementia or alzheimer's can be very difficult. At first, they seem to forget small things. As time progresses, they become more and more confused and start forgetting things they shouldn't, like their address or their children's names. Eventually, they lose touch with reality completely. Usually, the progression occurs in spurts. Some days are better, while other days worse.
A person must be legally competent to exercise any rights and privileges under the law. We don't think of it this way, but taking money out of the bank or completing an income tax return are legal actions. In the case of the bank, withdrawing money is a contractual benefit. The account holder is exercising a right to withdrawn money they lent (or, if you prefer, deposited) in the account. Whereas filing an income tax return is a legal obligation under the income tax act of Canada. As lawyers, we must always establish whether a client has the legal capacity to provide us with instructions or execute documents. While you can be forgiven if you believe that legal capacity can only be determined by a medical professional, in law, it is a legal test. While a doctor's certificate or letter indicating that someone no longer has legal capacity is strong evidence, it is not determinative. In one case, the court rejected a doctor's opinion preferring the evidence of close friends who testified that the person in question had always been forgetful.
As someone begins to lose their capacity, they become increasingly vulnerable. Family members are the usual culprits. They feel entitled to that person's money for a variety of reasons. Either (s)he was the one who looked after the parent or (s)he feels other family members don't need the money like (s)he does. The abuse usually starts when the offending family member assists the vulnerable person with personal banking or shopping. (S)He may add extra items to the cart for him or herself. In time, the abuser will take the person to the bank and withdraw money and take it. I have seen cases where one child drained a parent's entire savings, leaving nothing in the estate for the rest of the family. The list of potential abusers doesn't end with family members. Scammers are always on the hunt for vulnerable seniors.
In some cases, the fraudster will act in person by befriending the senior. However, most often, scammers operate by phone. They are likely located somewhere in Asia and prey on seniors advising them, for example, that they won a prize and must pay "administrative" fees to have it delivered. The list and breath of scams are too long and wide to detail here, but they can be very persistent. I know of one couple in particular who lost over $80,000.00 to a phony prize scam. The scammers were so successful that despite advice from a lawyer to call the police and stop giving money, they continued to do so.
If the person losing capacity prepared a Power of Attorney (POA), then the persons named (the attorney) can act on behalf of the vulnerable person. The attorney can advise the bank of the situation. Bank personnel can be on the lookout for anything unusual. The attorney may also limit the funds the vulnerable person can withdraw or pay via Interac or credit cards. If the person losing capacity did not prepare a POA, things can become a little tricky. Privacy laws prevent institutions like banks or credit unions from sharing a client's information. While, in some cases, tellers are trained to spot unusual behaviour, they cannot prevent someone from accessing their bank account. If a vulnerable senior attends the bank to withdraw funds, even they are accompanied by the abuser, staff have very little discretion. Abusers rarely physically threaten. Rather they persuade and exploit the vulnerable, so the vulnerable person may not appear in distress. However, even without a POA, concerned family members can advise the bank or credit union manager of their concerns. While they may not be able to stop it outright, they could slow it down. Eventually, if the bank staff are satisfied the vulnerable senior lacks capacity, they can require a court order. If the person deteriorates significantly, you can refer them to a doctor. If the doctor declares the person incompetent, you can refer them to the Manitoba Public Trustee or apply to the court to be appointed Committee. These processes, however, can be lengthy and expensive should you choose to apply to court yourself.
If you believe someone is exploiting someone vulnerable, you don't have many options. Police will rarely get involved because these actions, while potentially a criminal offence, are difficult to prove. Was the person helping the senior or stealing from them? The best advice I can provide is to stay involved and closely scrutinize the vulnerable person's financial affairs. Suppose you feel that capacity is an issue and the person in question did not prepare a POA. In that case, you should start the process of applying to the court to become Committee or refer them to the Pubic Guardian and Trustee as soon as possible.
This article is presented for informational purposes only. The content does not constitute legal advice or solicitation and does not create a solicitor-client relationship (this means that I am not your lawyer until we both agree that I am). If you are seeking advice on specific matters, please contact one of our lawyers at 204.925.1900. We cannot consider any unsolicited information sent to the author as solicitor-client privileged (this means confidential).
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