Usually someone takes advantage of a person’s vulnerability to coerce them into making decisions they would not otherwise make. For example, somebody coercing an elderly individual into changing their will in order to benefit themselves or exerting undue influence to give away assets or make gifts.
It may also involve misuse of a LPA for property and financial affairs or influencing a person to appoint them as their attorney under a LPA.
Financial abuse can be very hard to spot during a person’s lifetime and often only comes to light after the victim’s death.
Furthermore, there is usually little direct evidence of undue influence. Undue influence can involve threats, intimidation or manipulation but this is often done behind closed doors.
It is therefore more important than ever for advisers, practitioners and trustees and/or executors to be vigilant for signs of financial abuse.
Spotting financial abuse
There are a number of signs that may indicate that someone is being financially abused:
- Changes in financial behaviour, for example, making unusual or unexpected financial decisions such as withdrawing large sums of money from their accounts, making large transactions or making investments without an adviser’s involvement when that would be what they would usually do.
- Unexplained withdrawals of funds from their accounts.
- Decreased access to financial information; they may stop sharing their financial information with family or become more reluctant to discuss their finances with their trusted advisers.
- Unexplained and unusual gifts, either due to the size of the gift or the person to whom the gift is made.
- Significant or abrupt changes to their will that are potentially unexplained or unexplainable. For example a change at odds with previous wishes, disinheriting someone who benefits under a prior will or benefiting someone they do not appear to know well.
- Someone moving into a person’s home and living rent free or a third party generally becoming integrally involved in the person’s life quickly and without reason. This is particularly so if that leads to increasing isolation from a usual routine or friendships and contact with family.
- Changes in behaviour or health, for example becoming withdrawn, depressed, or anxious, or neglecting their personal care.
As with undue influence, it can be difficult to spot the signs as often it happens behind closed doors and the abusers will try to take steps to conceal their actions and motives. There can also often be a perfectly reasonable explanation in these situations.
It can also be extremely difficult to raise these issues and supporting clients who are at risk of being in these vulnerable situations is not easy. Discussing and dealing with capacity-related issues is challenging due to the sensitivity of the issues, client beliefs and attitudes, cultural considerations and family dynamics.
What can be done in the event of financial abuse?
Wills
If someone has made a will as result of undue influence or they did not have the necessary capacity to make will, the will may be subject to a validity challenge.
The type of scenario commonly seen in these types of cases is where one child benefits over other children and the decision is not supported by what were understood to be the testator’s wishes prior to death.
Another possible warning sign is where the primary care giver, particularly of a vulnerable or elderly individual, benefits greatly from a will.
The person challenging the will (usually a disappointed beneficiary who benefits under an earlier will) will need to prove that the testator was unduly influenced into making the disputed will. These claims can be hard to prove due to a lack of evidence.
In some cases an adviser, including an accountant or IFA, may have been appointed as an executor of a will that is ultimately disputed. Executors are generally expected to remain neutral subject to some exceptions.
