POA for inheritance

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Wing
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POA for inheritance

Post by Wing » 02 Sep 2017 13:08

One of my close relatives asked me to be the POA of his bank account, saying he wants to avoid the probate fees (and to avoid the wait time) upon death.. told me if he dies, he wants me to withdraw all this money from the account and split equally among his children (no spouse).

I don't mind doing a favor but concerned if I'll be put to jail to withdraw the account owner's money like that. Will the bank even let me?

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AltaRed
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Re: POA for inheritance

Post by AltaRed » 02 Sep 2017 14:26

Your relative needs to get legal advice. A POA ceases to exist at the moment of death. You would be breaking the law trying to access his bank account after the moment of death. It is only the executor who can administer the estate and disburse the proceeds according to a valid Will.

Added: What he needs is a valid Will that names his children as equal beneficiaries.

If he wants to avoid probate, he needs to name his children as joint owners of a joint (JTWROS) bank account....where the proceeds of the account automatically revert to the survivors of the account. That said, adding joint owners to the account gives them unfettered access to the account an any time as well. Think twice about being penny wise and pound foolish.
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twa2w
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Re: POA for inheritance

Post by twa2w » 02 Sep 2017 14:38

Your friend may make you a POA on his bank account either by a formal POA drawn up through a lawyer, or through a bank POA that applies only to the bank account.

In the event your friend becomes incapacitated before death, the bank POA would cease. (assuming they were made aware).The lawyer POA may survive incapacity depending on how it is drawn up.

Either way, a POA ceases on death and you would be committing fraud if you knowingly withdrew money from the account after his death, before the bank was informed of his death. ( once the bank was informed of his death the bank would freeze the account).However unless one of the children or the friends executor complained to the bank and the police nothing would happen.

Your friend could simply add you as a joint owner on the account and trust that you would not take any money and would follow his wishes on his death to split the money among his children. It would be best if he provided a letter to you and his children outlining why he was adding you to the account and that he wished the money divided among his children when he passes.
Or he could add all his children to the account providing trust is there.

Your friend should see a lawyer for proper legal advice and a will, poa and poa for personal care.

I assume he and you do not live in Quebec - rules are somewhat different there.

I see AR pisted while I was typing my response. Good advise as usual.
Last edited by twa2w on 02 Sep 2017 14:40, edited 1 time in total.

BRIAN5000
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Re: POA for inheritance

Post by BRIAN5000 » 02 Sep 2017 14:39

That said, adding joint owners to the account gives them unfettered access to the account an any time as well. Think twice about being penny wise and pound foolish.
Them and their creditors & exes or future ex.
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Wing
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Re: POA for inheritance

Post by Wing » 02 Sep 2017 23:26

twa2w wrote:
02 Sep 2017 14:38

Either way, a POA ceases on death and you would be committing fraud if you knowingly withdrew money from the account after his death, before the bank was informed of his death. ( once the bank was informed of his death the bank would freeze the account).However unless one of the children or the friends executor complained to the bank and the police nothing would happen.
What's the worst scenario for me in committing a "fraud"? My relative assures me no one will complain to the bank and/or the police. He doesn't want to name me a joint owner of the account. The money he has in that bank account right now is what his children don't know about. Don't ask me why he thinks this way, as much as I want to help, I need to see if I can accept the worst possible outcome before I promise to help. He's not taking any advice in setting up a will. My choice is to say yes and keep the close relationship or say no to break it. As you can tell, I don't want to break it but the possibility of being put to jail does cross my bottom line.

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Re: POA for inheritance

Post by nile » 03 Sep 2017 08:12

a true friend shouldnt put you in this position
your unease with the decision should tell you all you need to know
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OnlyMyOpinion
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Re: POA for inheritance

Post by OnlyMyOpinion » 03 Sep 2017 09:07

Tell them the reality is that you won't be allowed to. Tell them there are limits to the amount of money you can withdraw from a bank machine and that going to the bank counter to empty the account will certainly raise a flag with bank staff. Tell them the estate executor (or the courts if they have not designated one) will inventory all of their assets and will discover your unauthorized removal of funds and that you will be caught and charged.
Probate is minor and not worth your doing this.

You don't mention if this is a small or a large amount of money. You don't mention if they have other assets or if they have a will and executor. Are they providing you with some document with written instructions to try to indemnify you?
You need to convince them to do this properly - what about them distributing most of the money now?
I would say your worse case scenario is to lie to them - tell them you will do it, after they pass let the account be distributed under the estate. I'd do this before I would empty someone's account without proper authority.

