Australia’s population is ageing. And a bigger pool of ageing Australians potentially means more people who are less able to make important financial decisions.
In Australia, the number of people aged 65 and over increased by more than 700,000 between the 2016 census and the 2021 census, taking the total number of people in the age group to 4.4 million, according to the Australian Bureau of Statistics. The number of people needing care also increased by almost 50 per cent in those five years to 963,048.
Many people in this age group grant a Power of Attorney (POA) to a friend or family member to assist them in making decisions about their finances and care. While most of these agreements are exercised properly, an increasing number of attorneys are taking advantage of a vulnerable friend or family member in that ageing population.
A Power of Attorney is a legal document which gives one person (the Attorney) the power to act for another (the Principal) in some circumstances. The document sets out what decisions can and cannot be made on behalf of the Principal.
The most common type is an Enduring Power of Attorney which continues to be effective when the Principal loses “capacity” to make their own decisions. Enduring POAs usually grant certain rights over their loved one’s finances and assets. While this can be reassuring, it can be risky in the wrong hands.
The Compass website, an initiative of Elder Abuse Action Australia, states: “In general, the law says that someone appointed as an attorney must:
- keep the person’s money and property separate from their own
- maintain the person’s financial records
- act with honesty, care and diligence
- avoid conflicts of interest
I recently spoke at the Tasmania Law Society’s Elder and Succession Law Conference about the rise in financial abuse by Attorneys. While many Attorneys are unclear about their obligations and may unintentionally breach their obligations, others deliberately take advantage of their loved ones.
Nearly 15 per cent of older Australians have reported experiencing elder abuse with about 2 per cent experiencing financial abuse, according to the recent National Elder Abuse Prevalence Study.
Children are the largest perpetrator group for financial abuse (33 per cent) and there has been a significant increase in calls to elder abuse helplines about Attorney abuse in Victoria and Queensland, the study found.
When an Attorney financially abuses the Principal, they usually transfer money (sometimes large sums) from the Principal’s account into the Attorney’s or another family member’s account. These large transactions are particularly harmful when they transfer the majority of the Principal’s savings.
Attorneys can often declare the large transaction as a gift. While such gifts are sometimes allowable, they must be similar in nature to the Principal’s previous behaviour and be reasonable given their current financial circumstances.
Attorneys may claim the funds are to purchase property in another family member’s name for the Principal to reside. However, the transaction must be for the benefit of the Principal.
In other cases the Attorney may transfer smaller amounts into their own account for their own use while declaring it’s for the Principal’s everyday expenses. These small amounts can go unnoticed for months, even years, depleting the loved one’s savings.