Update: elderly client

Powers of attorney: an abuser's charter?

In recent weeks, the abuse suffered by vulnerable and elderly persons in care homes has been front-page news. The appalling treatment has naturally caused distress and great concern to the family and friends of the care home residents.

Sadly, there is another area of abuse suffered by elderly, vulnerable people, which does not attract the same amount of media attention: financial abuse carried out by attorneys, who are normally close relatives of the person suffering the abuse.

Recommended route

For many years, professionals involved in advising elderly clients have routinely recommended making powers of attorney (previously enduring powers of attorney (EPAs), now lasting powers of attorney for property and finances (LPAs)), to ensure that financial matters could be dealt with if the client subsequently lost capacity.

The professional person, usually a solicitor, would emphasise the benefits of a power of attorney, which allows the client to choose who should deal with their finances should they lose capacity, and avoids the costs, delays and restrictions involved with deputyships.

However, the potential drawbacks ?of a power of attorney may not ?always be brought to the client’s attention. Clients may therefore ?not appreciate that the attorney is ?left to their own devices without any routine checks or monitoring.

It is standard practice, when creating a power of attorney, to recommend that the donor chooses their attorneys with great care and only appoints persons they trust implicitly. But what happens if the client’s faith in their attorney is misplaced and the attorney abuses their position? The donor can be left in a very difficult situation, as demonstrated by two recent cases.

The first is a criminal case involving Maxwell Stuart Alvey, who was convicted of stealing £125,000 from his 92-year-old aunt, Betty Harrison. Mr Alvey was a rogue car dealer who was also convicted of fraudulently altering the odometers of over 50 vans before selling the ‘clocked’ vehicles to members of the public, a scam from which he made over £50,000.

Mrs Harrison appointed her nephew as her attorney in April 2008, although it is not known whether Mrs Harrison had the benefit of professional advice when drawing up the EPA. She was a widow with no children and apparently doted on her nephew, regarding him like a son.

Mrs Harrison had dementia and moved into residential care. Her home was sold to fund her care. Within a month of becoming attorney, Mr Alvey moved part of the proceeds of sale of the property out of Mrs Harrison’s building society account and into another account under his control.

A few months later, he was convicted of an unrelated theft and sentenced to 12-months imprisonment. Shortly after his release from prison, he transferred further funds from Mrs Harrison’s account for his own purposes. The care home became suspicious of Mr Alvey when care fees were left unpaid and Mrs Harrison was left short of cash to pay for clothes and other living expenses.

Concerns were raised with the Office of the Public Guardian (OPG) in August 2010 by the care home and building society. The OPG referred the case to Derbyshire Police. By this time, £125,000 had been withdrawn from Mrs Harrison’s accounts by her nephew.

Mr Alvey admitted theft from his aunt and was sentenced to two years in prison. He was sentenced to a further two years in relation to the sale of ‘clocked’ vehicles. Mrs Harrison was said to be left destitute and forced to rely on help from charities. Police are trying to recover funds for Mrs Harrison (and also for the victims of the clocking fraud) through a proceeds of crime hearing, but it remains to be seen whether any funds will be recovered.

In mitigation, Mr Alvey’s barrister said Alvey believed he would have inherited the money from his aunt and had moved it into another account because his business was in trouble and he feared the money would be taken by the liquidators.

Criminal conduct

Many clients would assume that an attorney’s powers would stop upon the attorney being convicted of a criminal offence such as fraud or theft, but this is not the case.

The bankruptcy of the attorney automatically revokes an EPA (paragraph 2(7), part 1, schedule 4 to the Mental Capacity Act 2005), and the same applies to an LPA (paragraph 17(1)(a) of schedule 1 to the MCA 2005). Criminal conduct by the attorney, however, does not automatically terminate an EPA or an LPA.

The court has the power to revoke an LPA if the attorney behaves or proposes to behave in a manner which contravenes the attorney’s authority or is not in the best interests of the donor.

The case of Re J (6 December 2010, unreported) also confirms that this can apply to conduct or proposed conduct of the attorney in another capacity (for example, as the litigation solicitor for ?the donor).

However, the problem is that the court may not become aware of the attorney’s conduct until it is too late to provide any real protection for the donor.

The second case of an abuse of power was a Court of Protection case involving the removal of an attorney under an EPA.

In Re Stapleton (3 July 2012), Mrs Stapleton appointed her son as her sole attorney with general authority to act in relation to all her property and financial affairs with no restrictions or conditions.

Mrs Stapleton was in a care home, ?and the local authority raised concerns with the OPG when her care fees were left unpaid.

Other actions of the attorney had also given cause for concern: he had sold his mother’s house and bought a property in his sole name in which he was allowing his daughter to reside rent free.

He had also bought a van in his name using his mother’s money.

The attorney denied financially abusing his mother, but the court was not convinced by his explanation of his actions and found that financial abuse had taken place.

Senior Judge Lush commented: “There was a wholesale assumption of dominion over Mrs Stapleton’s estate by her attorney, as if she were dead and he had come into his inheritance.”

Fortunately for Mrs Stapleton, her funds could be recovered from her attorney, because he had taken great care over what he regarded as his own money. The son was removed as attorney and was ordered to pay his own costs.

These are not isolated cases. They demonstrate that, in the wrong hands, a power of attorney can pose a great danger to the donor’s financial well being. It is noteworthy that, in both cases, there was a sole attorney who was a close relative of the donor and also the main beneficiary of the donor’s will.