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AltaRed
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Re: POA for inheritance

Post by AltaRed » 03 Sep 2017 10:38

OnlyMyOpinion wrote:
03 Sep 2017 09:07
I'd do this before I would empty someone's account without proper authority.
Indeed. I would not touch this with a 10 foot (3.3 metre) pole. People do the dumbest of things in their attempt to avoid (relatively) minor probate fees. As you suggest, we know nothing about the circumstances and it smells like there is more to this than what has been disclosed.
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Wing
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Re: POA for inheritance

Post by Wing » 03 Sep 2017 10:56

AltaRed wrote:
03 Sep 2017 10:38
OnlyMyOpinion wrote:
03 Sep 2017 09:07
I'd do this before I would empty someone's account without proper authority.
Indeed. I would not touch this with a 10 foot (3.3 metre) pole. People do the dumbest of things in their attempt to avoid (relatively) minor probate fees. As you suggest, we know nothing about the circumstances and it smells like there is more to this than what has been disclosed.
Of course, there are more to this but only I am not told so don't have more to give here. All I can say is when some people get old, they can get so stubborn on what they think is the best way and won't listen to other options. Insecurity, or past bad experience, makes people do unwise things. I just hope I'm not like that when I am in my 70s.

I guess it's pretty clear, if I'll be charged by the law, I definitely won't take the risk. Now, I can only 1. I reject the request and risk the possibility of ruining the relationship. 2. I accept the request and not do it after the person's death, or hope between the time now and my relative's death will there be a chance he will change his mind to setup a will/distribute the money prior to death.

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Re: POA for inheritance

Post by AltaRed » 03 Sep 2017 12:21

Firstly, I would tell the relative that anyone doing what is requested is illegal...plain and simple, and that it is a patently unfair request to burden anyone with. If the sum is more than remotely modest and is not the only estate asset, it will get attention*. Explain that probate fees are relatively inconsequential. If it is still a No, then simply say you cannot risk breaking the law. The relationship is meaningless if the relative intends to be so inconsiderate to begin with. There is a saying.... Dump those that bring you down.

I would never to the latter one. I would, as already was suggested, let it go to probate anyway. If there is no Will and no executor (intestate), then the courts will appoint someone to close the estate. What dead people do not know doesn't hurt them.... and they don't respond anyway.

* What if you did that and the relative was already, or would be, offside with CRA? CRA will come looking for what is due to them, never mind other creditors. They will look to YOU who mishandled estate assets. Gawd.....just thinking about all this gives me the shakes. You are bonkers if you think about this for more than two minutes.
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Re: POA for inheritance

Post by Peculiar_Investor » 03 Sep 2017 12:52

AltaRed wrote:
03 Sep 2017 12:21
Firstly, I would tell the relative that anyone doing what is requested is illegal...plain and simple, and that it is a patently unfair request to burden anyone with.
Well stated and exactly the right advice. :thumbsup: :thumbsup:
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Re: POA for inheritance

Post by OhGreatGuru » 03 Sep 2017 14:20

As everyone else has said, this is illegal. You could be sued by the bank and by everyone of the relatives (or exes, or creditors, or CRA) who thinks they might be entitled to part of the estate. And that's before you even get to the criminal aspect of it. Your "friend" needs a will, and he needs to appoint an executor. Given that fact that he is unwilling to listen to your concerns, I would advise not even offering to be executor. (His secretiveness also suggests he will be leaving his estate in a great mess for any executor.).

You might help him look for ways to pass on assets outside of the estate, to reduce or eliminate probate. But if he is unwilling to involve his children in this finances, that could be difficult to do without setting up testamentary trusts.
Last edited by OhGreatGuru on 04 Sep 2017 12:09, edited 2 times in total.

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Re: POA for inheritance

Post by twa2w » 04 Sep 2017 05:09

Wing, we don't really know enough about your relatives situation, nor why he wants to do thngs this way, nor why he wants to involve you at this time.
As other posters have elaborated, there are lots that can go wrong, even if there are no problems with CRA etc. I can think of a few ways that haven't been mentioned already.
However, unlike other posters I believe the possibility of you being charged and convicted of fraud in this situation is almost non existent. I could go into the legal details but very basically, you would have no personal gain, and there is no intent on your part to defraud a specific party or parties. You are unaware of your relatives situation and are only aware of his request to get his money to his children. You are simply trying to help an elderly relative by acting on his instructions. Having said that, you could very likely end up in a law suit and possibly having to make restitution to the estate. But I suggest even this is somewhat unlikely as most likely recourse would be the children as holders in due course. But you would have to defend yourself and this is stressfull and costly.
While the advice of all the posters still stands to have your relative follow the process of preparing will etc here are some ways I would suggest will get you off the hook while still acheiving your relatives intentions. Note I am not recommending them and there are ways these could go awry as well..
1) have your relative set up a separate chequing account with the money he wants to leave his children (with a few dollars extra cushion for service charges). Have him write a cheque dated today for each child for their share. He gives you the cheques with instructions to hand them out to the kids on his death bed. Cheques are good for 6 months so he will have to replace the cheques every 5 months or so if he is still alive. Any estate creditors would then have to commence an action against the children to recoup the money if there was a problem. You could not be culpable in anyway in this situation as you merely delivered cheques for your relative.
Issue would be if your relative becomes incapacitated and is unable to reissue cheques and the ones you are holding become stale dated before he passes.
2) Your relative could open an informal account in trust for the children, with you and he as signing officers with either to sign. He provides you with a letter stating the money is in trust for his children and you become trustee on his death and are to distribute it at that time. Again, an action could be commenced against him(his estate) by a creditor for fraudulent conveyance and the money possibly recovered from the beneficiariea. Although you might be named in the suit it is unlikely to have any merit as you have no knowledge of his creditors or his intentions. To prevent even this possibility you could also wait some time after death before distributing funds in order to ensure everything is taken care of.
3) Your relative could do this on a more formal basis with a proper trust deed drawn by a lawyer.still possible for creditors to take action but no comeback to you.

