We have an ageing population and with housing price growth and rising superannuation savings, we are seeing the wealthiest generations ever to retire.
In the midst of other issues (housing affordability, etc) arising from these occurrences, is elder financial abuse. In response to more than 200 submissions from the aged care sector, lawyers, finance professionals, advocates and even victims themselves, the Australian Law Reform Commission (ALRC) is presently conducting an inquiry into elder abuse.
The aim of the ALRC inquiry is to assist the federal government to identify what laws and frameworks can be put in place to best protect older Australians from any type of elder abuse.
What is elder financial abuse?
Elder financial abuse can be summarised as the improper use of an older person's property, finances and other assets without their informed consent or where consent is obtained by fraud, manipulation or duress.
Older people who are isolated or dependent on others, perhaps as a result of dementia, poor physical heath or who cannot read or write English are among those most at risk.
Whilst it's not always the case, sadly, the perpetrators of elder financial abuse are often related to the victim. "Inheritance impatience" is one of the biggest drivers of this type of elder abuse and unfortunately, there are more and more instances where people cross the line into criminal behaviour.
What are the warning signs?
Even those with full capacity may think of what's happening as a "family" issue and not speak up or seek help. It is therefore vital for other family members, as well as friends, neighbours, community carers, lawyers and financial services professionals and anyone else who interacts with the older person to be aware of the warning signs.
Red flags can include difficulty paying bills, significant bank withdrawals or unusual activity on an account, the unexplained disappearance of possessions or changes to a Will.
The older person may become isolated so social withdrawal can be another indicator and cause for concern. In this instance, friends, family and regular community services can be better placed than service professionals who interact with the older person less frequently to notice things like a change in demeanour and attitude.
As a lawyer or other advisor, red flags can include a hovering carer, or someone else making the appointment and dominating a meeting, not allowing the older person to speak. It's vitally important that we protect our clients and take instructions from them, preferably alone, as they are the ones to whom we owe a duty.
What can be done to prevent or minimise the risk of elder abuse?
A Power of Attorney allows one or more people to manage someone's legal and financial affairs. An Enduring Power of Attorney can be very useful to continue managing someone's affairs once they have lost the capacity to do so themselves but it's important to have the right people in this role as the person in need will be unable to oversee what the attorney is doing.
One way of minimising the risk of abuse is to have more than one person appointed and to stipulate in the document that decisions must be made jointly. Another way might be to limit powers, such as the power to sell property or perhaps the power to withdraw more than a certain amount of funds unless being applied towards payment of an accommodation bond.
There have long been calls for a national register of Enduring Powers of Attorney as there is currently no way of checking the validity of the document when an elderly or vulnerable person's relative, friend, or carer attempts to withdraw or transfer money on their behalf, or otherwise deal with their assets.
In response to this problem, the Australian Bankers' Association has called for the introduction of a national register of powers of attorney to add an extra layer of protection for customers. Banks are ideally hoping for the introduction of an online national register which they can test on a live, real-time basis to make sure a document is still current.
An online register may not be the answer though because:
- As it is, not enough Australians are making proper arrangements in the first place; and,
- Adding another layer of regulation or to the cost of the process may actually have the undesired effect of creating a disincentive to have the document prepared.
Perhaps what we should be looking at is tougher criminal sanctions for those who breach their obligations? Perhaps state and territory tribunals should be empowered to order enduring guardians and attorneys to pay compensation where a breach of their obligations has resulted in a loss to the person they represent? The problem is though, once the money is gone, it's often impossible to get it back.
The ALRC is expected to report on its inquiry in May 2017. In the meantime, as trusted advisors, let's not ignore those red flags.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.