Incapacity: safeguarding seniors’ finances and reducing the risk of financial elder abuse
Alarmingly, approximately 1 in 6 Australians report some form of elder abuse. With Australia’s aging population, there is the potential for elder abuse to continue to grow in the coming years.
As Wills and estate lawyers, we frequently come across cases of financial elder abuse. In our second instalment of this series, we look at what financial elder abuse is, and the signs advisors should look out for.
What is financial elder abuse?
Financial abuse is a form of elder abuse. It includes the illegal or improper use of an older person’s property or finances. It can take many shapes, including misusing a power of attorney, forcing or coercing an elderly person to change their Will, taking control of their finances against their wishes, or denying them access to their money.
The most common perpetrators of elder abuse are family members (mostly adult children), friends and neighbours.
Transcript
Financial elder abuse is a form of elder abuse. It happens when someone takes or misuses your money, assets or property without you agreeing or misusing a power of attorney. It’s alarmingly common with up to one in six Australians reporting some form of elder abuse. Perpetrators of elder abuse are often family members, mostly adult children, but they can be friends, neighbours or acquaintances.
People with poor physical or psychological health and higher levels of social isolation are more likely to experience elder abuse. Sometimes it’s as minor as a client indicating that their mail, such as bank statements, no longer being received in the mail.
A client could be concerned about missing funds. They could be engaging in financial activity that is unusual, erratic or uncharacteristic. The client may not be allowed to speak for themselves or someone else does all the speaking on their behalf, or the client may not understand or be aware of a recently completed transaction.
So, top tips to reduce the risk of financial elder abuse would include asking yourself who is your client and who are you actually taking instructions from? In what capacity are you taking these instructions, especially if someone’s using a power of attorney. It might be necessary to speak to the client privately without other family members present. You need to satisfy yourself that the client does in fact have the capacity to give you these instructions, and most importantly, keep good records.
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Who is most at risk of financial abuse?
Those with poor physical or psychological health are most at risk of financial elder abuse. Elders who live alone or those with higher levels of social isolation are also more likely to experience financial elder abuse.
Signs to look out for
There are a number of red flags advisors can look out for, which may indicate that a client is a victim of financial elder abuse. These include:
- the client indicating that their mail, such as bank account statements, are no longer being delivered to them;
- the client is missing funds from their bank account, or can’t locate documents;
- their financial activity has become out of character, unusual, or erratic;
- another party (such as a family member) does all the talking, or is not allowing the client to speak for themselves; and
- the client does not understand or is unaware of a recent transaction on their bank account.
How can this risk be reduced?
Given the prevalence of financial elder abuse in Australia, it is essential advisors are taking active steps to reduce risk to their clients. Some steps they can take include:
- ensuring you are taking instructions from the client or if you are taking instructions from a third party they are authorised through a power of attorney or other authority to do so;
- speaking to the client privately without any other family members present;
- satisfying yourself that the client has the requisite mental capacity, and getting medical confirmation if unsure; and
- keeping good records of meetings with clients.
If you suspect a client or someone you know may be experiencing financial elder abuse, we recommend you encourage the client to obtain legal advice before undertaking any major financial decisions.