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Will my children steal my money when I am old?

22 February 2021

A Financial Lasting Power of Attorney (LPA) is designed to secure your finances in case you are no longer able to manage your finances yourself. Many elderly people appoint an individual as their Attorney with their own children often chosen because of the level of trust required. In the majority of situations, the appointed Attorney will reliably manage and protect their parent’s finances; sadly there are some exceptions.

There are some individuals who will abuse their position to actually steal their parent’s money. Fortunately, this is very rare, though still, according to the Office of the Public Guardian (OPG), in 2018 alone there were concerns raised relating to 0.16% of Power of Attorney arrangements.

A growing concern

Although the actual percentage of Power of Attorney complaints may initially seem like a very small number, the number of investigations actually increased by 44% from 2017 to 2018. It is worth bearing in mind that this does not include the potential number of cases of financial abuse which were left unreported.

There are more than 3.5 million Power of Attorney arrangements registered in the UK and this figure will continue to rise given the ageing population. With more of us living longer, there are a growing number of elderly individuals who will lose their mental capacity.

According to The Alzheimer’s Society, it is predicted that by 2025 there will be more than one million people in the UK living with dementia. This will naturally lead to a growing number of LPAs, with a potential increase in complaints.

The development of the Financial Lasting Power of Attorney

In 1985, the Enduring Power of Attorney (EPA) arrangement was brought in as a way to protect the nation’s wealth, as the number of people aged over 65 in the UK continued to grow. An EPA provided a useful mechanism for individuals to be appointed to manage the finances of a person who no longer had the capacity to do so.

Before EPAs were available, financial control of an individual’s assets and finances could only be obtained through the court. This was a complicated and lengthy process, with the court appointing a ‘receiver’, which is similar to the ‘deputy’ position available today.

Many elderly individuals arranged EPAs, as it provided a choice of who would manage their finances, with many choosing one of their children. The EPA was a simple document which became immediately effective, although legally it had to be registered with the Court of Protection, once mental capabilities were lost. However, many of these documents were not registered, which enabled many Attorneys to access their elderly parents’ funds without restraint.

In 2007, the EPA was replaced by the Lasting Power of Attorney (LPA) mechanism. This replacement of the EPA was centred around a growing concern relating to the financial abuse of those who needed safeguarding. Prior to 2007, it was estimated by the Master of the Court of Protection that roughly one-third of EPAs were abusing their position of trust.

In contrast to an EPA, an LPA must be registered with the court from the outset. In addition, a certificate provider also needs to countersign the application to confirm that the individual has the mental capacity and is entirely trusting and comfortable with the appointed Attorney.

Although this is an improvement to the previous EPA system, there are no absolute guarantees that the LPA will continue to be trustworthy with their financial powers. However, the new system does increase the chances of abuse being spotted early, with The Office of the Public Guardian (OPG) appointed to safeguard individuals.

The Office of the Public Guardian

The OPG is an arm of the Ministry of Justice, which is in place to oversee the Power of Attorney system and any complaints relating to these positions of power. The OPG bases its approach on the principles of making safeguarding personal, with an aim to investigate complaints and improve individuals’ circumstances.

The OPG takes a very strict approach to investigating Power of Attorney complaints, with any proven abuse referred to both the Court of Protection and the police. If there is proof of abuse of this position of trust, the OPG can apply to the relevant court to remove the powers held by the Attorney.

As part of the safeguarding approach used by the OPG, they also work with health and social care workers and the Safeguarding Adults Board. This allows investigations to begin if concerns are raised by professionals. The OPG also encourages these organisations to check whether a Power of Attorney or a deputy court order is in place so that those who are unable to manage their finances are able to receive the assistance they require.

It is also worth bearing in mind that concerns are often raised to the court by other siblings, in addition to those who have picked up on potential issues such as neighbours, the postman, close friends or any individual in regular contact.

Minimising the risk of Power of Attorney’s abuse

As the saying goes, prevention is often better than a cure, so it is important to minimise the risk of potential fraud and theft. Although you may feel as if you can completely trust your children to act with your best interests at heart, there are situations where a Power of Attorney abuses their position. For example, personal financial difficulties could lead to an Attorney taking money from a parent without their knowledge, perhaps with the intention of repaying the amount.

There are also situations which arise relating to a feeling of entitlement, where the child believes they deserve financial recompense. When combined with simple dishonesty, it is often no surprise that a parent’s savings are spent without their knowledge.

A Lasting Power of Attorney can be set up independently, although it is advised to hire the services of a solicitor. This is especially important following recent pension reforms, which mean many individuals are now risking their pension savings in financial markets. Without a trustworthy Attorney in place, if an individual becomes ill, it may be difficult to make the important investment decisions required.

If a Lasting Power of Attorney is not in place, many children can find themselves unable to resolve issues with an ailing parent’s finances. This can quickly lead to lengthy and expensive court proceedings, where a child applies to become a deputy, instead of a Power of Attorney. It is common for the bill for this to into thousands of pounds so it is always advisable to seek legal assistance before this is required.

Sadly, it is common for LPA arrangements to cause ructions within a family, with siblings often not in agreement about who should be as the Attorney. However, it is important to remember that being an Attorney is in no way entitling the individual to a larger share of assets. It is simply a way to protect individuals in the event of mental capacity being lost.

There are various ways to protect yourself from potential LPA abuse, such as requiring more hands-on supervision. For example, the LPA arrangement could require the Attorney to produce annual accounts to an impartial party. Alternatively, if you are in the unfortunate position that you feel you are unable to trust your children, you could choose to appoint a non-family member as Attorney an LPA.

Lasting Powers of Attorney play a critical role in an individual’s plans for the future, and it is important to consider the arrangements early. There are risks involved, and due to the nature of an LPA, positions can be abused. However, increased awareness and the safeguarding provisions which are in place are providing protection to those who are financially vulnerable.

Our experienced team offer legal advice relating to both arranging a Power of Attorney and Power of Attorney complaints. Whatever your situation, safeguarding your finances is important to us and we will use our qualifications to ensure your situation is stabilised.

When you appoint a Financial LPA, they will be able to make decisions on your behalf relating to your finances, so it is absolutely essential that you consider the implications of who you appoint carefully. To find out more about the Lasting Power of Attorney role, or to discuss Health & Welfare Lasting Powers of Attorney, or Power of Attorney complaints, please contact our team today.