Attorney Who Co-Mingled Funds Found to Have Not Fully and Satisfactorily Accounted for the Estate
An attorney is appointed pursuant to an enduring power of attorney, who then has the authority to make financial decisions for the person appointing them. No, an attorney in this case does not need to be a lawyer.
Power of attorney’s often spring into effect when the person who created them lacks capacity.
Further, a person acting as an attorney must keep records, otherwise people may assume they are stealing.
The issue of keeping proper records was at issue in Richter v. Chemerinski, 2020 ABQB 307 where the Court found the attorney for the estate had failed to fully and satisfactorily account for the estate.
The Court held the attorney “was required to account for all use of funds and having failed in that task, an inference can be drawn that he received personal benefits for transactions he cannot properly explain or document.”
In this case, the attorney had conceded he had not maintained proper documentation, and that funds from the estate were co-mingled with his personal funds. The attorney’s sisters alleged that he had engaged in inappropriate actions which included:
- Paying municipal taxes on all of the land, including his solely owned land, from the Joint Savings Account;
- Potentially using some of the ATM withdrawals from the Joint Savings Account, of $28,147, for his personal benefit;
- Potentially paying for the spraying of his solely owned lands with funds from the Joint Savings Account;
- Paying the account of the court reporter dated March 23, 2009, in the arbitration in the amount of $2,163 out of the Joint Savings Account even though he was ordered by Justice Veit on June 30, 2011, to pay it personally;
- Paying an invoice in the amount of $5,663.73 from the Joint Savings Account in October 2008 for servicing of a tractor that he sold to himself in 2003; and,
- Using Anne’s equipment on his own land without compensation in reliance on the Compensation Agreement.
As a result of these actions, the Court further denied the attorney’s application to pass accounts, held the attorney had breached his fiduciary duty, had misappropriate assets, was not entitled to compensation for acting as attorney, and was ordered to pay the estate $413,132.94.
This case serves as a recent iteration of several important points:
- An attorney must keep proper accounts;
- An attorney requires approval from the Court to receive fees; and
- An attorney may not use money for themselves.