A rise in cases of financial abuse prove that seniors in all stages of frailty must implement appropriate safeguards against seemingly trustworthy family members or friends. It's becoming a growing national issue.
Financial exploitation of the elderly can stem from a person who holds an enduring power of attorney (EPA) misusing the power entrusted in them. An enduring power of attorney is a legal document enabling you to appoint a person or agency to act on your behalf, particularly when you can no longer make decisions yourself. As your vulnerability increases — whether from age, illness or manipulation by supposed loved ones — so, too, does the need for a trusted attorney.
An EPA is a valuable tool for the elderly, but one also susceptible to misuse. Granting an individual power of attorney effectively gives them control over your money and other assets, in the hopes they will be well-managed should you become incapable of doing so. Attorneys can assist with your day-to-day finances, as well as manage your bills and property. However, in the wrong hands, this power equates to a blank cheque and a veritable buffet of assets — both breeding grounds for financial elder abuse.
Seniors should mitigate the risks of financial exploitation by following a number of rules:
In choosing a relative or friend to take on EPA duties, you should ensure they're trustworthy and live within proximity of you. Truth and proximity are important for the attorney to actively and effectively manage your financial affairs. They should be competent to deal with financial and property related matters and to maintain accurate records of any transactions made through the EPA
They must be free of any conflict with the concerned person's family or friends. It is essential to appoint the right person. Your choice of attorney is critical because this person could come to have complete control over all your assets. You should remove all traces of sentimentality from your mind when asking this key question: "Who should I trust with such a responsibility?". The ultimate qualification for a choice of an attorney is an absolute absence of conflict, namely someone who doesn't stand to gain from the management of your affairs.
You should consider appointing more than one attorney. Look at appointing two people as joint attorneys. They must act together and agree on all decisions to be made, rather than only one person acting on their own. Appointing joint attorneys will provide a system of "checks and balances" on each appointed attorney, by the other.
An EPA can be limited. You have the ability to effectively limit the power of your attorney. You may do this by nominating the transactions that they do or do not have the authorisation to conduct. For example, you may elect that the attorney cannot enter into transactions where they are in a position of conflict, including the making of gifts or the sale of certain assets.
Appoint a substitute attorney. Appointing a substitute attorney gives you the added security of having a backup in case the person or agency that you have appointed can no longer act on your behalf.
Consider appointing a disinterested third party to act as your attorney. If no family member is well suited or available to take such a position public services are available, for whom foul play would constitute a career-threatening crime. Such organisations have the requisite know-how and are free from any conflict of interests.This may provide an alternative to surrendering financial responsibility to a family member, no matter how innocent their intentions may be.
Seniors who are thinking of nominating an enduring power of attorney should always consult with a qualified professional who is acting solely on their behalf. If one family member is appointed as attorney, other family members should be notified, although this isn't a legal requirement.
When an EPA is enacted, the right people and institutions need to be notified. This includes banks and any other person directly involved in financial dealings with the donor. This does not happen automatically. EPAs can take effect immediately or at a later date, for example when you no longer have the testamentary capacity to make financial decisions on your own accord, as determined by medical evidence and the State Administrative Tribunal. Most people elect to have their EPA take effect immediately, to avoid any delay and administrative burden of obtaining an order from the State Administrative Tribunal. However, there may be a good reason to delay the start of a power of attorney, depending on the circumstances.
You should regularly review your EPA to assess whether the nominated attorney remains suitable. You may revoke an enduring power of attorney at any time, so long as you still have the legal capacity to do so. In some circumstances they can also be revoked by the SAT. Every power of attorney relationship in WA is subject to audit and supervision by a simple application to the State Administrative Tribunal
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.