Elder financial abuse: Society’s shameful secret
With financial and psychological abuse of the elderly averaging seven per cent nationwide, there is a significant role the financial planning profession can play in actively preventing elder financial abuse.
In 2014-15, 155 matters of financial abuse of the elderly were reported in Queensland alone, representing a staggering $49,925,800, with 51 of these matters involving Enduring Powers of Attorney and the misappropriation of $10,968,500.
These are big figures from a relatively small number of reported cases, but sadly, the financial abuse of the elderly is a topic that barely raises a blip on our TV screens or in the wider media. Why?
Kirsty Mackie – the current Chair of the Queensland Law Society Elder Law Committee and Director of KRM Legal – says the ‘shame’ factor prevents many older Australians from reporting domestic violence, whether it’s financial, psychological or physical abuse.
“Like most victims of domestic violence, there is a strong case of shame associated with being abused by a loved one,” Mackie says. “Often, elderly victims rely on the perpetrator for care. They are too embarrassed and feel ashamed to report any incidence of abuse by a loved family member.”
What is elder financial abuse?
The definition comes under the umbrella of elder abuse, which has been defined by the World Health Organisation, as ‘a single or repeated act or lack of appropriate action, occurring within any relationship where there is an expectation of trust which causes harm or distress to an older person’.
“The important thing to remember from this definition is that it primarily happens out of a relationship of trust – a family relationship or a carer relationship,” Mackie says. “It’s very rarely that it will be a stranger financially abusing an elderly person.”
Typically, most victims of financial abuse are in the 80-84 age bracket, with their abusers generally in the 50-54 age bracket. Women are twice as likely to be abused as men, while the perpetrators tend to be primarily sons (52 per cent) and daughters (45 per cent).
Types of elder financial abuse
In her capacity as Chair of the Queensland Law Society Elder Law Committee and a specialist elder lawyer, Mackie has seen many cases of elder financial abuse. She says this type of abuse typically falls into six areas:
Misuse of the Power of Attorney;
‘Granny house’ scenarios where the older person sells their home, then gives money to a family member in return for construction of a granny house and care. The relationship breaks down and the older person is forced out with no money or place to live.
A family member moves in with an older person but never leaves. This family member fails to pay any bills, contribute to household expenses and claims a Centrelink carer’s pension but no care is actually provided. On occasion, this person convinces the older person to change their Will, bequeathing the house to the ‘carer’.
Forced changes to Wills and Enduring Power of Attorney.
Controlling access to finances.
Guarantees, personal loans, mortgages and reverse mortgages signed under duress.