Prevention of Elder Financial Abuse: Powers of Attorney and Inheritance Impatience

Szabo & Associates, Solicitors have from time to time highlighted the issue of elder abuse, most recently in Understanding Elder Abuse in Australia and National Plan to Address Elder Abuse, the latter which announced a national plan to address the issue of a complex and seemingly growing problem. Recently too it was reported that New South Wales will trial a new support programme for older people suffering abuse especially at the hands of carers and family. The Government announced $150,000 to pay for case workers to offer assistance to victims beyond the normal referral system helping to coordinate police, health, cultural and community services. Under the trial, callers will be referred to other agencies and followed up. The trial, which began in March, picks up from similar programmes in the USA, Canada and New Zealand. It was reported that more than 7,000 calls were made to the hotline between its launch in 2013 and December 2017. There were 2,130 calls to the hotline in 2016-17 up from 1,200 in 2013-14.

Elder financial abuse is not, of course, unique to Australia. In the UK, a recent request under freedom of information legislation to the Care Quality Commission disclosed that care home managers reported almost 13,000 concerns that vulnerable residents were experiencing financial abuse in the last four years. This data has prompted a call for a Government inquiry into the scale of the issue and how it may be tackled. The lawyer who made the request stated:

“This is an issue which should be high up the Government’s agenda, like in Western Australia and the US, and a positive step in this direction would be to commission a report and appoint a minister for the elderly who can lead on and create new policies in this area. Practitioners have serious concerns that the increased digitalisation of the creation of Lasting Powers of Attorney will empower abusers without any reciprocal drive to put statutory safeguards in place”.

Key Issues

Elder abuse has been described as any behaviour or action that harms an older person. It can take many forms including financial, psychological, physical and neglect.

Financial abuse, in particular, is the illegal or improper use of an older person’s property, finances or other property without their informed consent or where consent is obtained by fraud, manipulation or duress.

Causality may derive from “inheritance impatience” combined with a sense of entitlement or greed.

Even family members with the best of intentions can be overtaken by events such as their own financial difficulties to which they see a solution.

A recent report by ABC highlights a case in Western Australia of financial abuse but also how an individual can take action where they suspect an older person is being abused. In this case, three adult sons were refused guardianship, having siphoned off more than $1.6million of their elderly parents’ estate, and a granddaughter stepped in to demand an independent guardian. 

In March 2017, one of three adult sons helped his 87-year-old father sell his farm but then transferred the $1.6million to his own account and split the proceeds with his brothers. The sons also sought to have their parent’s home gifted to themselves even though the State Administrative Tribunal later found that their mother, 81, “lacked the capacity required” to agree to it. Two of the sons used their parents’ funds to pay their own legal fees and the Tribunal referred to large cash withdrawals.

In April, the granddaughter sought an independent administrator for her grandmother fearing she was at risk. One of the sons asked for him and his brother to be appointed as guardian and administrator for their parents arguing the father was “vulnerable to financial exploitation by his grandchildren” and was being held “against his will in hospital”.

The Tribunal did not accept the claims the sons were making about the granddaughter ordering an injunction preventing the sons from dealing with the funds associated with the farm. It also ordered investigations be undertaken regarding other amounts which are ongoing.

In other instances, financial abuse can be facilitated by the misuse of a Power of Attorney. Powers of Attorney are an important part of managing financial affairs once a person loses mental capacity to cope or indeed before that. It is a valuable tool but can be vulnerable to exploitation. As discussed in more detail in our blog Protecting Against Misuse of Powers of Attorney an Enduring Power of Attorney is a legal instrument that grants the person you choose as attorney (i.e. someone you choose to take control over your assets and/or finances at a point in time when you are no longer able to manage your affairs independently) with the authority to do the things that you have agreed within the body of the deed. This gives the attorney considerable scope to act in your place.

What Does it Mean?

No one should have to suffer abuse as a result of having granted a Power of Attorney. Regrettably, in the wrong hands, they can be used to take advantage by those trusted to act in the best interests of the grantor. Clearly it is essential to consider carefully who you will appoint as an attorney, as appointing the wrong person can have serious consequences for you or your family.

However, this should not put you off taking proactive steps to safeguard your rights as you age. As lawyers experienced in these matters, Szabo & Associates can support you in making decisions about your future and prepare documents to protect your wishes.

Also, if you witness what you believe could amount to elder abuse you can take action including contacting a lawyer or contacting the helpline.

Contact our Power of Attorney Solicitors Sydney, NSW

At Szabo & Associates, Solicitors, we are concerned that any client considering entering into a Power of Attorney fully discusses with us the purpose, meaning and consequences of doing so. In particular, this should include who they wish to appoint as an attorney. If you wish to speak to us about any aspect of a Power of Attorney please contact George Szabo on (02) 9281-5088 or complete our online contact form.