How to Protect Your Life Savings

The newspapers recently reported the sad case of Geoffrey Hough, an elderly man from Salford, Manchester, whose life savings of £56,000 had been fraudulently spent by his son-in-law. Mr Hough suffered from dementia and had apparently been tricked into granting his son-in-law, Ian Boardman, a power of attorney which he used to access Mr Hough’s savings for his own purposes.



Even the most sophisticated person can become vulnerable as they grow older, so how do you protect your elderly relatives or yourself in later life from being taken advantage of? Is it advisable to grant a power of attorney?



Mr Hough died in March 2011 and his son-in-law’s fraud had taken place over a period of four years, which would suggest that the power of attorney given by Mr Hough was possibly an old-style Enduring Power of Attorney (EPA). These could be created until October 2007.



EPAs were very flexible and simple in form and execution. They were replaced on 1 October 2007 with Lasting Powers of Attorney (LPAs) largely because EPAs were regarded as being vulnerable to fraud. There are more safeguards in place with LPAs than EPAs.



Under an LPA, a suitable independent person (such as a doctor) has to certify that the person granting the LPA understands what he or she is doing and is under no pressure to grant the LPA. The LPA cannot be used until it has been registered with the Public Guardianship Office, which provides another layer of protection.



A Property and Financial Affairs LPA enables you to choose someone you trust implicitly to deal with your financial affairs and to place restrictions or conditions on the way that the LPA is operated if that is your choice.



If there is no LPA in place and someone becomes incapable of dealing with their affairs, an application to the Court of Protection may be necessary for the appointment of a receiver. This is a relatively complicated and lengthy procedure and can be expensive. By comparison, the cost of drawing up an LPA is small enough to be reasonably regarded as an ‘insurance premium’ designed to put in place the best possible arrangements for managing your finances in later years if necessary.