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Why you're never too old to be defrauded

Probate and 'late-lifetime' fraud is on the rise - just as baby boomers are starting to hit retirement age. Diana Lennard on the elderly at risk

Sunday April 4, 2004
The Observer

Harold Shipman might still be practising medicine and murder today if Kathleen Grundy's daughter had not become suspicious of her late mother's will, a forgery that left everything to the doctor.
But more and more elderly people remain at risk from the actions of fraudsters. Probate fraud is a rapidly growing problem, together with what Crispin Ellison of the Institute of Legacy Management has dubbed, 'late-lifetime fraud'.

Five years ago probate fraud was not seen as a problem. The larger charities noticed it first and even they initially underestimated the size of the problem.

'We realised we were seeing the tip of an iceberg,' says Ellison. It was thought at the time to be in the region of £50 million per year. But Tim Stone of the Royal National Institute for the Blind (RNIB) and member of the Society of Trust and Estate Practitioners has recently raised that figure to a shocking £100-150 million.

Some deceits are breathtaking in their audacity. The most famous case is that of Annie Kay. She went to live with her carers, the Spillmans, in Southend. A solicitor was contacted by someone posing as Kay. He went to Kay's home, where the fake Kay instructed him to make a will leaving everything to the Spillmans.

After Kay's death her old family solicitor was suspicious that she had changed her will without consulting him and had disinherited charities of £2 million.

The charities called in solicitor Peter Jeffreys to investigate. Neighbours of Kay recalled seeing an elderly lady and the Spillmans in Kay's house. The Spillmans and their elderly relative were sentenced to prison. The charities eventually received the money they were left in the genuine will.

The larger charities are to thank for exposing the extent of fraud. They are left 2 -3 per cent of the total inherited wealth and legacy officers employed by the larger charities now also keep a practised eye on probates where their charity benefits.

However, it is not just char ities that are being defrauded: the remaining 97 per cent of money left to the public is wide open to professional fraudsters. Many people do not know the exact value of their relatives' estates. Most have no idea what an estate account looks like or the minutiae of legal fees, inheritance tax, capital gains tax or income tax. The field is wide open. Many cases involve fraudulent lawyers because almost all probate is dealt with by solicitors and not by the public.

In Scotland, probate is not granted until the assets of the estate have been listed as a public document, which provides an additional safeguard. We would do well to adopt such a system here but no such change is planned.

Late-lifetime fraud particularly affects elderly women. Widows often have little experience of handling financial affairs. In the most recently reported case, con-man plumber Gary Seabrook pleaded guilty to deception for charging 73-year-old Muriel Burbidge £5,355 for unblocking a drain.

Rogue traders, professional con-men, neighbours on the make, companions, care assistants and even family can be out to cheat the confused elderly of their assets. Typical signs of abuse can be unexplained withdrawals from their accounts, a relative taking over the finances but leaving bills unpaid, abrupt changes to wills, unexplained gifting of property, and a person becoming anxious and confused about their finances.

However, by no means every elderly person who gives away money is a victim. The difficulty for the courts is in judging whether that decision has been influenced by fraud. Elderly people with failing memories do not make the best prosecution witnesses. Often, if the fraudster is related to the donor, the police will be reluctant to pursue charges as they consider the matter domestic. With family members in particular it can sometimes be very difficult to tell where genuine claims end and fraud begins.

But fraud is most abundant in this area in the misuse of enduring power of attorney (EPA).

An EPA is often given by an elderly person to a lawyer, friend or family member, passing over control of all their finances. It can operate immediately and the recipient does, rather frighteningly, have unlimited access to the person's income and capital. Neither a doctor nor a solicitor needs to be present at the signing to confirm sound mind.

Sometimes solicitors are made attorneys and can charge for the work. One solicitor who had an EPA charged an estate £24,000 over a three-year period. Yet all he had done was set up a standing order to pay nursing home fees and prepare a will for his client.

EPAs do not have to be court-registered. There are currently approximately 14,500 registered annually and of those, 10-15 per cent are estimated to act unlawfully.

No one knows the number of unregistered EPAs in use, but it is believed the figure may be as high as 290,000. There is no court supervision and, unlike a receiver, the attorney only has a common law duty to account and does not have to start with an inventory.

Also, receivers are protected by bonds; attorneys are not. The Court of Protection also has surprisingly limited powers to interfere in cases of EPA fraud.

Changes are planned but they do not go far enough towards addressing the problem. The Mental Incapacity Bill, due to come into effect in 2007-8, creates instead 'continuing powers of attorney'. These will have to be registered before they are valid. But this is no guarantee as a safeguard against fraud.

In relation to probate fraud, the Public Guardianship Office is planning to set up an investigations unit and is presently running a pilot scheme reviewing what types of financial abuse it might handle.

Crispin Ellison believes that fraud is likely to increase substantially because the baby-boomer generation is reaching retirement and living longer.'The future scenario is frightening,' he says.

Where there's a will...

· A solicitor delivered two separate sets of probate accounts. A named beneficiary was to receive a sum of money, while a charity would have what was left. The money covered in the two sets of accounts differed by more than £60,000, which the lawyer kept. The fraud was fortuitously discovered when the first beneficiary rang the charity with a query.The solicitor was convicted of fraud and jailed for five years.

· Another charity receiving the accounts of an estate was puzzled as to why a woman of 92 had spent a fair amount of money on her credit card just before she died. An investigation showed that the solicitor involved in the will had faked his own card debts to appear with the dead woman's name.

· Another solicitor prepared similar versions of a will, and in the signed version substituted an alias of his own name for that of a real beneficiary.

· A lawyer prepared a codicil amending a will, reversing the gifts made by the deceased. He showed the will to one beneficiary but only the codicil to another. The result was that a charity, which had been left a large sum, received far less, while the solicitor pocketed the difference.

· A beneficiary was left the proceeds from the sale of a house. An executor falsely told the beneficiary it had been sold for £60,000. However, they investigated and found that the house had not been sold, though it later fetched £170,000.

Where to get help

· Action on Elder Abuse, a charity that also deals with financial abuse. Helpline: 080 88088141.

· Peter Jeffreys, of Wilsons, the solicitors, 01722 412412.

· Step, the Society of Trust and Estate Practitioners, 26 Dover Street, London, W1S 4LY (0207 763 7125; www.step.org).

· Institute of Legacy Management, an organisation for professional legacy officers and probate lawyers, 020 8675 3860.

· The Law Society's Office for the Supervision of Solicitors 0845 608 6565.

· Fraud Intelligence Unit of the Law Society, 01926 439 662.

 

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