The Australian April 2014
One of the most disturbing trends to exercise lawyers in recent years is the financial abuse of elderly people. The rise of the largest, wealthiest, and most vulnerable generation of seniors in our history has been accompanied by a dramatic growth in cases where frail, older people are being ripped off by the very people to whom they have entrusted their financial affairs. This is typically the son or daughter to whom they assigned an Enduring Power of Attorney (EPA).
The following statistics provide some sobering context:
- Victims of financial and other abuse tend to be late retirees, living alone, and in 33% to 69% of cases suffering from dementia;
- Australians aged 65 and older will grow from 12% of the population in 2001 to 21% by 2031;
- Wealth available for inheritance will rise from $8.8 billion in 2000 to over $70 billion by 2030;
- There are already over 300,000 Australians suffering from dementia. That figure is expected to rise to 400,000 in 10 years and 900,000 by 2050.
So prevalent has financial abuse already become that it has even generated its own nomenclature. “Strip mining” is the most serious, where there is clear intent by the perpetrator to strip a person of their assets of value, sell their house and contents, transfer cash and savings, control their superannuation, and then move the older person to a pensioner facility. “Dump and run” is a similar ruse, where the family siphons off an older persons assets and then has them placed in residential care, then they stop visiting and paying the care fees.
It is because of cases like these that the Standing Committee for Legal Affairs for the Parliament of the Commonwealth has described the Enduring Power of Attorney as ‘the most abused legal document in Australia.’
Not all examples are so clear cut. What of the case of the elderly person who pays her friend $200 a week to do her grocery shopping, but regularly receives only $50 worth of items? Can the financial gouging be counter-balanced to some extent by the benefit of regular contact with a friend who would not otherwise visit the very isolated person?
Similarly, what if an elderly person establishes a relationship with someone else who moves in with them and appears to be enjoying their wealth? This doesn’t automatically constitute a case of financial abuse – although the children of the person may not see if that way as they watch their inheritance rapidly evaporate.
In the past, lawyers were typically involved in estate litigation only after a person had died, the diminished size of their estate was revealed, and other beneficiaries began to question the conduct of the person to whom the EPA was assigned. But as the stakes grow higher, and opportunity for financial abuse expands, more clients are flagging financial abuse as it occurs in what is becoming known as ‘’pre-death disputes”.
The way that lawyers handle these concerns varies from state to state. In New South Wales and Queensland, for example, not only can their State Administrative Tribunals strip someone of an EPA, but they can also attempt to claw back the assets that were taken. In Western Australia, while the State Administrative Tribunal only has the power to strip someone of an EPA, and very limited ability to claw back assets, other common law and equitable remedies are available. These include claims for unjust enrichment, negligence, conversion, breach of fiduciary duty, restitution, undue influence and Unconscionable Dealing.
Perhaps a heartening trend in all this woe is the recent willingness of the Courts to expand and enlarge the prospects of success against a person who has abused their trust and financially taken advantage of an elderly person. The Courts, being well aware of the changing landscape of increasing vulnerability, increasing wealth and increasing numbers of people taking advantage of the elderly, are more willing to overturn Wills written under unfair pressure, claw back assets transferred unconscionably and punish those who engage in such acts.
Prevention is better than cure
But prevention is always better than a cure. Taking legal proceedings against a family member who has abused their mother or father is not only difficult and expensive, it is almost always very emotionally taxing too. Far better to make an early intervention to help protect an elderly person who appears vulnerable. Many of the abuses could be prevented by not allowing a predator to prey on the elderly in silence.
As Australia’s population ages, it is incumbent on all of us with elderly relatives to keep a watchful eye on their well-being. Our awareness of the vulnerability of the young in our society, must be matched by our concern for the old.