Financial elder abuse surged during COVID-19 lockdowns
Financial abuse of the elderly is on the rise, particularly during pandemic lockdowns.
Retirees with houses, superannuation and other assets are an attractive target for greedy relatives or swindlers.
Lawyer Katie Binstock is seeing more older people who have been cheated out of their savings and homes or been forced to change their will or other legal documents against their best interests.
A lawyer at McInnes Wilson, Binstock specialises in elder and succession law.
With 16% of the population aged over 65, it is a hidden crisis, says Luisa Capezio, aged care adviser at Phillips Wealth Partners.
The perpetrators are often family members, according to a Seniors Rights Victoria study, which found around 73% are sons, daughters, sons-in-law or daughters-in-law. Around 10% are intimate partners. Others are friends, neighbours or carers.
Elder abuse often occurs in the privacy of homes and the perpetrators are secretive about their behaviour until there is a crisis, such as the older person needing to fund aged care or pay their bills.
Kicked out of home
Take the case of 82-year-old Rose, who entered into a financial arrangement with her son, John. Rose signed over 40% of her home in return for John moving in to take care of her and pay all the bills.
Rose moved into a flatette at the back of the house. When John got married, his new wife gave him an ultimatum: "Your mother has to go."
In the meantime, John asked Rose to sign documents that, as it turned out, transferred the whole ownership of the house and other funds to him.
When the bills started mounting, Rose realised John wasn't paying them, which was part of the agreement. She was confused and overwhelmed. Then John told her she had to leave the house.
Rose's memory was failing and she couldn't understand what has happening. She contacted her other children, who ended up taking Rose to a lawyer who specialised in elder abuse. It was a difficult case to unwind because she had signed documents.
But because her memory or capacity to understand was failing, the lawyer was able to argue she didn't know what she was signing. Also, her son wasn't looking after her best interests.
The first lawyer who acted for both Rose and John, transferring 40% to John and then the whole amount, was found to have breached his legal duties. Not surprisingly, the case tore the family apart.
Worse in lockdowns
NSW Police say elder abuse is a form of family violence. Financial abuse is one of many types of elder abuse. Other sorts include emotional abuse, neglect, physical abuse, sexual abuse and social abuse where older people are kept isolated or restricted from seeing and contacting people.
Elder abuse cases shot up during lockdown periods, according to hospital emergency department, police and ambulance data. One of the reasons is that adult children returned home to live with their parents due to unemployment or returning from overseas.
While this might be okay for the short term, over the long term, problems can arise, says Melanie Joosten, from Seniors Rights Victoria, a legal centre that provides a helpline and an advice service to prevent and respond to elder abuse.
In an interview on community radio station 3CR, Joosten said that often older people are victims of inheritance impatience, with family members eager to get their hands on Mum and Dad's money.
They will do all sorts of things to get it. She believes it stems from a misguided belief that older people don't need their money and they should hand it over.
But sometimes it isn't a family member, as in the case of Abha Anuradha Kumar, a former nurse who received the $1 million estate of Lionel Cox, a 92-year-old with no family.
She had known him for less than a month in an aged care home. She was charged with engaging in professional misconduct, which included getting Cox to sign a will making her the sole beneficiary and executor. She was banned from being a registered health practitioner for five years.
Elder abuse is typically identified by doctors, geriatricians, social workers and increasingly home carers, who are trained to look for signs that the older person isn't safe. In response, governments have set up elder abuse hotlines to advise older people, family members and concerned members of the community. Financial elder abuse is so common that legal firms, as well as financial planners and accountants, are specialising in it.
But often financial planners and lawyers see people when the financial damage is already done, and it can be a complicated and lengthy legal process to win their money back.
"Identifying, seeking help and prosecuting the perpetrator can be challenging," says Craig Phillips, from Phillips Wealth Partners.
But this doesn't mean people are powerless to do something about it. He wants to raise community awareness of signs of elder abuse and for people to check if an older person is in a safe and supportive place.
Phillips is working with retired clients to set up an estate planning framework to protect them from ever becoming victims.
Dementia set to grow
As older people lose their capacity to look after their finances, they become vulnerable. Dementia Australia says there are currently 472,000 people living with all forms of dementia and without a major medical breakthrough it forecasts this number to grow to 1.1 million by 2058.
