Financial abuse of the elderly is on the rise, and the perpetrator is frequently a family member. Increasing social pressures, fractured families, technological advances, and the use of internet banking all contribute to this issue. Anyone can be at risk, but age, disability, cognitive impairment and poor mental health may make a person more vulnerable.
Furthermore, a survey last year by KPMG indicated an explosion of cases in which the perpetrator of the fraud was a family member. Fraud against the elderly and vulnerable happens more often than we might like to think, and we must act to expose it. Practitioners ought to consider a number of factors when advising both the vulnerable client and the executors of an estate, when they look back through the management of the deceased’s finances prior to death.
Why are the elderly attractive targets?
Those aged over 50 control 70 per cent of the nation’s wealth, and many seniors do not really realise the value of their assets (specifically, their homes or their savings). They are more likely to be lonely and vulnerable, or have disabilities that make them dependent on others, and those helpers have access to their homes and assets.
Victims of such abuse are often reluctant to take action against their abusers because they feel ashamed of having been taken advantage of, or because they do not want the abusers to withdraw their care and support.
What is financial abuse?
This spans a broad spectrum of conduct, from someone simply overcharging or helping themselves to an extra £5 or £10 from someone’s purse or wallet, to undue influence or fraud with a view to inheriting the entire estate. Below are some common examples.
1. Overt or covert taking of money or property
This category includes both straightforward theft and the improper use of money or assets. It could also involve over-claiming of benefits by overstating the severity of the situation. The examples are legion, but here are some real life cases.
The son who goes home to see his mother (and support his local football team at home matches), but requests £400 for the petrol for a 200-mile round trip. His mother, who either knows no better and/or fears abandonment, just pays.
The relative who keeps the vulnerable person confined to a limited number of rooms in their home and gradually sells off the contents of the other rooms and pockets the proceeds of sale.
2. Overcharging or persuading someone to accept lower cost or lower value services
The most common example I see is ‘persuading’ the vulnerable person to accept the smaller, cheaper back room in a residential home to save on fees and increase the inheritance. Another example is the relative who does the shopping, buys the cheapest food and drink, charges the elderly person for the most expensive, and pockets the difference.
3. Forging an older person’s signature
As a person becomes more vulnerable and loses confidence, often their signature will ‘wither away’ and may become easier to forge, thus providing an opportunity for greater financial abuse. The vulnerable person may not always then recall which cheques they have signed and which they have not.
4. Using a person’s property or possessions without their permission or knowledge
Examples in this category can range from ‘borrowing’ the vulnerable person’s car, to letting the home of the elderly relative when they stay with the perpetrator and failing to account for the rent.
5. Getting someone to sign a document through deception, coercion or undue influence
We are all familiar with the precautions we take when we get a will signed or when a house is the subject of a gift, but there can be equally important transactions we are never called upon to investigate, such as the transfer of a car or shares. These may require investigation post-death.
6. Promising lifelong care in exchange for money or property and then not fulfilling the promise
The obvious examples are where a ‘granny flat’ is built, and then the family, having added value to their home, gradually reduces their care or involvement.
7. Misuse of powers of attorney (PoA)
We are all familiar with blatant abuse of a power of attorney (PoA), but what of the abuse in which the attorney temporarily – and maybe ‘innocently’ – intermingles the donors’ assets with theirs, and so offsets their personal overdraft interest or props up an ailing business overdraft to assist short-term cashflow? We should also be aware of ‘convenient’ property deals, such as selling the house to a ‘builder mate’ without exploring development opportunities.
Who are the perpetrators?
Almost anyone can perpetrate financial abuse of the elderly, including very close family members such as spouses, children or grandchildren, carers and those in a position of trust and responsibility.
Often the perpetrator has some misplaced moral justification for taking what they believe is rightfully ‘theirs’: they may fear that the older family member will get sick and use up ‘their’ inheritance, or, due to increasing the longevity of the elderly person, they may be simply frustrated by having to wait longer than anticipated for ‘their’ money. Indeed, according to the KPMG study, 72 per cent of familial fraud was committed by fraudsters aged over 45. Other drivers may include a lack of financial stability in the sub-50 age group, or stepchildren wanting to right the ‘wrongs’ of a divorce settlement.
Sometimes perpetrators will have an addiction they need to finance. They may have financial problems arising from their own or their business’s mismanagement of funds. Or they may simply have heavy financial demands: teenagers or young adults still at home, for example, draining a limited income pool.
It might be that the perpetrator has negative feelings towards the vulnerable person or other siblings or family members who they want to prevent from acquiring or inheriting the older person’s assets.
Although it is strictly beyond the scope of this article, I think it is also worth mentioning the vulnerability of elderly people using the internet; ‘romantic’ scams are on the increase. I have seen people part with a substantial part of their life savings because they trusted ‘the nice lonely man’ on the internet. The grooming of a vulnerable person is not just restricted to child cases, so be mindful of this when a client mentions they have met someone on an over-55s dating site.
What are the warning signs?
The main red flag is change: elderly people often have predicable spending and income patterns, and routinely have the same individuals helping them. Any change should invite vigilance on the part of the practitioner.
• Withdrawals from bank accounts or significant transfers between accounts that the victim cannot readily explain.
• A change in the amount of cash being withdrawn each week when the victim’s spending habits have not changed for many years.
• Additional names on bank accounts or benefit payments.
• Appearance of previously uninvolved relatives or ‘close friends’.
• An increase in the amount of, or need for, cash in the house.
• Unpaid bills.
• Increasing reluctance to talk openly about family or friends.
• Increasing isolation or avoidance of once-usual social contact.
• Increasing reluctance to spend money, for example, to heat their home or to buy food.
• Increasing timidity, nervousness or lack of self-confidence.
What should practitioners do?
Always act sensitively when you have suspicions that financial abuse may be taking place. Broaching the topic is easier when you have had a relationship with the client for many years. There are various courses of action available, depending on the issues at hand, but always bear in mind that the client’s affairs are confidential and think carefully about who you can discuss your suspicions with properly.
Think about the extent of the alleged abuse (is it a simple one-off that could be human error, or is it part of a bigger pattern?), and if claims of abuse are brought to you by others, you ought to consider the credibility and motivations of the individual making those claims.
Contact the police, Adult Social Care, or Office of the Public Guardian and consider asking the local authority to place the vulnerable adult into safekeeping.
You can notify any professional body to which the suspected perpetrator belongs. If you suspect abuse or neglect (potential or actual) by another legal professional, you should contact the Solicitors Regulation Authority for guidance before you contact the head of risk and compliance at the practice concerned.
Consider an application to the Court of Protection for:
a. the revocation of an lasting power of attorney or registered enduring power of attorney; or
b. the suspension, discharge, replacement or variation of deputyship.
Above all, consider if your actions may tip off the perpetrator and so cause more distress to the vulnerable person.
Read our practice notes on Financial abuse, Making gifts of assets, and Lasting Powers of Attorney
Contact our Practice Advice Service