Lessons from Stan Lee and Buzz Aldrin - The Importance of Safeguards in Lasting Powers of Attorney to Prevent Financial Abuse
Stan Lee and Buzz Aldrin’s financial abuse cases provide valuable lessons on the need for safeguards in later life planning — especially with lasting powers of attorney. We share how you can design better and safer later life plans and lasting powers of attorney to protect yourselves and your loved ones.
When a Star is Conned
In May 2019, Stan Lee’s ex-manager, Keya Morgan, was charged with financial abuse of the late Marvel Comics founder1. Morgan had allegedly stolen US$262,000 from Lee and isolated him in order to control him. News reports described the webs of deceit spun by the many advisers, managers and 'newly-made friends' that had gathered around him and his fortune, after the death of his wife, Joan, 10 months earlier, had left the Spider-man creator in poor physical and mental health and perhaps more trusting of strangers than before.
10 months earlier, Buzz Aldrin – the second man on the moon and inspiration for Toy Story’s Buzz Lightyear– sued two of his children and a former manager, for financial abuse, fraud and defamation2. This was after they had applied to court to be appointed as his guardians (the U.S. equivalent of deputies) on the grounds that he had dementia and Alzheimer’s disease and could no longer handle his personal and financial affairs. Aldrin alleged that his son had, among other things, misused the power of attorney he had granted him and stolen US$0.5 million dollars from him3.
Lee’s and Aldrin’s cases involved allegations of elder abuse, and specifically, financial abuse, by family members and trusted associates. Elder abuse refers to actions or inactions – within a relationship with an expectation of trust – where harm or distress is caused to an older person4, and includes financial abuse, which is the unauthorised use of that person’s financial resources for personal benefit.
In this article, we use Lee’s and Aldrin’s cases to explain what financial abuse of the elderly is, and how appropriate safeguards in later life planning can help you and your loved ones preserve retirement monies, family inheritances and family harmony. We also explore how lasting powers of attorney (LPAs) may be abused in order to exploit elderly persons, and how to guard yourself or a loved one against it.
Why does Financial Abuse of the Elderly Happen?
There are many factors behind the financial abuse of elderly persons, and these include:
- increased dependence by an elderly person on family members or associates
- inheritance impatience
- increased vulnerability to scams from isolation
Many financial abuse victims, like Lee and Aldrin, suffer ageing-related deterioration in their vision, muscular function or cognitive functions5, which makes them more reliant on family members, caregivers and business associates with their finances and daily activities. This includes managing their business affairs, bills, banking, and groceries6, and sharing access to confidential business and personal financial matters, which makes them more vulnerable to financial abuse.
Inheritance impatience is the phenomenon where children of elderly persons feel entitled to their money7, for reasons that include:
- more wealth being concentrated in the hands of the elderly today, due to the rise in real estate value and the accumulation of savings over a lifetime
- people living longer than ever before8 - which means heirs must wait longer to inherit.
As people start feeling that their parent’s funds are ultimately theirs, they find ways to start accessing and using those funds.
More elderly persons are living alone these days. Many are widows, divorcees or never-been-married persons9 with no children. Isolation can cause loneliness, which makes them more open to strangers and makes it harder to detect any scams targeting them10. For example, five years passed by before the misdeeds of tour guide, Yang Yin, were discovered. Yang had wormed his way into the good graces of Madam Chung, a wealthy widow who lived alone. Yang stole S$1.1 million from her and had her make a will and an LPA to leave, and give control, to him over her estate11.
How LPAs Can Facilitate Financial Abuse
With the Singapore government’s strong push for more people to do LPAs12, including waiving the application fee13 and simplifying and speeding up registrations14, it may come as a surprise to some that LPAs can potentially be used by one’s family members or associates to commit financial abuse.
LPAs are legal documents that allow people – ‘donors’ - to appoint a person – a 'donee' - to decide and act for them if they lose mental capacity, over one’s personal welfare matters like where to live and what medical treatment to receive - and property. They are affordable, easy to make and are a key part of planning for one’s later life, and help relatives of mentally incapacitated persons avoid having to apply to court to act on their behalf15. In the right hands, LPAs enhance your autonomy by letting you arrange for someone to act in your best interests and based on your wishes.
But in the wrong hands, they are tools of financial abuse16, as donees are given enormous power through LPAs. They can sell, mortgage or transfer the donor’s property and investments for personal gain, empty bank accounts, and use the donor’s cash to buy fancy cars, clothes and trips for themselves.
