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Helping Mom or Helping Yourself – The pitfalls for children and others helping seniors manage their affairs

It is common for aging parents to ask a child to assist them in the management of their personal and financial affairs. Often it is not a situation of mental incapacity on the part of the senior person but rather loneliness, unfamiliarity with modern business systems and physical frailty are all reasons a parent will want some assistance with every day affairs. Such affairs may include banking, asset management, investments and property management. This article speaks to the parent/child relationship. However, the situation can easily arise with a nephew or niece and an aging aunt or uncle or even among neighbours or family friends.

Unfortunately, what can start out as assistance in good faith to the parent, often results in intense family argument and recriminations after the parent has passed on. Other siblings may not see the helper in the kindest light and may be suspicious as to what has transpired over the years.

The are many possible reasons for this, but some examples below will illustrate the sources of the mistrust.

  1. The helping child fails to keep an adequate financial record, or any record, of the parent’s income and expenses.
  2. The child mixes the parent’s funds with their own.
  3. The child makes gifts on behalf of the parent, including large amounts (e.g. a new car or university tuition for their own children).
  4. The child undertakes self-help estate planning for the parent, transferring bank accounts and property into their own name jointly for various reasons (e.g. intending to save money in taxes or simplify managing accounts)
  5. The child hires or pays their own spouse or children to repair or renovate the parent’s property.
  6. The child occupies (or permits members of their own family to occupy) the parent’s property “rent free” to help the parent out or provide security.

The child will often argue that “Mom knew and approved of all these arrangements”, or “Dad told me he wanted to make the gifts”. While this could be true, without independent advice and verification, especially if there is an unevenness in the transfers, the suspicions of others will come to the fore.

After the parent’s death, any of the circumstances listed above are red flags and point to possible mismanagement of the parent’s affairs. Gifts or transfers of money from a parent, sudden changes to fixed financial arrangements, transfers of property to a child without explanation, all feed the mistrust felt for the “helping child”.

What to do?

If you manage your parent’s accounts

If you are the helping child you must conduct yourself in a transparent and trustworthy way. If your parent is competent, you should ensure all of their estate planning, gifting, property transfers etc. are handled by them with the advice of independent professionals, who will document the parent’s wishes and decisions. If you are acting under an enduring power of attorney, whether your parent is competent or not, you must keep a complete set of records as required under the regulations to the Power of Attorney Act of British Columbia. You should also read and understand your legal obligations under Section 19 of the Power of Attorney Act. This states to act honestly and in good faith, exercise the requisite care, diligence and skill and keep the prescribed records easily accessible.

If you are the sibling

If you are the non-helping sibling and think things are amiss, know that you have legal rights. As a child of the deceased you are entitled to a full accounting of the estate assets. This often leads to the question of what happened to the parent’s assets before they died? Consider if assets are missing and what the “helping child” might have done with them.

It is important to look into the circumstances surrounding such arrangements carefully and if in doubt, consult legal counsel to make inquiries on your behalf. It may be that you have the ability to challenge the transfer of property. The recourse for the beneficiaries in these circumstances is to bring a claim on behalf of the estate against the recipient individual. However, if the “helping child” is also the personal representative they may resist your demands.

Whether you are the helping child or the sibling who’s been kept out of the loop our lawyers have the expertise to advise you on your obligations and your rights.

 

Tags: Article, Estate Litigation, James Baird, Heather Craig