Elder financial abuse: The bank of mum and dad at risk of robbery

Baby Boomers account for one quarter of Australia’s population, yet they own half the nation’s wealth.

It’s this sizeable net worth that’s meant some older Australians are able to provide loans to younger relatives struggling with high costs of living or the housing crisis.  

But according to Nicole Woodward, head of Trustee Services at Australian Unity, not all of these contributions from “the Bank of Mum and Dad” are voluntary. She says intense cost-of-living pressures and a shortage of affordable housing has placed older Australians at risk of financial fraud by younger relatives.

There are many different forms of financial abuse. The most obvious might be when a person’s money is used without their consent, but this is just one example.

Nicole explains that cases usually start small but can quickly escalate.  

“A grocery shop comes in $100 above budget, and it’s easy for the younger relative to tap their elderly mother’s card. Soon, $100 becomes $200, and $200 becomes $1,000,” she says.  

“The same goes for petrol. Younger relatives often drive mum’s car when they take her to a doctor’s appointment. Eventually, many start driving mum’s car for their own private purposes and pay for all petrol and insurance using mum’s bank account. Suddenly mum is paying for all the other person’s transport.” 

Another form of financial abuse which may appear harmless at first involves younger relatives coming to live with an older relative. This might begin as a temporary fix but eventuate into a permanent living situation with the younger relative refusing to leave.  

Unfortunately, cases can be even more sinister.  

For example, a relative who is not an attorney might take a parent to the bank and convince them to withdraw large sums of money.  

Or there have even been cases where younger relatives have forced their parent to transfer their property title into the child’s name. When that person eventually passes away, other siblings are shocked to find out the property is owned outright by their brother or sister, explains Nicole. 

“Australia is in the middle of a once-in-a-generation cost of living and housing crisis. These factors, on top of high interest rates and underemployment, have left some desperate for relief,” says Nicole. “With these pressures, it’s sadly become more common to see adult children wrongfully taking from older relatives.”

While a long-term solution to Australia’s living pressures will take time, it’s important that older Australians ensure their assets are not misused until then.

The first step is to create a clear plan for who will act on their behalf in the event that they lose capacity. This can be done by writing a Power of Attorney document with legal help.

Australians can assign different people to look after different areas of their Power of Attorney document, including financial, personal and medical.

When nominating a financial attorney, Nicole strongly recommends choosing an independent professional such as a trustee company, while placing personal and medical matters with relatives.

“This ensures money matters are managed by experienced experts who are separate from family relationships and equipped to act in the person’s best interests,” says Nicole. 

Talking to your parents about their future and engaging a trustee company takes the burden off family members and ensures their wealth is well-protected throughout the person’s life.

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