Again I would urge your relative to do things properly. If he is in Ontario, a hologragh will is still legal so he could handwrite a will if he has a real distaste for lawyers.

I would also urge you to see a lawyer if this goes much further.

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Re: POA for inheritance

Post by AltaRed » 04 Sep 2017 08:55

twa2w wrote:
04 Sep 2017 05:09
However, unlike other posters I believe the possibility of you being charged and convicted of fraud in this situation is almost non existent. I could go into the legal details but very basically, you would have no personal gain, and there is no intent on your part to defraud a specific party or parties.
I agree that criminal charges are unlikely given the circumstances as provided AND if there is some documentation such as the relative putting in writing what the relative wants done, but potential civil charges and financial exposure are vey real. If there is real money involved, there are the probate fees that should have paid to the government. They will want their share if it is 'material'. Who pays them if the money has been whisked off to the beneficiaries?

The financial exposure is the one I'd worry about most. The relative is being awful secretive. Does that relative have a number of creditors banging at the door? Is CRA one of them? The OP is in a difficult spot if the OP has no legal standing to the relative's assets but has distributed them anyway.

Something 'smells' in Denmark on this one. No relationship is that important..and as I said earlier, it isn't much of a relationship if the relative is making that kind of request in the first place.
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Re: POA for inheritance

Post by OhGreatGuru » 04 Sep 2017 12:24

twa2w wrote:
04 Sep 2017 05:09
...
However, unlike other posters I believe the possibility of you being charged and convicted of fraud in this situation is almost non existent. I could go into the legal details but very basically, you would have no personal gain, and there is no intent on your part to defraud a specific party or parties. You are unaware of your relatives situation and are only aware of his request to get his money to his children. You are simply trying to help an elderly relative by acting on his instructions. Having said that, you could very likely end up in a law suit and possibly having to make restitution to the estate.
I would disagree, though it depend on how much money is involved. But the financial exposure is huge.

A POA expires on the death of the person who signed it. Using it to clear out the deceased's accounts after death is a fraudulent act, no matter who you give the money to.

A person's estate is supposed to pass to the control of an executor; or to another representative appointed by the courts. Executors have duties and responsibilities defined by law. One of those duties is to settle all the "just debts" of the deceased before distributing any assets to beneficiaries. To do otherwise is breach of trust. Anyone who is owed money can and will go after the OP for it.

It is not clear if there is a will in this case. In the absence of a will the distribution of an estate is determined by provincial law, not by the unwitnessed verbal statements of the deceased.

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Re: POA for inheritance

Post by twa2w » 04 Sep 2017 13:39

If the relative has no will in Ontario, the estate will fall under the rules of succession which would give the money equally to his surviving children as there is no spouse. So assuming no huge debts or taxes maybe not a big deal. Still proper procedure should be to apply for letters of administration before distributing assets.
If there is a will leaving funds to other people then there may be an issue. But note that in my original reply I said to get his wishes in writing. If this is dated and signed and in the relatves hand writing, it could consitute a will pertaining to these assets and perhaps more depending on how worded. Lesser testaments have been successfulky probated. Further muddying the waters :D


Wing, why does your relative want to do this- avoiding probate, distrust of lawyers, suspicious of government, or trying to avoid paying some debts or taxes??
How are funeral expenses going to get paid? Does he have other assets, real estate to be disposed of? How much money is involved? In this account and altogether?
Why is he doing this now? Is he elderly, undergoing risky surgery, diagnosed with something?
Why you? Does he trust you, or does he think you are gullible enough to do this and don't know the risks? Does he not trust his kids?
These are all things you should have some idea about. I did give you you several suggestions that will work to protect you if your relative insists on following this path. I still suggest your relative follow the proper procedure.
Otherwise you should consult a real lawyer or stay clear.

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