Ageing brains and cognitive decline can be a huge threat to a person's wealth, particularly if they insist on making all their own financial decisions. Research says that it does become harder to make sharp financial decisions in our 70s and 80s.
Often the elderly appear on the ball outwardly. They have personable skills and are well presented.
But they are not coping. At the same time, they put up barriers to people such as friends who try to help them, refusing to give up their independence.
Phillips recalls an older woman, with no children or partner, who came to see him but couldn't tell him anything about her finances. She had a long working life before she retired but didn't know which superannuation fund she belonged to or where her money was. She recently had received a large cheque after downsizing but didn't know what to do with it.
It is a delicate issue and a difficult conversation for a financial planner.
One of the options that Phillips explored was to find if there were any trusted relatives who could support her. He located a sister who was of sound mind but lived in another city. He was able to contact her for help.
Other supportive steps that can help, says Phillips, include contacting a doctor to organise an ACAT assessment for extra help, plus a lawyer to update documentation to protect them.
Cognitive decline can happen to anyone, says Brie Williams, head of practice management at State Street Global Advisors for the global SPDR exchange traded funds business. They don't necessarily have to have dementia or Alzheimer's; people without either can still have great difficulty with financial decisions.
Medical research shows fluid intelligence or the ability to learn and process information and solve abstract problems peaks at around age 20. Crystallised intelligence, which is defined as wisdom, experiential knowledge and learning by doing, continues to improve before levelling off in a person's late 60s. This is around the time that the first signs of cognitive decline typically arise. They become more commonplace in the 70s and even more prevalent in the late 80s.
But while financial literacy and numeracy scores start to go down, there is a dangerous increase in overconfidence that makes investors doubly vulnerable to adverse financial decisions as they age because their skills diminish but they are not aware of the impact, says Williams.
The remedy is to have a plan to help protect older people's assets to maintain control in case anything happens to their decision making. You need to anticipate their financial needs and circumstances, but you need to be respectful. Often there is resistance.
But putting it off has significant risks, warns Williams. It could be too late to put anything in place if they decline because it won't hold up legally once they are medically diagnosed.
Being a self-funded retiree and doing your own investing can be tough. Yet many self-managed super funds are owned by retirees who are in the pension phase and don't use a financial planner, according to the research house Investment Trends.
By contrast, retirees receiving account-based pensions from major superannuation funds can be better insulated from their diminished financial acumen. The funds have substantial resources to make the investment decisions.
What to do about it
Being abused is difficult for people to talk about and there are some national and state support services for the elderly. There are police who specialise in elder abuse.
Also, there are legal services in most states, through legal aid, but you must meet certain criteria about income.
Binstock says some states have a pro bono service through their law society that may be easier to qualify for.
Melanie Joosten says that when an adult child is taking financial advantage of a parent, it is important to understand what the older person wants to do about it rather than impose what you believe should happen.
"There are often other factors involved and the older person doesn't want that child to get into trouble," she says. "So, on the one hand they want the abuse to stop, but they worry about what will happen to their son or daughter if they kick them out of the house."
Luisa Capezio urges community members to be aware of signs of elder abuse among residents.
Notice if they are more withdrawn than usual and if they are not enjoying their usual activities. They may be confused or worried about money or have stopped paying for things. They may appear dishevelled and neglected or not be eating properly.
The most important thing is to talk to the older person to find out if they are safe. Is anyone causing them trouble or being disrespectful? Listen carefully to what they are saying.
"Often they want the behaviour to stop but they want the relationship to continue. It does get out of control and there are lots of stresses," says Joosten.
She believes that in lockdowns older people could be prevented from making contact with other family members, friends and services who might be able to help them. They are stuck at home with the perpetrator.
Scammers zero in
The elderly are vulnerable to fraud, particularly those who are on their own or have failing cognitive skills. Losing money can have a devastating effect on the quality of their life. Elderly people can be unaware of what's going on or are too embarrassed to talk about the loss and ask for help.
Often family members are unaware that their loved ones are being swindled. Scams encompass investments, unexpected prizes and false inheritances, in exchange for personal details. Often there are fake (and real charities) calling for donations.
