Will my children steal my money when I'm old?

9 July 2018

Financial abuse of the elderly is a shame on our nation.

That the abuser is often the elderly person’s own offspring, acting under a Lasting Power of Attorney (LPA), is disturbing. And let’s not mince words; we’re talking about children stealing their parents’ money.

The number of Power of Attorney complaints investigated by the Office of the Public Guardian in 2017/18 was 44% up on the previous year. One can only speculate at the numbers of unreported cases of attorney abuse.

With more and more people living long enough to lose mental capacity, and with the over 65s having a share of the nation’s wealth, the need to provide a mechanism whereby persons could be appointed to manage a person’s wealth when capacity were lost led to the introduction of the Enduring Power of Attorney (EPA) in 1985.

Prior to 1985, control of the assets of a person who had lost mental capacity could only be gained by application to the Court to be appointed as a “Receiver” (now known as a “Deputy”).

The ability to create an EPA both gave individuals a choice as to who would take over their affairs, and spared the Courts the avalanche of applications expected as our wealthiest age group became increasingly old and frail.

The EPA was popular. A short and simple document, effective immediately, and surviving loss of mental capacity. There was a legal requirement to register the EPA with the Court of Protection once mental capacity was actually lost but it’s known that a sizeable number weren’t registered; the attorneys merely continued with unrestrained application of the elderly person’s funds.

Prior to the replacement of the EPA with the LPA in 2007, the then Master of the Court of Protection, Denzil Lush, estimated that around a third of attorneys under an EPA were abusing their power. Gary Fitzgerald, the CEO of the charity Action on Elder Abuse, lamented that, with an EPA, it was easier to get complete control of an old person’s finances than to apply for a passport.

The discussions that led to the replacement of the EPA by the LPA in 2007 properly centred on safeguarding against abuse.

 A valid LPA needs to be registered with the Court from the get-go and a Certificate Provider needs to countersign the form to confirm the person creating the LPA has mental capacity to do so, intends to do so, and is entirely comfortable with, and trusting of, the persons appointed (in most cases, adult children).

And there’s the rub; no safeguard can guarantee that your chosen attorneys will prove trustworthy and will dutifully use their powers solely in your best interests. 

Denzil Lush, interviewed on Radio 4, intimated that he’d never, personally,  sign an LPA ; he took comfort in the need for a Deputy to be formally appointed should he lose capacity, with his/her actions continually monitored by the Court. LPA’s, he said, are both prone to abuse and potentially damaging to family relationships.

So what prompts children to take their parents’ money?

I’m no psychologist and can’t make any scientific analysis of dishonesty and its causes. But my own experience suggests five common reasons why parental money is appropriated by adult children.

The first three might be expected:

  • Desperation; personal financial need – “borrowing” the money with or without the intention of paying it back
  • A feeling of historic entitlement - recompense for work done or life enjoyment foregone
  • Simple dishonesty often coupled with complete disregard for parents' well-being (cases of a child plundering a parent's assets to buy new houses, cars and foreign trips while leaving nothing in the pot to pay the nursing home fees have made the newspapers from time to time)

But the more challenging and surprising are:

  • Self- delusion that it’s morally acceptable to simply take one’s  “inheritance early ", given that the parents “don’t need the money”
  • To deprive brothers/sisters

With generations past, there wasn’t widespread expectation of inheritance from parents, save for families with a business, farm, or landed estate to pass down and a comparatively small number of estates of what my Dad might have referred to as the “upper middle class”.

In most families, where finances were tight and had to be carefully managed, any inheritance by the next generation was viewed as a windfall rather than an expectation.

But there seems to be a discernible and disturbing modern trend away from a hope, or at most an “expectation” of inheriting from parents to the concept of the “right” to inherit - as if parents are mere custodians of money due to their children of their deaths. This may in part be fuelled by the disparity of wealth between older and younger generations and children being semi-dependent on, or receiving financial assistance, from their parents well into adulthood (and even middle age).

The Australian legal and general press refer to “Early Inheritance Syndrome” manifested, most commonly, by children with control over a parent’s finances dipping into their parents’ funds for their own purposes without any perception that there is anything immoral in so doing.

The family dynamic may similarly, and perhaps surprisingly, play a part, in the misapplication of a parent’s funds. As solicitors advising on private client matters (and, specifically, in the preparation of wills and LPAs and the administration of estates), we often pick up on a family dynamic - often sibling rivalries - that might be invisible to the  client themselves.

Who is, or isn’t, appointed attorney can cause major ructions in a family where sibling relationships are fragile or strained. To be appointed attorney by a parent means the assumption of duty; it carries no discretion (save as to the choice of investments for the benefit of Mother/Father).

Appointment as an attorney is not:

  • an honour bestowed to show position in the pecking order of parent-child affections,
  • a recognition of entitlement to a larger share of the parent’s assets in return for having been a more attentive and dutiful child,
  • delegation of the power to decide how parents’ estates should be divided among self and siblings,
  • a gift of the parent’s assets to the Attorney,
  • the right to bestow (or deny) “visiting” rights.

Increased likelihood of loss of mental capacity with advancing age, the comparative wealth of the older generation, a shift in attitude towards inheritance and the complexity of family relationships, produce a dangerous cocktail which put the finances of the elderly at risk.

What’s been done to address that risk?

Registration of LPAs with the Court on creation was a major step forward, enabling them to deal with potential complaints and concerns promptly.

Legal safeguards aside, a marked increase in public awareness of the potential for financial abuse of the elderly has led to a greater willingness to share concerns with the Court. Perhaps the rise in the number of recorded complaints simply bears that out.

In many cases, contact with the Court is by one or more of those children not appointed as attorneys (and their motives in expressing concern  might sometimes be doubtful), and in others by hairdressers, carers, neighbours, the postman, or solicitors who have picked up on circumstances that don’t feel right.

Financial abuse by attorneys might properly be described in many cases simply as theft or fraud (“by abuse of position”) and may well be a matter for the police - or perhaps the Local Authority’s Adult Safeguarding Team.

But prevention must be better than cure. What can be done to minimise the risk of abuse of power granted by a document that is otherwise so inherently and obviously useful and necessary (and of which I remain a strong advocate)?

  • Don’t make an LPA but rely on the need for a Court Deputy to otherwise be appointed (the Denzil Lush position)? In support of that view,  it's notable that , of the 1729 Court of Protection investigations last year, only 82 related to Deputies (as opposed to Attorneys).
  • Introduce more “hands on” Court supervision of the activities of Attorneys (by the need to produce annual accounts to the Court, for example).  But might this not create the very delay and bureaucratic over-load that LPAs were designed to avoid?
  • Don’t appoint your children as your attorneys - or add a non-family member to the mix?

My own view is “none of the above”; there is nothing inherently wrong with the LPA concept.

Whatever the legal safeguards, and despite welcome signs of a sea change in public awareness and attitudes, financial abuse will, sadly, remain – and with our adult children top of the list of possible culprits. 

As problematic sibling relationships tend towards the children being at odds with each other rather than being “in cahoots”, perhaps the sensible answer is to appoint all your children as your attorneys... and let them police each other?

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