Further, 98% of the LPAs that are registered are based on ‘Form 1’17, which grant donees very wide powers over the donor’s property. Also, while ‘Form 1’ LPAs allow up to two donees to be appointed and allow donors to require their donees to make decisions jointly - which would provide some form of checks and balances – anecdotal evidence suggests that most ‘Form 1’ LPA donees act on a joint and several basis.
This means that a donee can deal with the donor’s assets without consulting another person, so once a donor loses mental capacity, the donee only needs a medical report certifying the donor’s mental incapacity in order to access the donor’s funds. This is fine for donors with tight-knit families and trustworthy relatives, but with an errant donee, a ‘Form 1’ LPA is akin to a blank check. It grants free rein over the donor’s cash, property, and investments, and statistics from the U.S. and U.K.18 point to LPA misuse as one of the commonest forms or means of financial abuse of the elderly.
Also, contrary to popular belief, financial abuse is not committed only by outsiders nor does it affect only the rich and famous. An influential U.S. study indicates that financial abuse not only affects those who live below the poverty line19, but in a disproportionate way. As with Aldrin’s case, whose children were alleged financial abusers, reports on ‘Inheritance Impatience’ and results of studies on financial abuse, such as the one by Singapore law students and a U.S. study20, consistently point to family members as the likeliest perpetrators of elderly financial abuse.
While Lee’s family and Aldrin were able to alert authorities and take legal action to protect their finances, research reveals that most financial abuse victims are not so lucky, and lose most of their life savings21. This is devastating given that most elderly persons do not have income streams to rely on.
While there is a dearth of data on financial abuse or LPA misuse in Singapore, a study by a group of Singapore law undergraduates revealed that nearly half of the almost 50 elder abuse cases they reviewed involved financial abuse22. In the U.K., LPA abuse is such an issue that Denzil Lush, ex-senior judge of the Court of Protection, which hears mental capacity cases, and author of the leading text on LPAs, announced in 2017 that not only would he not make an LPA - due to the serious risk of abuse23 - but that they can have a devastating effect on family relationships.
Suppose your brother were to abuse his authority as your father's LPA donee. Not only would he have cheated your father of his life savings, he would have also deprived you of any inheritance your father would have left you. Lush’s warning proved prescient when it was later announced that there was a huge spike in investigations of wrongdoing by LPA attorneys24.
Safeguards in Later Life Planning as the Solution
While the law provides safeguards against LPA and financial abuse, huge gaps remain. Theoretically, once an LPA is registered, a donee is subject to scrutiny by the OPG and are accountable to the Family Justice Court (FJC). Donees are required by the Mental Capacity Act (MCA) to act in the best interests of the donor, and any donee who misuses an LPA to financially abuse a donor may be charged with theft, extortion or criminal breach of trust, removed, or ordered by the FJC to give restitution of the donor’s assets and to return unauthorised gifts. But in reality, most financial abuse cases are unreported25, due to families’ reluctance to take action against each other26 and the difficulty of detecting and proving financial abuse27.
Therefore, elderly persons at greater risk of financial abuse, including those living alone, are affluent, have spendthrift or substance-abusing heirs, or who have poor familial relationships, should ensure that their later life plans and documents include key safeguards like:
- having their LPA certified by a certificate issuer who specialises in mental capacity law – this ensures that donees are given relevant and digestible information as to their roles, and also as to the consequences of not acting in the donor’s best interests or exceeding their authority.
- including a supervision mechanism and clause in their LPA – this requires the donee to periodically account to an independent third party like a lawyer or accountant, who has the power to periodically demand updates on the donee’s actions. The idea is to have a watchman who keeps the donee honest and who can tip off the OPG if needed.
expressly limiting the donee’s power to make gifts - While the MCA already restricts a donee’s power to make gifts of the donor’s property28, doing this serves as a reminder to the donee and also puts third parties like banks on notice of transactions in which the donee or someone else benefits from in a way that is not in the donor’s best interests.
Donees may also be made to act jointly if the value of a gift exceeds a stipulated value or if a key asset is to be sold, like the donor's residence; the donees may otherwise act jointly and severally for gifts below that value and for other more routine decisions.
