How to guard against financial elder abuse
When impatient children or grandchildren make a grab for a share of their parents' or grandparents' assets while they are still alive, it is dubbed "early inheritance syndrome" by lawyers.
The other term for this increasingly common fraud is "financial elder abuse".
Elderly people who have had a serious accident or have dementia are most at risk as their families or carers take over their finances.
Cases of greedy adult kids who feel "entitled" to their vulnerable parents' assets are on the rise, particularly as significant amounts can be involved thanks to high property prices. It is believed to involve around 5% of older Australians.
The effect can be devastating as it leaves parents short of money or without a home in their old age. It fractures families that have previously got on well together.
It is important for parents to make sure they keep control of their assets and not let them fall into the wrong hands. The key is to plan ahead and set up mechanisms to protect yourself in the event that you lose your capacity to make decisions.
Get independent legal advice
You will be advised to set up a power of attorney, a legal document that gives another person the authority to make financial and legal decisions on your behalf.
Typically people believe that they will always be able to take care of themselves, so they put off drawing up a power or attorney or an enduring power of attorney until it is too late.
Choose a trusted power of attorney
It is important to choose someone you trust to make financial decisions for you. It can be a friend or family member or a trusted expert. If you have family members who have financial problems or addictions, it is best to cross them off the list.
Never sign a power of attorney without understanding what is involved. Sometimes the relationship with the person you appoint changes and you need to replace them. If you want to get the power of attorney revoked, it must be done in writing.
You will need an authorised person to certify your power of attorney - typically a justice of the peace, a legal practitioner or a public notary. While you can photocopy the original, the copy will not be recognised unless it's properly certified.
Some enlightened parents call a family meeting to explain what they have put in place if anything happens to them.
It is a good idea to keep all your family members informed about giving away any money or property.
Set out the conditions attached to a gift
This can include whether it has to be paid back or whether it will be part of the estate with other family members' inheritances adjusted accordingly. This can prevent misunderstandings that can lead to family feuds.
If you lend money to family members or friends, make it legally binding rather than a casual arrangement.
Some parents believe it is better to give their adult kids some financial help when they need it rather than have them wait until they are dead.
But one of the problems with dividing up your assets early is that you don't know what your costs will be when you are old.
You don't know how long you will live and how much you will need to spend on medical and aged care and nursing home costs. You may need to get the money back to meet your own costs.
Be careful about family members moving back home
Make copies
It is important to keep your will up to date and have copies. Don't keep the only copy at home.
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