Are you an attorney or someone considering appointing one under a Power of Attorney (POA)? It is crucial to understand the legal responsibilities and risks associated with this role, especially when it comes to protecting financial assets. A POA is a legal tool that grants one person, the “attorney,” the authority to manage financial and legal matters on behalf of another person, the “donor.” Understanding the responsibilities of an attorney under a POA is critical, as these duties carry serious legal implications.

In British Columbia, an attorney appointed under a POA is bound by significant fiduciary duties designed to protect the donor from financial mismanagement, abuse, and conflicts of interest. The recent case of Holmes v. Modry, 2025 BCSC 430 (Holmes), in the BC Supreme Court serves as a stark reminder of the severe legal consequences that can arise when these responsibilities are breached, especially in cases where large sums of money are involved.

The case

In Holmes, the British Columbia Supreme Court found that the defendant had grossly breached his fiduciary duties while acting as an attorney under a POA for his late uncle and aunt. The case was brought forward by the administrator of his aunt’s estate, who alleged that the defendant had misappropriated over $1.2 million from his aunt and uncle’s joint bank accounts for his personal use. The Court determined that the defendant’s conduct was in direct violation of his obligations as an attorney under the POA, as he withdrew large sums of money without adequate documentation, failed to maintain proper financial records, and used the misappropriated funds to finance his personal real estate development project and speculative cryptocurrency investments.

A crucial issue in the case was the defendant’s improper co-mingling of funds. Attorneys acting under a POA must keep the donor’s financial assets separate from their own to ensure transparency and accountability. Mixing personal and donor funds not only creates confusion but also increases the risk of financial abuse. The defendant ignored this requirement by blending his personal finances with those of his uncle and aunt, making it difficult to determine which funds rightfully belonged to the estate. The Court found that this lack of transparency and improper handling of funds indicated an intentional breach of fiduciary duty. As a result, the defendant was ordered to:

  • Repay $1,283,441.31 to his aunt’s estate;
  • Return any remaining cryptocurrency purchased with estate funds; and
  • Pay interest on the misappropriated amount.

A key factor in the case was the defendant’s failure to obtain informed consent before making financial transactions. Even though he was granted POA, this authority did not give him unlimited control over the funds. The Court found no evidence that his aunt and uncle had explicitly authorized the defendant to use their money for personal investments, particularly in speculative ventures like real estate and cryptocurrency. This reinforces an important legal principle: having POA does not mean an attorney can make unilateral financial decisions that serve their own interests, especially when those decisions involve high-risk investments that could jeopardize the donor’s financial security.

This case highlights the dangers of financial abuse under a POA and serves as a cautionary example for both attorneys and donors. Attorneys must understand that they do not have unchecked power over the donor’s finances. Every decision must be legally justifiable, well-documented, and aligned with the donor’s best interests. Even if an attorney believes they are acting in good faith, failing to adhere to the law can result in severe consequences, including court-ordered repayment of misused funds, civil liability, and in some cases, criminal charges.

Four steps to mitigate risks of financial abuse

For individuals considering appointing an attorney under a POA, there are several important steps that can help mitigate the risk of financial abuse:

  • Choose a trustworthy attorney – The person appointed should be financially responsible and knowledgeable about their legal duties.
  • Set clear limitations – The donor can specify restrictions on the attorney’s authority, such as requiring dual authorization for large transactions or prohibiting certain types of investments.
  • Implement oversight mechanisms – Requiring the attorney to provide periodic financial reports to a third party can enhance accountability.
  • Seek legal assistance – If financial mismanagement is suspected, legal action can be taken to hold the attorney accountable and recover lost assets.

The Holmes decision serves as a powerful reminder that attorneys under a POA are not just managing finances; they are acting as fiduciaries with a legally enforceable duty to protect the donor’s best interests. Anyone acting under a POA should treat the donor’s finances with the utmost care, prudence, and diligence, ensuring that every transaction is lawful, ethical, and thoroughly documented. By following these principles, attorneys can fulfill their fiduciary obligations responsibly while protecting the financial well-being of the individuals who have entrusted them with such authority.

If you are concerned about the risks associated with a POA or need guidance on appointing an attorney, our Estates and Trusts Litigation Group is here to help. Contact us today to discuss your options.