- appointing a professional donee - these are legal, accounting, healthcare and social service professionals who provide doneeship services. While fees are involved, these donees are more vigilant with their duties and roles as donees, and are subject to further duties and supervision from regulatory bodies like the Law Society of Singapore, Institute of Singapore Chartered Accountants, and the Singapore Medical Council, beyond the OPG’s supervision and the FJC’s purview.
setting up a trust - this is done so that on the donor’s mental incapacity, the donor’s assets are transferred to a licensed trust company to manage as trustee, and decisions over care and medical fees and the donor’s property are made by the trustee. This provides better safeguards, as licensed trust companies are regulated by the Monetary Authority of Singapore and are generally experienced with handling financial matters.
While this usually adds significant costs, including the annual fees of the trust company and legal fees for the trust documentation, we hope that the Special Needs Trust Company (SNTC) can introduce an affordable trustee service for the elderly, particularly those lacking someone to appoint as a donee and who cannot afford the services of professional donees or private licensed trust companies. As a non-profit licensed trust company experienced with serving persons with special needs, the SNTC is likely to be well-suited to serve the needs of vulnerable, elderly persons.
The Last Word (for now) on Lasting Powers of Attorney
We are the first to admit that this piece appears to smack of alarmism, especially when we lack concrete facts and data on financial abuse or misuse of LPAs in Singapore and lean heavily on U.K. and U.S. studies and data.
However, there is nothing to suggest that the greying of the Singaporean population is any different from the United States’ or United Kingdom’s, or that we have nothing to learn from their experience in dealing with financial abuse, especially when our mental capacity law regime is so heavily influenced by the U.K.’s.
We do not suggest that LPAs be avoided, given their many benefits, and we believe in keeping the LPA registration process cost-effective and convenient, but we believe that a one-size-fits-all approach to LPAs must be avoided, given the disastrous consequences and immense risks of misuse of LPAs and financial abuse in general for families and to our society in general. Lest anyone thinks financial abuse is strictly a private family issue, consider that the costs of lifelong caring for an elderly person who has fallen victim to financial abuse are likely to come from public funds29.
It is therefore hoped that more people, especially those we believe are at greater risk of financial abuse, are not only made aware of financial abuse, but also strongly consider implementing some of the safeguards we have suggested.
Should you have any queries regarding the above, please feel free to contact us.
1 Reuters, ‘Stan Lee's ex-manager charged with elder abuse against comic book co-creator’, 14 May 2019, at https://www.reuters.com/article/us-people-stan-lee-idUSKCN1SK04W, last visited on 16 October 2019
2 Buzz Aldrin: Apollo 11 astronaut drops lawsuit against his two adult children’, The Guardian, 13 March 2019, at https://www.theguardian.com/us-news/2019/mar/13/buzz-aldrin-astronaut-legal-affairs, last visited on 16 October 2019
3 The Independent, ‘Buzz Aldrin sues his children for trying to take control of his finances after claiming he suffers from dementia’, 26 June 2018, at https://www.independent.co.uk/news/world/americas/buzz-aldrin-children-sue-astronaut-lawsuit-dementia-money-exploitation-a8418101.html, last visited on 16 October 2019
4 World Health Organization, ‘The Toronto Declaration on the Global Prevention of Elder Abuse’ (2002), at https://www.who.int/ageing/publications/toronto_declaration/en/, last visited on 16 October 2019
5 Securities and Exchange Commission, ‘Elder Financial Exploitation - Why it is a concern, what regulators are doing about it, and looking ahead’, June 2018, at https://www.sec.gov/files/elder-financial-exploitation.pdf, last visited on 16 October 2019
6 Black, Jane A., ‘The Not-So-Golden Years: Power of Attorney, Elder Abuse, and Why our Laws are Failing a Vulnerable Population, St. John’s Law Review, Vol 82, Winter 2008, No. 1, at 290, at: https://scholarship.law.stjohns.edu/lawreview/vol82/iss1/7, last visited on 16 October 2019
7 RAlzheimer’s Australia, ‘Preventing Financial Abuse of People with Dementia’, at page 18, at https://www.dementia.org.au/files/20140618-NSW-Pub-DiscussionPaperFinancialAbuse.pdf, last visited on 16 October 2019
