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Reducing the risk of financial abuse of the elderly

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A Bradford man has last week pleaded guilty to six offences of theft and fraud, crimes which can be said to be even more appalling because of the identity of the victim - a 85 year old woman.  Mr Bhupinder Sahota is currently being tried at Bradford Crown Court for offences of stealing almost £185,000 from the elderly woman. 

The reason that this sad case was drawn to my attention in the newspaper over the weekend was that Mr Sahota was acting for the victim under an Enduring Power of Attorney ("EPA").  In fact, he has admitted that he used this legal document in particular to defraud the elderly victim out of over £20,000.

An Enduring Power of Attorney was a legal document, which prior to October 2007 could be signed by an individual in order to place trust in another to deal with all their legal and financial affairs.  The donor (the individual who signed the document appointing the attorney(s)) would sign the EPA knowing that should they lose mental capacity in the future, their attorney(s) could continue to manage their affairs on their behalf.   

It meant however, that with only the signature of the donor and attorney(s), accompanied by independent witnesses, a person could nominate one or more attorneys to effectively step into their shoes immediately and do all what they could do.  The main advantage of such a document was that if the paper work was becoming too much for an individual, typically the elderly, then they could nominate a family member or another person such as a legal professional who they trust to manage their finances on their behalf.  They could sign cheques, deal with the bank accounts and sell property.  The document never even had to be seen by a court until the donor was losing capacity.  Only at that time did the Attorney's then have the legal obligation to notify certain family members and register the document with the Court at the Office of the Public Guardian. 

Since October 2007, no new Enduring Powers of Attorneys can be created.  Any existing EPA's can continue to be used and when the capacity of the donor falls into question, they must still be registered with the Court.  At Clarion, we continue to act for many clients under Enduring Powers of Attorneys and assist other attorneys with the process of registration with the Court. 

Given the potential for abuse under the old form Enduring Powers of Attorney, the government created the new Lasting Powers of Attorney.  Now not only can a donor appoint a person they trust over their legal and financial affairs, but also over their personal welfare, something which was not possible under the previous Enduring Power's of Attorney.  It also does not need to be the same Attorney(s) for both roles. 

An Attorney under a Lasting Power of Attorney has the same powers as an Attorney under an Enduring Power of Attorney and is placed in the same position of trust, meaning it is still a very important decision a donor must think carefully about.  There are however more safeguards, introduced by the Mental Capacity Act 2005 to hopefully reduce the number of cases of financial abuse particularly amongst the elderly and the vulnerable.  These are as follows:

1.   The Attorney (s) cannot begin to use the LPA until it has been registered with the Court. This process can take some time, something which the Court is working on, however there are various options Clarion can assist with to help in the interim period if funds are urgently needed, for example to pay for care fees.  The main point is however that no bank or other company should accept an LPA unless it has now received the official stamp of the Office of the Public Guardian to show their approval of the appointment and to show that the LPA, according to their standards and checks, has been created legitimately.

2.  The LPA is a much larger form compared to an EPA.    The form must now not only be signed and witnessed by the donor and attorneys but also a Certificate Provider.  A Certificate Provider is an independent person who must see the donor without the attorney(s) present.  They must read through the LPA with the donor and certify that they have spoken to the donor alone and that they are happy that the donor is signing the LPA with the full understanding of the wide power the LPA entails and that there is no undue influence or pressure from anyone concerned.  They are there to try and ensure as much as possible that the LPA is being created out of the donors own free will.  Furthermore, not anyone can be a certificate provider.  It must be either a person who has known the donor personally for at least 2 years or be a professional such as a GP or solicitor.  A Certificate Provider must also not be in any way linked to the attorneys by family ties or through a business connection.

3.  As part of the registration process with the Court, the donor must also nominate up to five "Named Persons" to be notified of the LPA and its registration.  These people are typically family members and it gives them the opportunity to also object at this initial stage, before the document has begun to be used. Therefore adding another level of protection before an Attorney can gain access a donors funds. 

4.  The donor can also state clear restrictions and guidance to the attorney(s) on which assets they can and cannot deal with and how they wish for assets to be dealt with.

A lasting power of attorney is sometimes misconstrued as being only for the elderly.  This is simply not the case.  Unfortunately incapacity and mental illness can occur at any time, however once a lasting power of attorney has been created, worrying about the need to manage a loved ones funds when they may be needed for their care, can be avoided.  One less problem to worry about in difficult times.  We recommend to all our clients that they think about creating a lasting power of attorney typically when creating/updating their wills. 

Should you require any further information about registering an existing Enduring Power of Attorney or making a new Lasting Power of Attorney, please do not hesitate to contact a member of the Private Client team.

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.