“Families must take caution and protect older relatives and their assets from manipulative close family members.”—Nicole Woodward, Head of Trustee Services, Australian Unity
Key points
- Mounting financial pressures are leading some Australians to take advantage of their older relative’s finances.
- There are many different means of financial abuse. Some might seem less obvious than others.
- Creating a clear plan is the most effective way of protecting against elder financial abuse.
Baby Boomers account for one quarter of Australia’s population, yet they own half the nation’s wealth.
It’s this sizeable net worth that’s meant some older Australians are able to provide loans to younger relatives struggling with high costs of living or the housing crisis.
But according to Nicole Woodward, Head of Trustee Services at Australian Unity, not all of these contributions from ‘the Bank of Mum and Dad’ are voluntary. She says intense cost-of-living pressures and a shortage of affordable housing has placed older Australians at risk of financial fraud by younger relatives.
“Australia is in the middle of a once-in-a-generation cost of living and housing crisis. These factors, on top of high interest rates and underemployment, have left some desperate for relief,” says Nicole. “With these pressures, it’s sadly become more common to see adult children wrongfully taking from older relatives.”
How elder financial abuse can occur
So, how are these cases of elder financial abuse being carried out? According to Nicole, in many scenarios it’s trusted family members who are Power of Attorney and misuse their authority. But that’s not always the case.“Even if a relative has not been made an attorney or legal guardian, cases occur where they secretly manipulate the parent into visiting a new lawyer and arrange a new power of attorney or transfer. This often occurs without the knowledge of other close family members,” says Nicole.
Yet people don’t need power of attorney to commit financial abuse. Other friends and family members can take advantage of an older Australian’s finances as well.
What financial abuse can look like
There are many different forms of financial abuse. The most obvious might be when a person’s money is used without their consent, but this is just one example.
Nicole explains that cases usually start small but can quickly escalate.
“A grocery shop comes in $100 above budget, and it’s easy for the younger relative to tap their elderly mother’s card. Soon, $100 becomes $200, and $200 becomes $1,000,” she says.
“The same goes for petrol. Younger relatives often drive mum’s car when they take her to a doctor’s appointment. Eventually, many start driving mum’s car for their own private purposes and pay for all petrol and insurance using mum’s bank account. Suddenly mum is paying for all the other person’s transport.”
Another form of financial abuse which may appear harmless at first involves younger relatives coming to live with an older relative. This might begin as a temporary fix but eventuate into a permanent living situation with the younger relative refusing to leave.
Unfortunately, cases can be even more sinister.
For example, a relative who is not an attorney might take a parent to the bank and convince them to withdraw large sums of money.
Or there have even been cases where younger relatives have forced their parent to transfer their property title into the child’s name. When that person eventually passes away, other siblings are shocked to find out the property is owned outright by their brother or sister, explains Nicole.
Ways older Australians can protect against financial abuse
While a long-term solution to Australia’s living pressures will take time, it’s important that older Australians ensure their assets are not misused until then.
The first step is to create a clear plan for who will act on their behalf in the event that they lose capacity. This can be done by writing a Power of Attorney document with legal help.
Australians can assign different people to look after different areas of their Power of Attorney document, including financial, personal and medical.
When nominating a financial attorney, Nicole strongly recommends choosing an independent professional such as a trustee company, while placing personal and medical matters with relatives.
“This ensures money matters are managed by experienced experts who are separate from family relationships and equipped to act in the person’s best interests,” says Nicole.
Talking to your parents about their future and engaging a trustee company takes the burden off family members and ensures their wealth is well-protected throughout the person’s life.
The effects on Real Wellbeing for everyone involved
The Australian Unity Wellbeing Index, a yearly survey conducted with Deakin University, has shown that a person’s financial situation is a major factor in their wellbeing. Findings from the survey indicate a clear link between low income and lower levels of personal wellbeing.
But it isn’t just those on low incomes that are struggling. Data has shown that even households above the median household income are reporting lower levels of wellbeing than those in higher income households, with more people going without essential items such as housing payments, utilities, food or health care.
This financial hardship might explain why we’re seeing an increasing number of Australians taking advantage of their older relative’s wealth, but it certainly doesn’t make elder financial abuse okay.
The effects of financial abuse can be detrimental to a person’s wellbeing, explains Diedre Timms, Co-Chair of Elder Abuse Action Australia’s Board.
“Continual psychological abuse really degrades a person’s self-esteem and general wellbeing,” says Diedre. “They become more and more cut off because they’re not confident to maintain friendships, or to go out. Or if they’ve experienced financial abuse, they might no longer have the resources to go out.”
It can also lead to financial insecurity for the victim, resulting in an inability to afford necessary aged care or housing. Physical health can also be impacted with injuries, malnutrition or untreated medical conditions caused by lack of finances.
To protect yourself and loved ones, keep an eye out for warning signs of elder financial abuse and don’t be afraid to have difficult conversations when needed.
If you have concerns about elder abuse, contact the Elder Abuse Helpline on 1800 ELDERHelp (1800 353 374), or visit the Compass or Elder Abuse Action Australia websites for more information, support and resources.
