A mentally incapacitated parent was effectively kidnapped and taken to a low tax jurisdictions to avoid taxes

Date: 30 Sep 2015

Bumblebee Design

Suzanne Marriott, partner and notary public for Charles Russell Speechlys, talks about the cases of financial abuse of UHNW clients after they lost their mental capacity.

How can mental incapacity interfere with succession planning?

Those making the decisions on behalf of the incapacitated family member often have conflicts of interest which they find hard to separate and will fight hard to keep control of. In many cases, the family member will be inheriting the estate or part of it, and this conflicts with spending this inheritance on their parents during their lifetimes as it will inevitably reduce the final payout. One way to solve this is by appointing independent and often professional attorneys or deputies, and non-family members.

We often hear about cases of financial abuse of mentally incapacitated people, especially by their family members. Are UHNW clients exposed to abuse to the same extent?

Yes, in my experience they are, either because the values are higher and family members think it will go unnoticed, or it is worth fighting about as values are so high and control of the assets is key. I worked on cases when this kind of abuse was perpetrated also by non-family members, such as staff and carers.

How do you structure lasting powers of attorney when assets are in different jurisdictions?

UHNW clients should take local advice in the jurisdictions and take out an equivalent to lasting powers of attorney at the outset while they still have capacity. Sometimes notarised copies of LPA will work with an affidavit, which is a written statement confirmed by oath or affirmation, for use as evidence in court.

What interesting cases of mental incapacity involving the UHNW clients have you been working on?

Two biggest ones I have worked on involve a case of a family member who effectively kidnapped the mentally incapacitated client to Guernsey to where they lived to save tax. In another case, a family member kidnapped a client to America and Scotland to avoid their siblings taking control.

What trends do you see in the industry?

More practitioners are shying away from this area of law due to lack of experience as it is very specialised. The court of protection also tends to choose representation based on postcode rather than expertise which means the fees recovered are too low despite the complexity of work.