Scams come in various forms and are delivered in many ways: you could be approached directly by a person, emailed, cold-called or sent an SMS. Scammers have a few things in common – they often target vulnerable people with the sole purpose of conning them out of their money.
Many people, from the very rich to the very poor, have been conned throughout history, but scammers ideally prefer to target the vulnerable, such as those with dementia and other mental or physical problems, because they are usually more persuadable. But what can you do if you suspect that your parents, who may be in a vulnerable position, are being taken advantage of?
Geraldine Macpherson, legal marketing specialist at Liberty, says: “The reality for those of us who are older than 40 is that our parents are ageing. One of the biggest risks for the elderly is bad financial decisions. These are often a result of falling for scams, or being in a situation where they are mentally incapacitated and unable to make decisions.”
Magauta Mphahlele, the acting ombudsman for consumer goods and services, says: “We have seen a lot of elderly consumers investing in expensive equipment, products or programmes as they try to find a miracle cure for their problems. Sadly, not all of these products or offers bring about the desired relief.”
A failing system?
So, where can you get help and is there a system in place to give you support? It’s currently possible to take over the financial affairs of your parents if they allow you to, but as soon as they become mentally ill, this all falls away.
“This power of attorney provides you with the right to transact on their behalf when they are not physically present, but what many people do not realise is that, as soon as the person granting the power of attorney lacks mental capacity, the power of attorney is null and void. To continue to act on it amounts to fraud,” says Macpherson.
In countries such as the UK, relatives or carers are able to obtain “enduring power of attorney”, which continues to be valid if the grantor becomes mentally incapacitated, but it must be granted prior to the mental incapacity.
“Unfortunately, this concept is not applicable to South African law. It could solve many practical problems, at a small cost,” adds Macpherson.
But there is a reason power of attorney doesn’t continue after a mental illness is diagnosed.
“Time and again, we see the abuse of powers of attorney by children who manipulate their parents to benefit themselves – often at the expense of siblings – and, at times, they even blatantly steal from their parents.
“It must be accepted that those who lack mental capacity are extremely vulnerable and thus strict measures are in place to protect them,” says Macpherson.
Ways around power of attorney
If your parent is no longer mentally capable of making decisions, there are two options. Firstly, you can apply to the high court to have your parent/s placed under curatorship.
“This is a complex and costly process, requiring compelling medical evidence as well as the services of an attorney and an advocate. This could cost tens of thousands of rands in legal fees,” explains Macpherson.
The other option is to apply for an administration order in terms of section 60 of the Mental Health Act.
“This would be the cheaper route, but the administrator’s powers are more limited than the curator’s, and it is necessary to report to the Master of the Court on an ongoing basis,” adds Macpherson.
Another possible solution is to ensure that assets are held in trust prior to your parents needing such legal intervention. The trustees would then be able to make financial decisions without the need of a court order for the benefit of your parents.
“In the situation where all the siblings are emigrating and the parent is being left behind, it may be worth it to seriously consider this option and get legal advice on it,” says Macpherson.
What else can you do?
It’s vital to keep the lines of communication open with your parents, and educate them about the traps they could fall into if they are not careful with their finances and personal documentation.
“Make sure that your parents are being serviced by a credible financial planner and, where possible, ensure that at least one of the adult children is involved in all the financial decisions made and that the siblings are kept in the loop,” says Macpherson.