Family members are the main culprits when it comes to perpetrating financial elder abuse on their ageing relatives. The most common perpetrator is an adult son, though financial abuse is also committed by daughters, in-laws, grandchildren, nieces and nephews, and even friends.
It may have something to do with the size of the average estate these days – the family home alone is worth more than it’s ever been. Experts predict $10 trillion worldwide will be transferred in the next two decades from aged parents to their baby boomer children. It is a huge inter-generational transfer of wealth, and it is also the object of a growing impatience. Financial elder abuse has skyrocketed, in which legal apparatus are exploited to get at the inheritance before their parents are actually dead.
Financial elder abuse: joint ownership
A common form of financial elder abuse is to convince an ageing relative to nominate another joint tenant. With joint tenancy, the principle of survivorship is invoked, which means when one tenant dies the surviving tenant acquires the whole property automatically. As this applies to cars, shares, furniture and bank accounts, these nest eggs can be used while parents are alive rather than waiting for the estate to be administered later. It also cuts out any other beneficiaries, who might otherwise have a claim if the asset had been part of the estate.
Financial elder abuse: power of attorney
It’s prudent for everyone to have a power of attorney, but when given to the wrong person, can have catastrophic results.“Now everyone’s getting them but unfortunately there’s no regulation and no formal register, so if someone uses it for the wrong reasons, most of the time no one’s the wiser.”
Once a parent loses mental capacity, the power of attorney is irrevocable until they die without legal intervention. And once the money’s gone it’s very hard to get it back. When the status quo is upset and one or both parents become sick the family must re-engage to make decisions. Unresolved emotions, childhood rivalries and anger towards parents often arise. These family wars have remained hidden until guardianship tribunals, established around 25 years ago as a legal forum to protect the wellbeing and finances of people with intellectual difficulties, emerged as the new fight club for siblings arguing about control of their inheritance.
Sue Field, 67, an adjunct fellow in elder law at Western Sydney University, blames “inheritance impatience”, and says it is a more widespread cause of abuse than the deliberate con man.
“We can see the 90-year-old in the gutter because they have been ripped off, but that’s not our family. But it is our family borrowing the $10,000 in Sydney to renovate the toilet,” she says.
Ms Field said appointing a family member as attorney “often causes disharmony, particularly if one person, not through malevolent means, is misusing money”.
Jenny, whose name has been changed, believes her 93-year-old mother is the victim of elder abuse. “This wasn’t part of the plan,” she said. “Mum ended up suffering and she lost her home.”
After their father died, Jenny’s brother was given control over their mother’s finances. Without telling the rest of family, he sold the family home, which was worth close to $2 million.
“What he did was technically legal,” Jenny said. “Nowhere in my mind can I see where that was the right thing, to displace my mother and make her homeless at 92 with Alzheimer’s. My father had wanted for mum to stay in her home till her dying days and have 24-hour care, if that’s what she needed. The situation is now she is in a nursing home on the pension.”
Jenny’s brother told her he had invested the funds, but she said no money was going towards the care of their mother.
The NSW government is examining proposals for attorneys to lodge yearly accounts, and the establishment of a register of powers of attorney, to provide some basic oversight of the estate management of the booming number of elderly Australians.
Financial elder abuse: discretionary trust
Discretionary trusts limit the people getting annual distributions to family members, which can include relatives within two generations, and allow trustees to decide irrevocably who gets money and who does not. Further, as the asset is owned by the trust, not the beneficiary, when a key family member dies, even if it’s your parent, the trust doesn’t form part of the individual’s estate for the executor to distribute. The resolutions to this can be incredibly messy, and the management of these trusts is largely done in secret.
Bryan Mitchell warns that if a beneficiary is excluded from controlling how much he/she receives from the trust, they may still find remedy in the court. In past cases, the courts have found that in these circumstances, the beneficiary has effectively received nothing. Provision for such beneficiaries is made from the estate by the court.
Financial elder abuse: a growing problem
It is estimated that more than 6 per cent of older Australians are victims of elder financial abuse, but the number is probably much higher, with many people afraid or ashamed to report the actions of a person they loved and trusted.
Age Discrimination Commissioner Susan Ryan is calling for a national approach to inform and protect older people, and encourage them to speak up.
“Elder abuse is a huge problem in Australia. It affects all kinds of families, it’s not just something that affects poor people or rich people or migrant families, it happens right throughout our community and it’s getting worse. I think older people are ashamed, they’re guilty, they’re frightened. If [the abuser is] a family member they are ashamed that this would happen in their family, they’ve spent all their lives looking after their children and they’re ashamed to think the relationship has broken down to the extent that one of their own children could treat them in this fashion.”
Superintendent Rob Critchlow feels passionately about elder abuse. A regular part of his policing work is visiting nursing homes and retirement villages to talk about what he calls a hidden crime.