This gives rise to a conflict of interests, in that any money spent on the donor’s care reduces the attorney’s eventual inheritance.

Professional advisers may consider it prudent to warn clients explicitly about this, and the fact that attorneys are not subject to any routine monitoring. The OPG only polices the attorney’s conduct if concerns are raised by a third party.

Raising concerns

In both cases mentioned above, concerns were raised in relation to unpaid care fees. Had the donors not been in care homes, for example, if they had lived with their family member who was acting as attorney, the financial abuse may never have come to light.

The lack of monitoring means that there are few barriers in practice to prevent an unscrupulous attorney acting outside their powers as attorney and possibly committing a crime or breach of fiduciary duty.

However, once the assets have been dissipated by the attorney, it can be difficult to recover them through the courts.

Both cases involve EPAs, but exactly the same concerns and issues can and do arise with attorneys acting under a registered LPA. LPAs contain no more safeguards in this respect than EPAs.

The certificate provider’s role does not require any discussion with the donor regarding the suitability of the attorney, whether any safeguards or restrictions should be included in the LPA or the potential conflicts of interest which may arise.

Practitioners may wish to review their LPA checklist to ask the donor specifically about the suitability of the proposed attorney(s).

Are they good at managing their own finances, have they ever had financial difficulties or been made bankrupt, have they ever been in trouble with the police or been convicted of a criminal offence?

Unless specific enquiries are made, the client is not likely to volunteer this information. If the proposed attorney is ?a beneficiary of the donor’s will, does ?the donor consider the attorney will be able to put the donor’s best interests ahead of their own personal interests as eventual beneficiary?

If the client insists on appointing someone as attorney who, objectively speaking, would not be considered ?a good choice to manage someone else’s finances (for example, a discharged bankrupt), it may be prudent to suggest they have two attorneys acting jointly (with replacements in event of death/incapacity) and/or include provision ?for accounts to be produced and ?audited annually.

Restrictions on the attorney’s powers could also be included, to provide more protection for the donor.

The charity Action on Elder Abuse has an excellent website, which provides ?a list of indicators of financial abuse ?(see box).

It is vital that financial institutions, solicitors, and care homes, as well as the family and friends of vulnerable persons, are aware of the signs of abuse and notify the local authority, the OPG or the police if they have any concerns.

In summary, if you appoint trustworthy attorneys, an LPA is a very helpful tool.

However, if your trust and faith in your attorney are misplaced, a power of attorney may be a dangerous instrument which could be used to facilitate financial abuse.

Clients should consider carefully whether a sole attorney is appropriate, particularly where the proposed attorney is a beneficiary of the client’s will (which will often be the case), and whether any restrictions should be included in the LPA or a second attorney appointed to act as a ‘check’.

• Signatures on cheques and other paperwork that do not resemble the older person’s signature, or that are signed when the older person cannot write.
• Sudden changes in bank accounts, including unexplained withdrawals of large sums of money by a person accompanying the older person.
• The inclusion of additional names on an older person’s bank account.
• Abrupt changes to, or the sudden establishment of, wills.
• The sudden appearance of previously uninvolved relatives claiming their rights to an older person’s affairs or possessions.
• The unexplained sudden transfer of assets to a family member or someone outside of the family.
• Numerous unpaid bills, or overdue rent, when someone else is supposed to be paying the bills.
• Unusual concern by someone that an excessive amount of money is being expended on the care of the older person.
• Lack of amenities, such as TV, personal grooming items, appropriate clothing, that the older person should be able to afford.
• The unexplained disappearance of funds or valuable possessions such as art, silverware, or jewellery. 
• Deliberate isolation of an older person from friends and family, resulting in the caregiver alone having total control. 

Court's jurisdiction: vulnerable adults with capacity

The Mental Capacity Act 2005 (MCA 2005) and Code of Practice set out how the affairs of persons lacking mental capacity should be dealt with.

However, the MCA 2005 does not cover persons who have capacity.

An individual may have capacity, but still be very vulnerable to exploitation by others and, until recently, it was not entirely clear whether the courts could intervene to protect such a person.

There was an argument that the court’s inherent jurisdiction had not survived the passing of the MCA 2005.

The case of DL v A Local Authority and others [2012] EWCA Civ 253 confirmed that the High Court still ?has inherent jurisdiction to intervene ?in cases where there is a vulnerable adult who has capacity.

The case was brought by a local authority (LA) which had concerns about an elderly couple. The LA believed that the couple were being bullied by their son, who lived with them. The son was trying to force his parents to move out of their home, was restricting friends from visiting his parents and making it difficult for carers to visit.

The father was eventually assessed as lacking capacity, so the court had power under the MCA 2005 to intervene on ?his behalf.

The mother, on the other hand, had capacity, and the son argued that the court’s inherent jurisdiction to act on ?her behalf had ceased as a result of the MCA 2005.

The Court of Appeal held that the inherent jurisdiction of the court was available to all vulnerable adults, whether that vulnerability was a result of mental incapacity, physical impairment causing inability to communicate a decision, or other factors such as coercion, restraint or undue influence which impaired the individual’s capacity to make a decision.

The court therefore has the power to intervene and provide injunctive relief in cases where a vulnerable adult with capacity is being subjected to undue influence or coercion.