Senior with early signs of dementia gets into more than $68,000 of debt

June 23, 2020

Key Lesson:

Banks will not restrict a person’s access to their own money and credit until they have the required legal documentation to transfer control to someone else. It is important for everyone, but especially seniors, to plan ahead for how their finances will be taken care of if they need help.

If a parent, relative or friend is no longer able to manage their finances and have trusted you to help:

Set up a meeting with their bank to discuss your concerns and get a list of any documents that they require to transfer financial control to you.
If you are named as their Attorney for Property, be prepared to present a signed copy of their Power of Attorney (POA) to their bank.
If the POA stipulates that it can only be used when the person is incapable of managing their own finances, be sure that you have a report or other medical proof from a doctor that says this.
If the person does not have a POA, and they are now not capable of making one, you need to see a lawyer for help.

Death of spouse leaves senior with access to couple’s personal and business accounts

Mr. and Mrs. N were seniors who had operated a local business for many years. During that time, Mrs. N handled the couple’s personal and business finances because she spoke English fluently and had banking experience. In May 2015, Mrs. N suddenly passed away, leaving Mr. N with full control over their personal and business accounts. Mr. N spoke very little English and his understanding of how to manage money was limited. Without Mrs. N to help, Mr. N closed their business in July 2016.

Shortly afterwards, Mr. N’s son, Mr. NJ, and his daughter, Ms. O, noticed that some of Mr. N’s spending was unusual. They spoke to Mr. N’s bank, Bank XYZ, about their concerns. The bank explained that, because of privacy rules, it could not speak to them about Mr. N’s accounts.

Mr. N asked Bank XYZ to add Mr. NJ and Ms. O to his accounts. They were added as joint account holders to Mr. N’s personal account and were added as signing officers on the remaining business account. Mr. N remained a joint account holder and signing officer of the business account, so he could still withdraw money from both accounts, and his unusual spending continued.

Frequent spending triggers family concerns

Mr. NJ and Ms. O grew more and more concerned about Mr. N. He was depleting his bank accounts, borrowing against his line of credit, and missing bill and mortgage payments. In August 2017, Mr. NJ and Ms. O consulted Mr. N’s doctor, Dr. D, for an explanation of Mr. N’s unusual behaviour. Dr. D advised Mr. NJ and Ms. O that Mr. N may be showing early signs of dementia.

Dr. D wrote a note about Mr. N’s condition and gave it to Mr. NJ and Ms. O. They provided it to Bank XYZ and asked the bank to monitor Mr. N’s spending. The bank explained that the note was not enough for them to act on Mr. NJ and Ms. O’s request. Mr. N’s unusual spending continued.

In November 2017, a dementia specialist examined Mr. N. After Mr. N’s assessment, the specialist gave Mr. NJ and Ms. O a formal medical letter explaining that Mr. N had dementia. Mr. NJ and Ms. O gave the letter to Bank XYZ to support their concerns that Mr. N could no longer manage his own money.

Mr. NJ and Ms. O also gave Bank XYZ a copy of Mr. N’s Power of Attorney (POA) appointing Mr. NJ and Ms. O to act in his place if he was no longer capable of managing his own money. Mr. N had signed the POA years before, but this was the first time they had brought it to the bank. The POA included restrictions so that it could only be used if certain medical conditions were met. The bank did not let Mr. NJ and Ms. O act for their father using the POA, because the bank was not satisfied that the specialist’s letter included the medical details required by the POA.

Mr. NJ and Ms. O were unable to provide a medical letter that satisfied Bank XYZ until April 2018. By that time, Mr. N’s debt added up to more than $68,000.

Frustrated by their experiences with Bank XYZ, Mr. NJ and Ms. O brought their complaint to OBSI.

Our findings

During our investigation, we concluded that Bank XYZ could reasonably have limited Mr. N’s access to his accounts when they were presented with the POA and medical letter in late November 2017. We found that:

Mr. N’s account agreements say that Bank XYZ will accept instructions from someone who has been appointed as Mr. N’s legal representative if the representative can demonstrate their legal authority to the bank’s satisfaction.

Until Bank XYZ received the documentation required to transfer control of Mr. N’s accounts, it was appropriate that Mr. N could freely access his own money.

Prior to November 2017, Mr. NJ and Ms. O had not satisfied Bank XYZ’s requirements to limit Mr. N’s access to his own accounts.

In late November 2017, when Mr. NJ and Ms. O presented Bank XYZ with a Power of Attorney and a formal medical letter, the bank had enough evidence to limit Mr. N’s ability to access his accounts and take on debts.

The outcome

Bank XYZ agreed with our conclusion and offered to do the following:

Consolidate Mr. N’s debts and the mortgage on his home to reduce interest costs for all his debts, including any he had before late November 2017;

Pay for the costs of this remortgaging, such as appraisal fees, legal fees and pre-payment costs; and
Pay $7,500 toward Mr. N’s debt to compensate Mr. N for the interest on charges and withdrawals that took place between December 2017 and February 2018.

We agreed that Bank XYZ’s offer was reasonable.

Although Mr. N’s children wanted the bank to pay his debts in full, it is not reasonable to expect the bank to monitor their customer accounts for purchases that may seem unusual to the account holder’s family and friends. While Mr. N spent money after his dementia diagnosis was known to the bank in November 2017, he benefitted from those purchases, which included professional services.

Mr. NJ and Ms. O accepted Bank XYZ’s offer on Mr. N’s behalf, and their dispute with the bank was resolved.