There are approximately 750,000 people with dementia in the UK and every year an estimated 150,000 people have a stroke.  Dementia is a term which refers to various different brain disorders which result in a loss of brain function.  If someone is unable to make a specific decision because of an impairment of the mind, then that person can be said to lack the mental capacity to make that decision.

Unfortunately, those who are vulnerable or lack capacity to make decisions about their own finances can become targets for financial abuse. 

Financial abuse

Financial abuse is the theft or misuse of money or personal possessions, which involves an individual's resources being used to the advantage of another person.  

Financial abuse could involve pressure on an individual to lend or give money away.  There could also be pressure to sign over a house or property, or to change a will.  It is important to be aware of signs of financial abuse - these may include false signatures, deliberate isolation from family/friends and sudden excessive expenditure. 

In cases where financial abuse is suspected, there are remedies available for the victim, their families and carers. 

Planning ahead

People are increasingly aware of the need to plan ahead to safeguard their assets whilst they still have capacity to do so.  As part of this process, an individual (the donor) may put in place a power of attorney, delegating authority to a trusted person (the attorney) to make decisions on his or her behalf if the donor loses capacity.

An enduring power of attorney (EPA), which was valid before 1 October 2007, will continue to be valid.  An EPA does not need to be registered until the donor loses capacity; an unregistered EPA can be used by the attorney only with the consent of the donor. 

From 1 October 2007, EPAs have been replaced with lasting powers of attorney for property and affairs (LPAs).  An LPA must be registered at the Office of the Public Guardian before an attorney can use it.  Once registered, an LPA can be used by the attorney whilst the donor has capacity but only with their consent.  Any decisions/actions taken by an attorney under an LPA should always be in the donor’s best interests. 

It is important to ensure that LPAs are drafted carefully, that suitable attorneys are appointed and that any appropriate restrictions are included. 

Protecting people who have lost capacity

Where someone does not have capacity to make decisions and has not appointed an attorney, there will be no-one with legal authority to manage his or her financial affairs.  In these circumstances, it may be necessary to involve the Court of Protection to ensure that decisions can be made on the individual’s behalf.  This may include the appointment of a deputy.  

It is important to ensure that assets are safeguarded, preferably whilst someone has capacity, to minimise the risks of financial abuse.