A ticking time bomb

There has been much media discussion in the past decade about the ageing population and the resultant rise in age-related diseases. The substance of the debate has been about how this issue will be tackled at government and individual level, both financially and in terms of care provision.

This state of uneasy affairs has understandably often been dubbed as
'a ticking time bomb'. There is a further layer to this bomb which results from modern globalisation and particularly,
the increase in ageing internationally mobile people.

I am talking about the cross border conflict of laws concerning the assets of vulnerable adults. The ticking has now stopped and the bomb is about to detonate, with private client advisers beginning to consider the fallout.

The status quo

Dementia (which may more accurately be described as a collection of symptoms caused by a brain disease or series of strokes) is the most widely known age-related disease that is on the rise. Alzheimer's UK estimate that globally, there are 36 million people living with dementia. This figure is expected to double in the next 20 years.

The statistics are similarly worrying closer to home, with six million estimated to be living with dementia in Europe. In the UK the figure is currently at 820,000, which is expected to rise to 1.7 million by 2051. In response, the UK government has pledged £300m of support into research on the disease.

As private client advisers, we are increasingly encountering decreasing capacity of clients by reason of age related dementia. The problems range from those of a purely legal nature, such as how to obtain instructions on behalf of a client with diminishing capacity, to those of a combined legal and moral nature, such as at what point to intervene when faced with a client who may or may not be suffering abuse.

It is an appalling fact of life that abuse of the vulnerable occurs, about which we hear more and more, and in varying degrees of seriousness. English law favours autonomy of the individual over intervention and so the question of when to intervene can be fraught. Sadly most private client advisers will have witnessed first-hand cases of abuse of the vulnerable.

Case study

One of my clients, an elderly loner, had a carer who was the only person he would see for months on end. He was very fond of her and had utmost trust in her. He retained mental capacity but it was declining. He was very frail physically and relied upon his carer for all his needs. The client would refuse requests from his advisers for intervention into both his financial and welfare affairs.

While he retained mental capacity, he was at liberty to refuse assistance. However as time went on and his needs increased, it became apparent that his refusal of assistance was at the behest of his carer. She was exploiting her influence to isolate him, ensuring that all caring responsibilities (and thereby remuneration and expenses) remained with her. This amounted, not just to financial abuse, but also emotional abuse, putting the client at risk of physical harm.

Luckily this client had earlier put in place a lasting power of attorney which enabled us to dismiss the carer, ensuring that his care needs were appropriately met. Disappointingly this is not the only client I have had who has been manipulated
by those who were outwardly caring
for them.

Mental Capacity Act 2005

The England & Wales Mental Capacity Act 2005 (MCA) and its code of practice, lead the way in steering a course through the legal and practical issues involved in acting for the vulnerable. Many jurisdictions do not have such advanced law in this area.

Jersey has no mental capacity legislation. This was highlighted in a recent serious case review of the States of Jersey Safeguarding Partnership Board. The case concerned an elderly and frail man who, notwithstanding his lifelong aversion to medical treatment, was administered medicine covertly in his food by his care home staff.

The serious case review found that there was no structure for decision making in terms of undertaking a mental capacity assessment, and making a best interests judgement. It cited 'the significant and progressive' principles of the MCA, as benchmarks for decision makers. They are referred to in draft Jersey policy and it is expected that Jersey will have legislation based on the MCA.

Vulnerable clients in Jersey

Turning now to the financial affairs of the vulnerable in Jersey, this is governed by the customary law of the curatelle as modified by article 43 of the Mental Health (Jersey) Law 1969. It is necessary to appoint a curator to manage the financial affairs of those who have lost capacity to do so for themselves.

A curator is a court appointed representative with a similar role to the English Court of Protection deputy. There are no lasting powers of attorney or similar measures that can be taken in advance by a client. Additionally there is no law in Jersey recognising foreign lasting powers of attorney, but they will be registered by the court in Jersey for use on the Island as a matter of comity.

Jersey's economy has transformed since the date of the 1969 law; the island is now a leading international financial centre. It follows then that the law in connection with the finances of the vulnerable requires updating, especially in the shadow of the detonating bomb.

Therefore the positions in England and Wales and in Jersey are quite clear. But what about further afield where, in addition to the different legal system, there are different languages and cultures?

International cooperation

An attempt has been made to address this at an international level, by the Hague Convention on the International Protection of Vulnerable Adults.

It introduces laws for determining which jurisdiction is competent to implement measures on behalf of the incapable person. It provides that, jurisdiction is primarily based on the habitual residence of the person concerned. It also takes into account nationality, situs of the assets and presence of the person.

One of the aims of the convention is to ensure that, where a person has put in place arrangements for their own affairs, should they become incapable in the future (such as through a lasting power of attorney), that such arrangements are respected in other jurisdictions. This is achieved by way of a certificate issued by a contracting state, confirming the arrangements for use in another contracting state.

However the convention has limitations. It has been signed and ratified by very few countries: Austria, Czech Republic, Finland, France, Germany, Switzerland and UK for Scotland. It has also been signed but not ratified by Cyprus, Greece, Ireland, Italy, Luxembourg, Netherlands, Poland and UK for England & Wales and Northern Ireland.

Practitioners report that the different jurisdictions take various approaches to a request to recognise an English lasting power of attorney. It is advised that any lasting powers of attorney intended for use in any of the convention countries should be executed before a notary, and legalised at the time of execution.

Where we go from here

In the knowledge that the time bomb is close to explosion, now more than ever in our roles as trusted family advisers, we should be alert to the early signs of dementia and help our clients plan for a decline in capacity, which may happen over many years.

Getting to know our clients and their families through longstanding relationships is crucial in enabling us to spot the early warning signs, of which difficulty with finances can be one. Powers of attorney are extremely useful to plan for the future.

However as noted above, their availability, recognition and enforcement in other jurisdictions is not always straightforward. As a result a combination of various asset protection structures, such as an offshore holding company, may also be appropriate for an international client. 

Donna Withers is head of wills
and probate at Hawksford