Financial abuse covers a wide variety of activities from mishandling finances to fraud, but may broadly be described as a violation of an individual's rights relating to their financial affairs or assets. Anyone can be a victim of financial abuse, but older people are extremely vulnerable to financial abuse whether perpetrated by relatives, carers or strangers.
There is no statutory definition of financial abuse, but guidance published by the Department of Health describes it as follows:
'Financial or material abuse, including theft, fraud, exploitation, pressure in connection with wills, property or inheritance or financial transactions, or the misuse or misappropriation of property, possessions or benefits.’
This can manifest itself in several different ways:
• Theft of cash, either physically, or through transfer of funds from the vulnerable elderly person or apparent theft or loss of possessions.
• Misappropriation or misuse of money or property - for example, improper use of money or assets when handling it for an elderly person under informal arrangements.
• Exerting ‘undue influence’ to give away assets or gifts. This can include placing inappropriate pressure to change their will or make gifts they otherwise would not or pressurising the older person to accept lower-cost/lower-quality care services in order to preserve more financial resources for any beneficiaries.
• Misuse of enduring/lasting powers of attorney or misuse of welfare benefits.
While older people may be particularly vulnerable due to advancing age, dementia or Alzheimer’s for example those with sensory impairments (poor sight or hearing for example) may also be at risk of abuse, especially where they are relying on others for information and assistance.
Signs of financial abuse
Indicators of financial abuse can include the following, although they are by no means limited to elderly people and could apply to any ‘vulnerable’ person:
• Signatures on cheques or documents that do not resemble the person's signature. Bells should start ringing when documents are signed when the person is unable to write.
• Sudden changes in bank accounts or unexplained withdrawals of large sums of money or money regularly disappearing after visits from a relative.
• Inclusion of additional names on an elderly person's bank account or benefits payments.
• Unpaid bills when someone else is supposed to be paying these on behalf of the elderly person.
• Lack of amenities such as TV, personal grooming items, appropriate clothing items, that the elderly person should be able to easily afford.
• Unexplained disappearance of valuables and possessions such as jewellery.
• The deliberate isolation of an elderly person from their friends and family, resulting in the carer alone having total control.
Changes to or creation of new wills, especially when those changes leave most or all of the assets to a ‘new friend’ or only one relative are another important warning sign. It is important to distinguish between someone applying undue influence on the testator (the person making the will) through threats or physical violence or deception and appeals to the testator’s sentimentality.
You may dislike the idea of relatives or others trying to ingratiate themselves by appealing to the testator's affections, dropping hints about past services they've rendered that should be rewarded. All these actions are undoubtedly designed to emotionally influence the testator, but such behaviour is perfectly legal and legitimate, no matter how distasteful you may find it.
What is not legitimate or acceptable is someone applying psychological or actual physical pressure directly on the testator if that pressure makes the testator do something they otherwise would not have done. The key element is coercion. Without coercion, the influence applied cannot be termed 'undue'.
Coercion may be brutal and directly obvious such as confinement or the threat of physical violence (or indeed the use of actual physical violence) against the testator or against someone or something they hold dear - like a friend, another relative or a pet. Coercion may also be more subtly applied in the last days or hours of life when the testator is least able to resist that pressure.
Lasting Powers of Attorney
Financial Abuse is still possible even if the elderly person had the foresight to make a Lasting Power of Attorney (LPA). This is a powerful and binding legal document that allows you to choose the people you want to make decisions on your behalf when you lack the mental capacity to make those decisions yourself.
The person making the Lasting Power of Attorney is legally referred to as the 'donor'. The people (or firms and other entities like a solicitor or a trust corporation) the donor chooses to make decisions on their behalf are known as 'attorneys'. Deputies perform a similar function, but they are appointed by the court in circumstances where the donor already lacks mental capacity to make an LPA. There are two types of LPA:
• Property and financial affairs: allowing an attorney to make decisions about paying bills, dealing with the bank, collecting benefits, selling property, etc.
• Health and welfare: only coming into effect when the donor lacks the capacity to make such decisions personally, this LPA allows the attorney to make decisions on treatment, care and medication, where the donor lives (at home or in residential care), etc.
Being an attorney under an LPA is a role that carries immense responsibilities and represents an investment of tremendous faith and trust by the donor. An attorney must follow the Code of Practice of the Mental Capacity Act 2005 which means that essentially they must always act in the donor's best interests. If they don't, the OPG can step in and remove them, but only if concern about the behaviour of an attorney is raised with them by a third party or other attorneys.
Disclaimer
This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2024
