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Financial planning and fraud – two sides of the same coin

Anthony Fairweather, professional attorney and court of protection expert discusses planning and fraud.

I gave a talk last week and, on the same day, attended another.

The talk I gave was on foundation planning, ie putting everything in place to make sure that all your key legal building blocks are in order.  I looked at wills, powers of attorney and health issues.  I explained that if you had considered all three and, hopefully, put at least two of them in place, you have probably done all that you can to protect yourself and your family in your old age and after you have gone.

The feedback was interesting.  In the discussion about wills, few people appreciated the potential benefits of trusts for protecting vulnerable beneficiaries, or for families where there is a second marriage, or to alleviate inheritance tax.  The perception is that they are expensive, cumbersome structures which benefit only the super rich.

When we discussed powers of attorney, people hadn’t realised the cost and administration involved if someone needs support or loses capacity when no power of attorney is in place.  A lot of people had heard about the Court of Protection but didn’t really understand its role.

So what has any of that to do with the afternoon talk I went to about preventing financial abuse?

I think anyone working around the Court of Protection and elderly clients is alert to the fact that financial abuse is rife.  When a family member gains access to a loved one’s finances ‘best interests’ can be reversed. The vulnerable elderly can often become the victim of a family member who, acting as attorney, puts their hand in the family till, even though they had previously shown no inclination towards fraud. The vulnerable family member is then left in a care home without a personal allowance while the proceeds of sale of their house disappear without their knowledge.  This is, of course, an extreme example, but it’s not uncommon.  Most offences involve smaller sums, or benefits and pensions, but it is a crime none the less.  For a vulnerable adult on a modest income, the impact will be significant.

How easy is it to recover monies in these circumstances?  The answer, in my experience, is that it is very difficult.  Even where it is a crime under the Fraud Act, a theft or conspiracy to defraud, will the police be interested? The local police often show a healthy disinterest.  Civil proceedings can be expensive and complex.  The prospect of tracing and recovering assets can be slim with the cost being carried by the victim of the crime unless there is a successful recovery.

And this brings me back to my talk.  The best approach is to prevent temptation.  You may not want to appoint a professional such as a solicitor or accountant as your attorney, but why not place a condition in your Lasting Power of Attorney that makes the attorney disclose accounts or statements annually to a professional?  You wouldn’t have the cost of appointing a professional attorney, and it may deter an opportunist who knows that every year an independent third party is going to check that everything is running smoothly and safely.