Lasting Power of Attorney - Friends and Family Fraud
KPMG is one of the largest professional services companies in the world and every year, for 28 years (making it the longest running survey of its kind in the UK) it has kept a Fraud Barometer measuring major fraud cases heard in the UK’s Crown Courts where charges are in excess of £100,000.
In the period measured from 01 January 2015 to 30 June 2015, KPMG found that the value of fraud rose by 22% in the first half of 2015 to £385m against £317m in the same period in 2014.
Further, fraud committed within families increased by five times since the same period last year.
Too Long to Wait
According to the survey, in the majority of cases, an elderly person was defrauded by a younger relative with a total of £1.7m stolen from the elderly by younger members of the family. And, strangely, the most common culprit being someone in their 50s or 60s stealing from an older relative with 72% of familial fraud being committed by fraudsters aged over 45.
Hitesh Patel, UK Forensic Partner at KPMG, has suggested this may be due to those in this age group becoming frustrated with the longer and longer period this ‘baby boomer’ age group is being forced to wait for their inheritance as people are living longer than ever before.
Familial Fraud
Familial or ‘familiar’ fraud happens when a close friend or member of the family take advantage of the trust they have been given use this for their own financial gain. It seems hat those who know the most about a person, and who are most depended upon, are those with the potential to use the information they have to their own benefit.
Familial fraud has intensified so much so that credit reference agency, Experian, have included one category of fraudsters in their statistics as friends and family.
This sort of crime is frightening and emotionally devastating. It is worse when the victim has lost capacity and the perpetrator has been given the power to look after the property and financial affairs, yet instead, simply steals the money.
In one such case a woman after being granted a power of attorney, stole her father’s savings and left his care home bills unpaid.
Most people in this situation will not even be aware their wealth has been taken from them thus making it hard to measure. Even those who have not lost capacity but are vulnerable, do not like to admit that money has been taken and prefer to let the matter go rather than cause ‘unpleasantness’.
Lasting Power of Attorney
Lasting Power of Attorney documents that give the power to someone to look after another’s finances and health have seen dramatic increases in their registration. Since 2011, these numbers have more than doubled with almost 350,000 being registered in the financial year ending April 2015, against 150,000 being registered in 2011.
Couple this increase with the record numbers of rising levels of dementia and, it appears, some people just cannot help themselves – especially if they think they can get away with it!
What Can Be Done?
A Lasting Power of Attorney document (LPA) is invaluable for ensuring that, should mental capacity be lost, those who need to have access to funds in order to continue to live their lives. For example, in the case of a married couple with children, a spouse would not, necessarily, be able to have automatic access to the other spouse’s funds and this can cause extreme stress and unhappiness as seen with the, much publicised, case of Heather Bateman. https://www.youtube.com/watch?v=xNqGw1cvnkI
These, however, are not the type of situations where KPMG say the fraud is occurring. The main incidents of fraud are against elderly members of a family.
So what can be done to prevent the elderly person who has given the trust to a younger member to look after affairs from becoming a victim; not make the LPA at all? Well, no. In this case a court would appoint a Deputy which may be someone who the elderly person felt unsuitable for other reasons.
Naming attorneys is still the way forward. With the right people appointed, an LPA is a very good document to use.
Some tips on ways to protect against fraud by means of an LPA are:
Name more than one Attorney: An LPA can name two, three, even four attorneys, who can act either on their own or jointly with the others.
Specify how Attorneys should act: Decide if these attorneys should act separately for some matters and jointly for others.
Give guidance: a Donor can direct the attorneys to, say, meet twice per year and look at withdrawals from bank accounts, discuss how money matters should be handled for the next six months and monitor anything that might look suspicious.
Making a Lasting Power of Attorney
Although it might seem a relatively easy document to complete, it is the knowledge of tips and ways that protect vulnerable people from theft that makes it a good idea to have a professional draft the document for you.
If you would like to speak to someone regarding making an LPA, please do give us a call on: 020 8920 3360, or email us at: info@twb.org.uk.
Sadly, fraudulent activity is on the increase within families, however, careful planning will always provide security.
We look forward to hearing from you.