Power of Attorney: Horror stories

You might have noticed a series of horror stories in the media recently about Powers of Attorney (POA). Of course, all news outlets only focus on the bad stories, so please be aware that these are freak cases.

How risky is a POA?

The Ministry of Justice is reported as saying that 1,260 concerns were raised about Power of Attorney cases in the last three months, in most cases, because nursing home or care home fees were not paid.

Although the number of investigations into attorneys and deputies has apparently increased in recent years, this is still a tiny percentage, as there are 2.5 million LPAs registered in England and Wales.

Please don’t be put off! It is still dreadfully important to set up a Power of Attorney to handle your financial (and maybe health) affairs if you lose capacity.

Are you ready? Here goes…

Horror story 1

Frank Willett was in a nursing home suffering from dementia. His daughter Leslie discovered that his £60,000 savings had gone, together with his service medals, her mother’s wedding ring and jewellery, and all the family photos and documents.

It turned out that his former next-door-neighbour had executed an Enduring Power of Attorney (EPA)* that gave him control over Frank’s financial affairs, as well as a new will that nominated himself as the main beneficiary.

The neighbour, Mr Blake, pleaded guilty to theft and was sentenced to 4.5 years in prison.

Horror story 2

Ian Leonard gained control over his mother’s financial affairs under an LPA in 2012, after she was diagnosed with dementia and placed in a care home. He withdrew thousands of pounds, sold her flat for £260,000, and used the money to fund a buy-to-let property in his own name.

Leonard failed to pay the care home fees, and in 2015, and it was found that her financial assets had been decimated. Ian was sentenced to 5.5 years in prison.

Horror story 3

John Gimbert was granted Power of Attorney over the affairs of his cousin, Janette Trim, in 2003. When Janette’s father died, he left her his estate worth £220,000.

John sold her father’s bungalow for just £1 to his eldest son, David. He also used Janette’s funds to pay mortgage deposits for his three children, to buy £30,000-worth of new Chrysler cars, and to lease a Motability car for himself and his wife. Altogether, John asset-stripped around £200,000 from Janette’s inheritance.

John was convicted of four counts of theft, and David is facing a retrial for conspiracy to defraud and for handing stolen property.

Don’t panic!

Despite these horror stories, an LPA is a powerful and effective tool to ensure peace of mind.

As a safeguard, LPAs require an independent person to confirm that the donor understands the power and importance of the LPA and is not under any pressure to make it. The LPA can’t be used until it is registered with the OPG. Also, you can list any number of people to be notified when the LPA is registered.

To reduce the risk of a rogue attorney, we recommend you always have at least two attorneys. You can specify whether you want them to make decisions jointly, or jointly and severally. If your financial affairs are complex, you might decide to have a professional attorney alongside your trusted family member or friend.

If you are concerned about the conduct of an attorney, you can apply to the OPG (which now has greater investigative powers to intervene), report your suspicions to the police, and make an application to the Court of Protection.

Do be careful, choose the right people as your attorneys, and be sure to protect yourself and your finances.

Why you need an LPA

If you don’t have a financial Power of Attorney in place before you need it, your financial decisions will be handled by the Court of Protection. This means your money could be tied up for years, leaving you and your loved ones in financial difficulty.

The link below tells a final horror story. It demonstrates the risk of NOT having an LPA in place (and includes a link to download a Saga PDF that tells the whole sorry tale).

Why you need an LPA even if you’re not old

*EPAs were replaced by Lasting Powers of Attorney in 2007.

Lance Baron

Certified Financial Planner (CFP) based in East Sussex, UK. We support people in Southeast England with more than £500K to invest by building a financial plan that will help them live the life they want… until age 100