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Caring for our elders at Christmas

06 December 2018

Money & Life team

Money & Life contributors draw on their diverse range of experience to present you with insights and guidance that will help you manage your financial wellbeing, achieve your lifestyle goals and plan for your financial future.

We can all feel the pressure on our household budget during the festive season. But when that pressure gets passed on to older family members as a request for a handout or loan, financial abuse can end up being the outcome. Find out more about elder financial abuse, what to watch out for and what to do about it.

What is elder financial abuse?

According to the World Health Organisation, financial abuse of an older person is ‘the illegal or improper exploitation or use of funds or other resources of the older person.’ Acts of financial abuse can sometimes happen when a scam or fraud is carried out by a stranger. But in most cases, elder financial abuse is performed by someone the person knows, usually a relative, friend or carer. According to research from the Australian Institute of Family Studies, a family member having a sense of entitlement to an older person’s property and possessions is the greatest risk factor (84%) for elder financial abuse.

This type of elder abuse is on the rise according to The Senior. In 2016, 15,747 calls were made to elder abuse helplines, compared with 10,243 in the previous year. And with a population that’s living longer, it seems likely that reports and cases of elder financial abuse are likely to become more common. Current estimates are based on very limited data, but it’s thought around 9% of older Australians have been affected by some kind of financial abuse[1].

Sometimes the abuse can be what Monash University calls unintended, with the person carrying out the abuse not knowing there is something wrong with their actions. Doing grocery shopping for Mum with her bank card or money and adding on a few items of your own might seem harmless enough. But if someone gets used to treating their parent’s money as their own, this can prepare the way for intended abuse. Even when that person is your Mum or Dad, Uncle or Aunt and you somehow feel entitled, acting in your own financial interests and not protecting theirs is considered abuse.

The problem of inheritance impatience

Financial abuse can range from living with an older relative and refusing to pay for rent, groceries and bills to far more serious cases, where a family member is acting as a Power of Attorney and makes financial choices in their own interests, rather than the person they represent. But in recent years, one of the more common family transactions that can turn into elder abuse is parents helping adult children buy a home. According to a survey of 1000 Australians conducted by law firm Slater and Gordon, 26% of millenials are relying on financial help from parents to get on the property ladder.[2]

This expectation among young people of getting help from parents to buy property is one of the key issues driving ‘inheritance impatience.’ With Australians living longer, we could be seeing more cases where older parents feel the pressure to put their hands in their pockets to help out with everything from a house deposit to paying school fees for grandchildren. In some cases, parents may be comfortable and willing to make these contributions, whether as a gift or loan. But a parent may agree to act as guarantor on a mortgage, for example, without fully understanding how their assets and finances could be affected if their son or daughter were to default on payments. Or they could be pressured to downsize their home and gift the proceeds, not realising how this could affect their tax position and age pension entitlement.

Parents could also create problems down the track by not taking a long-term view of their own finances when they offer to help. “More often than not, parents can’t really afford to help out their kids as much as they think they can,” says Anne Graham, CFP® from Story Wealth Management. “They get this sense of being very wealthy when they get access to their super because it’s usually the largest sum of money they’ve ever saved. But it’s typically going to have to last for 25 years or more. A planner can help by discussing your future income needs and doing some modelling to see if you can give money away and still fund your retirement. When you’re faced with the reality that paying off your children’s HECs debt means your retirement income will run out 10 years sooner, it gives you a different perspective on your choices.”

Keeping an eye on older relatives

The festive season is often a time when families come together. This can be a very happy occasion, but stresses and strains between the generations can highlight tension and problems, played out in confrontations or through more subtle signs. It’s important to look out for the following indicators of potential financial abuse between one family member and another:

– Any conversation where pressure is being applied to an older person to make a change to their circumstances against their will – a move into aged care or selling their home for example.

– There’s discussion about a power of attorney and/or will and the person involved doesn’t speak up.

– An older family member reports problems with unpaid bills or having money go missing from their bank account.

– It’s difficult to get them on their own to have a one-on-one chat.

Who can help?

If you think you may be experiencing elder financial abuse, ASIC’s Moneysmart website lists potential warning signs and phone numbers you can call to get legal help.

At the time of writing, each state offers their own elder abuse support service. However, in June 2018 the Federal Government established Elder Abuse Action Australia

(EAAA) a national peak body to counter elder abuse. And in the 2018 Federal budget $22 million was allocated to protect older Australians from abuse, including trials of specialist elder abuse support services. So in the future, we can expect to see a greater level of support available for this very important issue.

Thinking about sharing super with your kids? Get tips from a CERTIFIED FINANCIAL PLANNER® professional on making sure financial gifts or loans to kids are in your interests.

[1] Sydney Morning Herald, Financial abuse of elders is likely to grow, John Collett, 12 June 2018, “Data on financial abuse of elders is scant but the best estimate is that up to 9 per cent of older Australians are affected by some form of financial abuse.”

[2] CPA, In The Black, Rising house prices are fuelling elder financial abuse: how accountants can help, Thea O’Connor, 5 June 2018 “Twenty-six per cent of Gen Ys said they had to, or would need to, rely on an inheritance windfall to purchase the home they wanted, according to the survey commissioned by Slater and Gordon Lawyers.”