Swindlers also go door-to-door offering home maintenance or gardening or roofing or plumbing services. Threats and extortion from tax office or utility company impersonators are designed to pressure elderly people into handing over their money.
Scammers use dating websites and other social media to take advantage of the recently divorced or widowed who are naive about how technology works. The love interest plays on their emotions to get them to lend money or give gifts or simply reveal their personal details.
Beware the granny flat trap
Some parents who don't want to go to a retirement home move in with their adult children or have them move in with them. They come to a financial arrangement, compensating their adult kids for moving in and looking after them. These informal arrangements can be a disaster if the relationship breaks down.
But you can make a more formal granny flat arrangement that ensures the older person lives in the property under a life tenancy interest and still receives the age pension. There is a Centrelink exemption that allows a parent to transfer or sell part or all of their home, or pay money, to their children for a lifetime right to use the granny flat.
But these arrangements can be fraught, warns lawyer Katie Binstock, who has provided advice on many granny flat arrangements. Aged care adviser Luisa Capezio describes them as messy. All parties need to do their homework.
Both Binstock and Capezio stress that a lawyer who understands the risks should draw up the agreement.
"There are so many things that can go wrong," says Capezio. First, the agreement has to stick to the Centrelink rules so that the aged person still receives a pension. Often well-intentioned adult children find that living with an ageing parent can be a burden, she says.
Parents need to think carefully about signing over their interest in the home, says Binstock.
"You are going from having an interest in your property where you have control and hold all the cards," she explains. "The problem with selling up and putting money with the family or transferring it to the family is that you don't hold any cards. You don't cover what happens when there are changes."
Common problems that can derail a granny flat agreement and land the parent in trouble include an adult child's separation from their partner. Or the parent needs money to cover aged care costs but they have handed it over to their adult children.
If the parent does get dementia, it is hard for both the parent and the child to stay at home and the parent could be better off in aged care.
Binstock says she has seen adult children take wonderful care of their parents, often putting their work life on hold or cutting back their hours. But these adult children can have to confront siblings who believe they have taken advantage of their parents. She has to deal with contested estates and disputed powers of attorney.
She recommends that adult children who care for their parents keep records or a diary note of what they spend their parent's money on and what their parent requests, in case there is a challenge by other siblings.
She also recommends parents think carefully about who they appoint as power of attorney.
"Appoint people who you can trust. Think of the relationships between family members. Consider who is financially stable and who is likely to take the money. Where are the problems likely to come from?"
Binstock recommends that parents outline what gifts or remuneration they want their children and grandchildren to have from their estate while they are alive.
By adding a clause in the power of attorney document, this can avoid family disputes.
Signs of financial abuse
How do you help protect the elderly? Look for suspicious signs.
While one or two of these probably don't indicate something is wrong, a combination of several could.
• When an adult child has undue influence over an ageing parent who is losing capacity to make decisions and a deteriorating memory.
• If an adult child lives with the parent and is financially dependent on them.
• The parent is isolated by the adult child who blocks visits from other adult children.
• The adult child is secretive about the parent's finances.
• The adult child has a substance abuse or gambling issue.
• Estate planning documents such as the will or power of attorney or enduring guardianship are changed if the parent has some cognitive issues such as early or advanced dementia.
• The parent complains of the unexplained disappearance of belongings or credit cards or substantial bank withdrawals, or doesn't have enough money to pay the bills.
• No food in the fridge.
• Cancelling or refusing home-care help.
• Receiving late-notice reminders for bills or aged care fees.
• Reduced spending on services they valued in the past such as personal care, household upkeep or social outings.
How to protect your parents
• Broach the sensitive topics of ageing and a decline in memory long before there are any signs.
• Call on your parents' trusted friends
and professionals to help them understand the risks of not planning for a "what if" scenario.
• Sort out power of attorney so that if a parent or spouse loses their ability to make financial decisions, someone responsible and trusted can take over.
• Warn your parents about scammers who target the people and urge them to watch out for dodgy investment or romance schemes.
• If your parents don't have a trusted financial planner, find one who understands the need to have a plan to transfer wealth if there is cognitive decline.
• Help your parents to stave off memory loss with exercise, adequate sleep, a good diet, stress management, mentally stimulating activities and social engagement.
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