Lasting Powers of Attorney – How do You Know When to Act?

A recent article published in the Sunday Times told the sadly all too familiar story of an elderly person being scammed out of significant amounts of money. And even more sadly, she could have been protected.

The fraud was discovered when the octogenarian suffered a collapse at home and her daughter decided it was time to act as her mother’s attorney under the financial lasting power of attorney (LPA), which had been set up some years beforehand.

Unfortunately, by the time the daughter gained access to her mother’s accounts she found some serious anomalies and tens of thousands of pounds were ‘missing’; various direct debits had been set up to companies that the daughter did not recognise and a five-figure credit card debt was also unfathomable to both mother and daughter. The mother could not remember what, when or why the monies had gone out of her accounts and what any of the payments were for.

The story was one of a fiercely independent woman who assured her daughter that she was able to cope and a daughter who desperately wanted to believe her. But, in all likelihood, scammers all-too-readily recognised the mother’s mental frailty and took full advantage of it.

It’s a very sad story, and one which many people with aging parents probably fear happening to them.

Lasting powers of attorney – not an infallible safety net

A lasting power of attorney for property and financial affairs allows a trusted person (the attorney) to make decisions about finances for someone who can no longer handle such things as paying bills, selling a property or managing bank accounts.

Attorneys have a legal duty to act in the best interests of the donor (the person who creates the LPA) and, whenever possible, must involve the donor in any decision making process about money. However, the difficulty for attorneys is knowing when to intervene. If the donor is adamant that they are able to manage their finances and don’t need assistance, many attorneys (frequently the sons and daughters of donors) will take the decision not to ‘meddle’ in the donor’s affairs.

But, as the story mentioned above informs us, vulnerable people can easily be targeted by scammers and the thieves will use all manner of falsehood to con people out of their money.

Action Fraud, the City of London Police crime reporting service, says that since the coronavirus pandemic began more than £14 million has been stolen in related scams. Reports of fraudsters pretending to be from HMRC, the police and various other authority figures have been made.

Not meddling – but money minding

The question of intervention in a parent’s financial affairs can be a really tricky one, but if you propose actions as protection rather than intrusion your assistance may be more welcome. By helping a donor understand how fraudsters operate, you may be able to convince them that your support would be useful and there are a number of practical measures you can take to tackle the sort of unwanted approach that vulnerable people might be caught out by.

However, an elderly person may be reluctant to ask you, as their attorney, to take over, because they may feel that once you act on their behalf there will be an automatic assumption that they have lost mental capacity. This could be devastating, as it could perhaps be one of the last bits of independence they have.

If you have been named in a valid LPA, you can of course take over a donor’s financial affairs when the donor has lost mental capacity, but it is also possible to act in a supportive role under a financial LPA, while the donor still has mental capacity. This could mean that the donor understands the decisions you are making on their behalf, but they perhaps just require your assistance with certain aspects of their finances.

It is possible for a donor and their attorney to act in this way, provided the donor made the appropriate election when they prepared their financial LPA. If you are acting as an attorney in that instance, you are acting with the donor’s consent, and at any point, the donor can revoke that consent if they wish to do so. This can be of some comfort to a donor as they won’t be relinquishing all control. If the donor makes such an election in their LPA when it is prepared, it can make the LPA much more useful for both the donor and you, as their attorney. It also means your intervention might be perceived as useful assistance, rather than taking away the donor’s independence.

Donors and attorneys working together

If the LPA is registered with the donor’s bank, the donor could, for example, request that copy bank statements are sent to you, as their attorney, so that you can review them together or so that you are able to keep a careful eye on payments leaving the account. This means that any fraudulent transactions on an account might be spotted quickly and limit the potential harm caused. It could also be possible for you, as an attorney, to have internet banking capabilities if the donor prefers, and you could assist with making payments or checking balances in this way. This is a service which has almost certainly been of great use to some vulnerable people who have been required to “Shield” due to COVID-19.

Considering the donor’s feelings

As an attorney, any action you take must always be with the best interests of the donor in mind and you should always consider the donor’s past and present feelings. And this is when the decision to act often becomes tricky for the children of donors, because the donor might be reluctant to accept your help. However, if you believe that the donor no longer has the mental capacity to look after their finances themselves, as an attorney you can intervene at this stage.

Ultimately, if it is necessary to intervene or perhaps if the donor has requested that you assist them (with their consent) you will need to register the LPA with a financial institution before they will discuss any account matters with you. A bank will require a certified copy of the LPA in order to grant you access to the donor’s accounts and it can take some time for documents to go back and forth if you are using the postal service.

Recent digital technologies have been put in place to make it simpler for attorneys and donors to share LPA details with organisations and the “use a lasting power of attorney” service, launched by the Office of the Public Guardian on 17 July 2020, means that when a donor registers a new LPA they can utilise an online tool which provides a personalised access code. This code can then be given to an organisation, such as a bank, and the organisation will then be able to view a summary of the LPA online so they can verify that the attorney has power to act for the donor. This means that the attorney can make checks much more quickly if they believe there could be a problem.

What about deputyship?

And lastly, if it’s too late to set up an LPA because your loved-one has already lost mental capacity, you can apply to the Court of Protection to become the person’s deputy. A deputy’s powers in relation to the affairs of the person who has lost mental capacity are similar to that of an attorney, but there are rigorous controls and reporting procedures incumbent upon a deputy and the application process is complex and more costly.

In our opinion, it is always preferable to put set up an LPA before mental capacity is lost, particularly as it allows the donor to choose who they would like to appoint as their attorney, rather than a court deciding who they believe is best placed to act on their behalf.

Speak to a solicitor today

If you wish to put a lasting power of attorney in place or you need to make a deputyship application to the Court of Protection, our experienced solicitors can assist you and make sure the whole process is conducted accurately and as quickly as possible.

For further information or to make an appointment with a member of our legal team, please email or telephone 020 8464 4242.