8 Straits Times, ‘Singaporeans have world's longest life expectancy at 84.8 years’, 20 June 2019, at https://www.straitstimes.com/singapore/health/singapore-tops-in-life-expectancy-at-848-years, last visited on 16 October 2019
9 Centre for Ageing Research & Education and Duke-NUS, ‘Home Alone: Older Adults in Singapore’ at page 3, at https://www.duke-nus.edu.sg/docs/librariesprovider3/research-policy-brief-docs/home-alone-older-adults-in-singapore.pdf?sfvrsn=6735541d_0, last visited on 16 October 2019
10 Weill Cornell Medical College, ‘Financial Exploitation of Older Adults: A Population-Based Prevalence Study’, J Gen Intern Med. 2014 Dec; 29(12): 1615–1623, at https://link.springer.com/article/10.1007%2Fs11606-014-2946-2, last visited on 16 October 2019
11 Straits Times, ‘Yang Yin saga: Sale will close sad chapter of widow's life, says niece’, at https://www.straitstimes.com/singapore/housing/sale-will-close-sad-chapter-of-widows-life-says-niece, last visited on 16 October 2019
12 Today Online, 9 November 2016, ‘Lasting Power of Attorney applications still short of Gov’t’s goal: Chuan Jin’, at https://www.todayonline.com/singapore/lasting-power-attorney-applications-still-short-govts-goal-chuan-jin, last visited on 16 October 2019
13 The Straits Times, ‘Application fees for Lasting Power of Attorney waived for 2 more years till end-August 2020‘, at https://www.straitstimes.com/singapore/application-fees-for-lasting-power-of-attorney-waived-for-2-more-years-till-end-august, last visited on 16 October 2019
14 Channel News Asia, 20 July 2019, ‘Faster and easier application process for Lasting Power of Attorney from August’, at www.channelnewsasia.com/news/singapore/lasting-power-attorney-application-waiting-period-11739422, last visited on 16 October 2019
15 The Straits Times, ‘No LPA? Expect long court process, high cost’, at https://www.straitstimes.com/business/invest/no-lpa-expect-long-court-process-high-cost, last visited on 16 October 2019
16 Jonathan Federman & Meg Reed, Gov’t Law Ctr., Abuse and The Durable Power Of Attorney: Options For Reform 4–5 (1994), at https://www.albanylaw.edu/centers/government-law-center/about/publications/past-publications/Documents/Abuse%20and%20the%20Durable%20Power%20of%20Attorney%20-%20Options%20for%20Reform.pdf, last visited on 16 October 2019
17 The Straits Times, 29 June 2018, ‘Fee waiver for LPA extended to 2020’, at https://www.straitstimes.com/singapore/fee-waiver-for-lpa-extended-to-2020/a>, last visited on 17 October 2019
18 Amanda A. Thilges, ‘Abuse of a Power of Attorney: Who Is More Likely to Be Punished, the Elder or the Abuser?’, 16 J. AM. AcAD. Matrimonial Law , 579, 579 (2000) and Exploitation of Seniors: Hearing Before the S. Special Comm. on Aging, 109th Cong. (2006).
19 Weill Cornell Medical College, ‘Financial Exploitation of Older Adults: A Population-Based Prevalence Study’, J Gen Intern Med. 2014 Dec; 29(12): 1615–1623, at https://link.springer.com/article/10.1007%2Fs11606-014-2946-2
20 See note 22.
21 New York State Office of Children and Family Services, ‘The New York State Cost of Financial Exploitation’, 15 June 2016, at https://ocfs.ny.gov/main/reports/Cost%20of%20Financial%20Exploitation%20Study%20FINAL%20May%202016.pdf, last visited on 16 October 2019
22 NUS Adult Protection Research Team, July 2016, ‘Report on the Management and Prevention of Elder Abuse in Singapore’
23 Financial Times, Senior UK judge warns against power of attorney agreements, at https://www.ft.com/content/ecf6ac14-818c-11e7-94e2-c5b903247afd, last visited on 16 October 2019
24 Law Society Gazette, 15 June 2018, ‘'Abuse' warning as investigations into power of attorney surge’, at https://www.lawgazette.co.uk/law/abuse-warning-as-investigations-into-power-of-attorney-surge/5066489.article, last visited on 16 October 2019
25 New York City Department for the Aging, ‘New York State Elder Abuse Prevalence Study’, May 2011, at p 51, at https://ocfs.ny.gov/main/reports/Under%20the%20Radar%2005%2012%2011%20final%20report.pdf, last visited on 16 October 2019
26 Manthorpe, J., Samsi, K., & Rapaport, J. (2012), ‘Responding to the financial abuse of people with dementia: a qualitative study of safeguarding experiences in England’, International Psychogeriatrics, 24(09), 1454-1464
27 Arizona Elder Abuse Coalition, Arizona Attorney General, Financial Exploitation of the Elderly: How Financial Institutions Can Help at p 3
28 Mental Capacity Act (Cap 177A), section 14(2)
29 See note 20 above.
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