Questions and Solutions: Why Older Prospects Want Everlasting Power of Attorney
Older clients are not necessarily always more vulnerable than younger clients, but they are often more susceptible to financial abuse, Mohammad Uz-Zaman, Associate Step member at ADL Estate Planning, told FTAdviser.
FTAdviser: Is age always synonymous with vulnerability?
Mr. Uz-Zaman: No, definitely not. People at risk come from all walks of life and from all age groups. Yes, it is generally older people who suffer from dementia, for example, but also victims of accidents and people with mental health problems and learning difficulties are also at risk.
I think it’s important to remember that vulnerability means that anyone is easily injured and everyone is worth protecting.
FTA: What can make older people particularly vulnerable?
MUZ: If there’s anything Covid-19 has taught us, I hope it’s important not only to appreciate the importance of real human connection, but also to be aware of one another, and especially older neighbors who may rarely see their children , may have lost their spouse and who may also suffer from the physiological challenges of old age.
All of these factors and more make the elderly vulnerable.
Free Trade Agreement: Can These Vulnerabilities Make It Difficult for People to Make Well-informed Financial Decisions?
MUZ: No doubt. We know that vulnerable people are easy targets and that older people often have a source of income. In my experience, isolated older people are more susceptible to financial abuse by scammers posing as benefactors.
What is not always so clear is that family members are also responsible for financial abuse if they feel they can reward themselves for paying bills and shopping for groceries.
When someone is vulnerable, especially due to loneliness and isolation, their decision-making skills and otherwise sound judgment are at risk of serious exploitation.
Free Trade Agreement: What kind of advice should clients approaching 70+ get from their advisors?
MUZ: I would really hope that people’s financial affairs will be sorted out long before they turn 70. I’ll get back to that in a moment, but ultimately, such clients must have permanent power of attorney.
These are powerful legal documents that allow a person known as a “donor” to appoint a person of their choice, known as an “attorney”, to take care of their affairs in the event they no longer wish to make decisions or are unable to manage their affairs by themselves, at a later stage in their life.
For example, if someone has had an accident or illness that kept them temporarily or permanently in bed, their financial affair can only be managed without an LPA if an application for representation is made to the Court of Protection.
The clue, however, is in the name: the person is not their deputy but a deputy of the courts, and there is no guarantee that any particular family member will be appointed, especially if there are internal disputes about who should play that role. Not to mention that it’s a very expensive route.