Red flags to look for when spotting financial abuse
We previously discussed the merits of having a Lasting Power of Attorney (“LPA”) in place sooner rather than later to safeguard against future loss of capacity, whether that is from dementia or from an accident. There has been an overall increase in LPAs registered with the Office of the Public Guardian (“OPG”), but only 15% of the over 75s have an LPA in place.
It is very important that people have registered LPAs but in light of recent statistics from the Health and Social Care Information Centre (“HSCIC”), the important message to those of you deciding who should be your attorney(s) is to choose somebody that you trust.
People (“donors”) can choose professionals to be their attorneys, but most donors choose close relatives or friends for this role. This has many advantages as the close relative/friend will know the donor relatively well and will know what needs to be done in the donor’s best interests. It also keeps costs low, as a lay attorney cannot pay themselves a salary for undertaking their attorney duties.
A recent study by the HSCIC, however, shows that there were 21,935 reports of financial abuse against elderly donors and two thirds of the reports involved accusations against family and friends. In addition, accountants KPMG estimated that elderly donors had £1.7m stolen from them by their family.
Whilst the statistics are worrying, people should not be discouraged from making LPAs. The following are guidelines that you might want to consider when making your LPA:
1. Notifying people
A donor can name a third party that the OPG must notify before their LPA is registered. However, from summer 2015, donors could choose not to notify third parties before registration. This change was included to make it easier for people to make LPAs.
You can put an extra safeguard in place by naming a party to be notified. This person should be somebody who knows you well.
2. Appointing more than one attorney
It is a good idea to appoint more than one attorney so that there is a safeguard against one attorney committing financial abuse. Attorneys can be appointed (i) jointly or (ii) jointly and severally.
Jointly means that the attorneys must agree unanimously on every decision, however big or small. This can often be quite restrictive and can mean that decisions are delayed if one of the attorneys cannot be reached. Jointly and severally means that the attorneys can either make decisions together or individually. It is possible to elect specific decisions on which you want your attorneys to jointly.
It is always a good idea to appoint a replacement attorney in case one of the original attorneys is unable to act for you. Again, this should be somebody that you trust.
3. Certificate provider
When making an LPA, a certificate provider will need to confirm that the donor has capacity to make the power. This can be a relative or friend, provided that they have known the donor for at least two years. Alternatively, the certificate provider can be a professional, such as a doctor or lawyer.
It seems that the latter is the more secure way to ensure that the donor has capacity, but will not safeguard against situations where the donor is under undue influence to appoint a particular person as their attorney. If this is the situation, it is hoped that the person to be notified (above) would be alert to any such factors, especially if they know the donor very well.
4. When to make decisions
You can choose for your attorneys to make decisions on your behalf when (i) you have capacity with your consent or (ii) you lose capacity. From a practical point, it may be difficult for your attorneys to prove that you lack capacity if you choose option 2. As a result they may have to obtain a medical assessment showing that the donor lacks capacity.
There is no sure way to guarantee that your attorney will not commit financial abuse, but it is hoped that by implementing the safeguards mentioned above, and choosing somebody that you trust, will help combat against future financial abuse. The financial abuse statistics should not put you off making an LPA as this is a sure way of ensuring that you make an active choice in appointing attorneys whilst you have capacity.
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