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, tells FTAdviser.
FTAdviser: Does older age always equal vulnerability?
Mr Uz-Zaman: No, certainly not. Vulnerable people come from all social strata and across all ages. Yes, it is generally older people who suffer from dementia, for example, but equally victims of accidents, and those with mental health problems and learning disabilities, are also vulnerable.
I think it is important to remember that vulnerability means any person can be easily harmed and any person is worthy of protection.
FTA: That said, what can make older people particularly vulnerable?
MUZ: If there is anything that Covid-19 has taught us, I hope it’s not only to value the importance of real human connection but also to be conscious of each other, and especially elderly neighbours who may rarely see their children, may have lost their spouse and who may also be suffering from the physiological challenges of old age.
All these factors and more engender vulnerability in the elderly.
FTA: Can these vulnerabilities make it harder for people to make sound financial decisions?
MUZ: No doubt. We know vulnerable people are easy targets and elderly people more often than not have an income source. In my experience, isolated elderly people are more susceptible to financial abuse by fraudsters pretending to do be do-gooders.
What’s not always so clear is that family members are also culpable for financial abuse, when they feel they can reward themselves for paying bills and doing some of the grocery shopping.
When someone is vulnerable, and especially due to loneliness and isolation, their decision-making skills and otherwise sound judgement is at risk of serious exploitation.
FTA: What sort of advice should clients approaching 70+ be getting from their advisers?
MUZ: I would really hope people have their financial affairs sorted out long before they reach age 70. I’ll come back to this in a second, but ultimately such clients must have their lasting power of attorney in place.
These are powerful legal documents that allow an individual known as the ‘donor’ to appoint a person of their own choice, known as an ‘attorney’, to look after their affairs should they no longer wish to make decisions, or lack the capacity to manage their affairs themselves, at a later stage in their lives.
For example, if someone had an accident or an illness left them confined to a bed, either temporarily or permanently, then the only way their financial affairs can be managed without an LPA is by an application being made to the Court of Protection for deputyship.
The clue is in the name, however: the person is not their deputy, rather they are a deputy of the courts and there’s no guarantee a particular family member will be appointed, especially if there are disputes internally as to who should take that role. Not to mention it’s a very expensive route to go down.