Putting pressure on an older person over an expected inheritance doesn’t always stay financial but can escalate into other forms of elder abuse. Partner and Accredited Aged Care Professional Debbie Sage looks at the financial consequences of gifting, an attorney’s legal duties, and what Australian families can do to protect an older person’s independence and dignity.
This is Part 2 of an article series looking at how a sense of entitlement to an older person’s assets can lead to financial elder abuse and other forms of abuse. Read Part 1 here.
When financial pressure leads to other forms of elder abuse
Inheritance impatience may lead to other forms of abuse, including:
Psychological or emotional abuse: An older person may be criticised, shamed, threatened or made to feel guilty for spending their own money or not allowing the expected beneficiary to use their money or conduct the transaction on their behalf.
Coercive control: A family member may gradually control the person’s finances, communications, appointments, transport and relationships, reducing their independence over time.
Social isolation: Contact with other relatives, friends or professionals may be restricted so that the financial conduct is not questioned.
Neglect: Care, medication, equipment or suitable accommodation may be withheld to avoid reducing the estate.
Physical abuse: In serious cases, conflict about money or property may escalate into intimidation or physical violence.
Gifts can have unintended financial consequences
Families sometimes believe that giving away money or transferring assets will reduce aged care fees or increase a person’s Age Pension entitlement.
Centrelink applies specific gifting and deprivation rules. Generally, a person may gift:
- up to $10,000 in one financial year; and
- no more than $30,000 across five consecutive financial years.
Amounts above the applicable limits may be treated as a deprived asset. This means Centrelink may continue to assess the excess amount as though the older person still owned it, generally for five years from the date the transaction was made.
The older person may therefore lose control of the money while it continues to affect their pension and/or aged care means assessment. Gifting can also create tax, property, estate planning and family law consequences, depending on the circumstances.
An Enduring Power of Attorney is not a licence to spend
An attorney appointed under an Enduring Power of Attorney holds a position of trust. The appointment does not transfer ownership of the older person’s assets to the attorney, nor does it give them free reign over what should occur with that person’s assets.
The attorney must comply with the relevant legislation and the terms contained within the document. The attorney’s duties include obligations to:
- act honestly and with reasonable care;
- act in the older person’s interests;
- support the older person’s participation in decision-making;
- keep the older person’s money separate;
- maintain accurate records and accounts;
- avoid unauthorised gifts;
- identify and manage conflicts of interest; and
- avoid using the position for their own personal benefit.
Transactions that benefit the attorney – such as transferring property or money to themselves – may be prohibited unless properly authorised within the document or by seeking consent from a Court or Tribunal. Even where an Enduring Power of Attorney permits certain conflict transactions, the attorney must still comply strictly with the document and the applicable law.
An attorney who misuses the position may face removal by a Court or Tribunal, an order to provide accounts or records, or an order to repay money or restore property. They may also be hit with personal liability for loss, civil proceedings or a criminal investigation or prosecution in serious cases.
The issue of financial elder abuse may continue after death
Questionable transactions do not necessarily disappear when the older person dies.
An executor may need to investigate significant transactions made during the deceased person’s lifetime, particularly where there is evidence that an attorney misused their authority. Claims may be available to recover money or property for the estate.
Australian cases, such as Bird v Bird [2013] NSWCA 262, demonstrate the potential consequences where estate representatives fail to investigate or pursue transactions involving misuse of an attorney’s position. The precise duties and remedies will depend on the facts and the law of the relevant state or territory.
The important takeaway to note here is that an executor has a duty to investigate the deceased’s bank accounts and assets where they are aware that an enduring power of attorney was activated during the deceased’s lifetime, and the failure to do so or seek recovery where necessary may put them at risk of personal liability to the disappointed beneficiary/ies in the estate.
How families can reduce the risk of financial elder abuse
Genuine protection is not the same as control. Protection means supporting the older person’s choices while safeguarding them from pressure, exploitation and abuse.
Presume capacity
- Include the older person in every discussion concerning their life, care and property where possible.
- Speak directly to them rather than only to relatives.
- Do not assume incapacity because of age, disability or diagnosis.
- Consider whether communication support or a capacity assessment is required for a particular decision.
Respect the person’s choices
- Ask and determine what matters to the older person.
- Respect their right to spend their money on their own care, comfort and enjoyment.
- Recognise that a decision is not invalid merely because family members disagree with it.
Create opportunities for private discussion
An older person should have opportunities to speak privately with relevant health, financial and legal professionals. This can help identify pressure, fear or undue influence that may not be disclosed in front of family members.
Keep clear records
Attorneys and other financial decision-makers should retain:
- bank statements;
- receipts and invoices;
- records of significant decisions;
- details of gifts or loans;
- property transaction documents; and
- notes explaining how expenditure benefited the older person.
Good records protect the older person and help demonstrate that the decision-maker has acted properly.
Plan early
Planning is most effective before a crisis or loss of capacity. Appropriate documents may include:
- a current Will;
- an Enduring Power of Attorney;
- an Advance Health Directive or equivalent document;
- current superannuation death benefit nominations; and
- a considered aged care and financial plan.
Reviewing your estate plan regularly keeps your documents consistent with your current circumstances to avoid any misunderstanding.
Choose an attorney carefully
An attorney should not be appointed merely because they are the eldest child, live nearby or expect to inherit.
The appropriate person should be trustworthy, financially responsible and capable of putting the older person’s wishes ahead of their own interests. Depending on the circumstances, appointing more than one attorney or requiring joint decisions may provide additional safeguards.
What to do if there are concerns
Where inheritance-related abuse is suspected:
- Listen to the older person privately and without judgment.
- Avoid confronting the suspected person in a way that may increase risk or isolation.
- Record relevant concerns, including dates, transactions, statements and changes in behaviour.
- Secure important documents and financial information, where this can be done lawfully and safely.
- Review the Enduring Power of Attorney and any authority being relied upon.
- Consider protective legal, financial or tribunal processes appropriate to the relevant state or territory.
- Contact emergency services if there is an immediate risk of harm.
Inheritance impatience and inheritance conservation are not simply family disagreements about money or other assets. They can deprive an older person of independence, dignity, proper care and the ability to enjoy the assets they worked hard to build.
The central principle is straightforward: an older person’s money belongs to them and should be used for their benefit during their lifetime.
Expected beneficiaries are not entitled to control, preserve or receive those assets early. Respecting this boundary is essential to preventing financial exploitation and the neglect, isolation and psychological abuse that may accompany it.
Attwood Marshall Lawyers – support through every stage of life
Attwood Marshall Lawyers has a dedicated Aged Care team with Accredited Aged Care Professionals who can assist with estate planning, aged care transitions, Enduring Powers of Attorney and the obligations of substitute decision-makers.
For a confidential discussion about aged care planning or estate planning matters, contact our Wills & Estates Department Manager Donna Tolley on 1800 621 071 to set up an appointment.
