A rising number of ‘financial advocates’ acting on behalf of people in need are being investigated over their decision-making.
Figures obtained by insurer Royal London show that hundreds more ‘power of attorney’ cases are being probed by Government body the Office of the Public Guardian this year compared to last – a rise of nearly 46 per cent to 1,647.
Power of attorney is a legal document allowing an individual to manage the finances of someone who cannot undertake ordinary financial tasks themselves – for reasons like dementia or following a serious accident.
On the rise: The number of ‘power of attorney’ cases probed by Government body
Helen Morrissey, of Royal London, says some investigations are cases of theft and greed, while others are examples of people overstepping boundaries or failing to keep records correctly. She adds: ‘People taking on these responsibilities need clearer guidance on what they can and cannot do.’
HOW IT WORKS
Those creating lasting power of attorneys are known as donors. They fill out the paperwork and choose attorneys who can represent them. This must be done while still of sound mind.
There are two types – one covering property and finances, the other health and welfare.
Documents are registered with the Office of the Public Guardian and activated if a donor needs help. For example, if they develop dementia. Multiple attorneys are allowed, and donors decide whether they must all agree on every decision or if they can act independently of each other.
IMPACT ON RELATIVES
Though incidents of attorneys acting questionably do occur, families stuck without licence to act in a crisis say power of attorney is crucial.
Take Jonathan and Carol Smith. The couple had all the responsibility for looking after the finances of Carol’s mum when she lost mental capacity last year – but no authority.
While Carol’s mum, Jessie, was still able to, the Smiths tried to arrange a power of attorney because she needed help with day-to-day running of her accounts. But Jessie was advised separately not to allow it.
Struggle: Jonathan and Carol Smith
Jonathan, who lives in Warwickshire, says: ‘I tried to pay some of her bills but was repeatedly asked if I had power of attorney, which I did not. We were left with endless problems.’
After Jessie developed Alzheimer’s, Carol and Jonathan, aged 70 and 69 respectively, found it difficult to pay nursing home fees because they could not access her money – a situation Jessie would never have wished to arise.
With no rights to allocate Jessie’s money, or authority to sell her home, the Smiths contributed around £200 a month from their own savings to cover fees.
Jessie passed away before the Smiths could apply for ‘deputyship’ through the Court of Protection, which would have taken months and more money to arrange.
Jonathan says: ‘My advice is to have power of attorney in place because it makes life a lot easier.’
Four key steps when you are setting up a power of attorney
1. Get the paperwork. Set up an online account by visiting gov.uk/power-of-attorney and then complete the forms online. Alternatively, download and print off to fill in by hand. You can ask a solicitor for help or contact the Office of the Public Guardian (OPG) on 0300 456 0300.
2. Sign the document. This must be done by you – the donor – the attorneys willing to represent you, witnesses and a ‘certificate provider’ who confirms you are applying by choice and are of sound mind. The latter could be a solicitor, for example.
3. Notify important people in your life. The ‘form to notify people’ – an LP3 form – tips off anyone you think should know about your plans. They have three weeks to raise any concerns.
4. Register. This can take up to ten weeks. Completed forms should be sent with the correct fee to Office of the Public Guardian, PO Box 16185, Birmingham B2 2WH.
Many experts say rare cases of bad behaviour are not symptomatic of a problem with power of attorney itself, but can be a result of who donors pick to represent them.
Gary Rycroft, partner at Lancaster-based law firm Joseph A Jones & Co, says: ‘Individuals need to be brutally honest about whom to appoint.’
Adult offspring are typically chosen for the job, but Rycroft says a minority of parents with adult children who are either terrible at managing money or who could potentially steal from them, need to face reality.
Carol’s late mother Jessie
Rycroft adds: ‘Parents need to ask whether they trust their children and, if appointing more than one, whether the siblings get on with each other. If answers to these questions are difficult, think again about who you appoint.’
Angharad Lynn, associate solicitor at law firm Veale Wasbrough Vizards, champions professional advice to ward off financial abuse. She says: ‘There is potential for abuse with power of attorney. But with legal advice and someone trustworthy appointed as attorney, it is a useful tool for families.’
PROS AND CONS
Power of attorney is quicker and cheaper than the alternative. Fees were reduced in April last year from £110 to £82 to encourage take-up and apply to both types – health and finances.
Without power of attorney, a person who has lost ‘mental capacity’ will not necessarily be able to choose who helps them. In this situation someone volunteers to be deputy, for which the application fee is around £400. There are also ongoing supervision fees, levied by the Court of Protection.
The constant supervision of deputies does give extra protection for vulnerable people.
The same cannot be said for power of attorney, but legal help can add necessary safeguards.
My dad invested his pension but he’s too ill to handle it any more – what can we do?
Find out how to apply to be a ‘deputy’, if your loved one is ill and hasn’t set up power of attorney.
Lynn adds: ‘A solicitor can explain about adding preferences, such as instructing attorneys to produce accounts, or to take investment advice. It is also possible to notify other family members that lasting powers of attorney are being made. Those notified can keep an eye on how the donor is treated, providing a form of cross-check.’
Solicitors can also be appointed as attorneys. Lawyers charge for their services once a power of attorney is activated, but they can remain neutral, act dispassionately and be held accountable for any wrongdoing.
Anyone who registered a lasting power of attorney with the Office of the Public Guardian between April 1, 2013 and March 31, 2017 could be in line for a refund worth up to £108 plus interest.
This is because Government costs for providing a registration service reduced, but prices did not fall quickly enough by comparison.
Repayment is also due to people who registered enduring power of attorney. These documents were replaced by lasting power of attorney on October 1, 2007 but are still valid if signed before that date.
Refunds vary between £34 and £54 for each type of power of attorney, depending on when you paid the fees. Additional interest is 0.5 per cent. Visit gov.uk/power-of-attorney-refund or call 0300 456 0300 and select option six.
Myth or truth: what legal document really means
MYTH: I can sort a lasting power of attorney in future when I actually need it.
TRUTH: You cannot. You can only arrange it when you do not require it – when you are of sound mind.
MYTH: Signing this document gives a person access to all of my money after I die.
TRUTH: When you die, so does the power of attorney agreement. From that point, a will dictates what happens to your money, or the rules of intestacy if no will exists.
MYTH: I have to choose a relative, even though I think they are just after my money.
TRUTH: You can choose anyone you wish to act as an attorney so long as they agree. It should be someone you trust implicitly. You can also appoint a solicitor to act on your behalf.
MYTH: There is no turning back if I change my mind later on.
TRUTH: You can formally end a lasting power of attorney if you wish to make a new one.