Members of the baby boomer generation represent the richest in national history and will transfer the largest amount of wealth ever between generations.
Members of the baby boomer generation represent the richest in national history and will transfer the largest amount of wealth ever between generations. In recent years, there has been a drastic increase in the number of reported cases of financial abuse among the elderly population. The most alarming fact of this situation is that these numbers only reflect the reported cases while many instances of abuse remain hidden.
Based on the number of reported cases, experts suggest that up to 5% of Australians over 65 have been victims of financial abuse. The majority of victims only seek help after a great deal of damage has been done, making it even more difficult to recover their assets. Unfortunately, it is usually those closest to the victims who take advantage of the elderly.
How does it start?
Children are the most likely perpetrators, although there are many instances of other family members or trustees taking advantage of the situation. The most common type of abuse is when children assume responsibility for their parent’s income. It often begins with the best of intentions when the family members commingle their parent’s income with their own in a single bank account to manage and protect their funds.
Over time, it can become very confusing and difficult to distinguish which assets belong to each person. It is only a small leap to assume their parent’s resources as their own and use it to supplement their income. When they reallocate these funds to pay personal debts and bills, the parent’s accounts are left unpaid. The largest portion of reported cases of financial abuse is delinquent payments from the aged cared facilities. There are also a significant number of cases where family members or trustees encourage the elderly to transfer ownership of assets which is where you can really get into trouble.
Who is most vulnerable?
Women over 80 appear to be the most at risk group, although other factors such as mental illness or diminished mental capacities, isolation, dependence, and linguistic barriers can also make the elderly more susceptible. The most ironic and distressing reality is that most people don’t believe it can happen to them or that their children are capable of such abuse.
Situations where the elderly persons provide power of attorney to their children can also make them candidates for financial abuse. Many people draft private documents outlining the responsibilities, but since legal representation is not always involved it can be difficult to ensure that powers of attorney are properly utilized.
How can you protect yourself?
In order to protect yourself from financial abuse, you must first recognise the risks and then create a plan that can be implemented if you lose your mental capacities. Seek professional advice, independent of those who will be responsible for your care. Once you have determined how you want to manage your assets, contact a lawyer to appoint an enduring power of attorney with clearly defined responsibilities and directives. Be sure to update your will on a regular basis and ensure that any loans you provide are legally binding. An outside observer with knowledge of the legal system is the best method to ensure your loved ones do not take advantage of you and to prevent financial abuse. For additional resource on protection from scams visit our senior friendly services page.
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