Financial Abuse of Older People

Grahame Allen • October 2, 2019

An incidence of financial abuse of an older person may be intentional and clearly wrong, perhaps involving illegal activity, in which case it is likely to be easier to identify. Abuse is not always easy to identify however. Sometimes arrangements, originally motivated by good intentions, gradually erode into financial abuse, as the perpetrator succumbs to the temptation of opportunity, misguided feelings of entitlement, or even perhaps revenge for perceived past injustices.

Although recognising the potential for financial abuse of an older person may not always be easy, there are a number of factors which, if present, may indicate a heightened danger of abuse and encourage the practitioner to ask more questions and to be more alert.

Consider whether they appear to be: vulnerable

isolated

WHAT IS FINANCIAL ABUSE?

There are a number of definitions of what constitutes financial abuse of older people.

The   World Health Organisation   defines financial abuse of an older person as, "The illegal or improper exploitation or use of funds or other resources of the older person". The definition includes acts with adverse outcomes committed not only by people known to and trusted by the victim, but also acts perpetrated by strangers and by institutions.

Abuse may be intentional or unintentional. Intentional financial abuse is defined in Monash University's  Protecting Elders' Assets Study , as "the separation of a person from the benefit of their assets for the benefit of another, involving deliberate intention". Unintended abuse is "the inadvertent or uninformed financial mismanagement or neglect of financial assets which causes the deprivation of benefits to be derived from those assets".

The following are given in the study as common examples of financial abuse:

  • theft
  • misappropriation or misuse of money, property or assets
  • exerting undue influence to give away assets or gifts
  • putting undue pressure on the older person to accept lower-cost or lower-quality services in order to preserve more financial resources to be passed to beneficiaries on death
  • carrying out unnecessary work or overcharging for a service
  • misuse of powers of attorney
  • denial to access funds
  • failure to repay loans
  • living with the older person and refusing to contribute money for expenses
  • forging or forcing an older person's signature
  • promising long-term care in exchange for money or property and then not providing the promised care
  • getting an older person to sign a will, contract or power of attorney through deception, coercion or undue influence
  • abusing joint signatory authority on a blank form
  • getting an older person to be a guarantor for a loan where the benefit of the loan is for someone else without sufficient information or knowledge to make an informed decision.

INDICATORS OF POTENTIAL FINANCIAL ABUSE

It is common for close family and friends to be well intentioned in their planning for care of an older person. Their intentions may stem from over protectiveness or a sense of obligation.

The range of acts or omissions that constitute abuse occur along a continuum: at one end, harm results from a poor understanding of an older person's needs; at the other, harm results from aggression and serious physical assault. In different circumstances, different sorts of interventions are required.

Abuse may occur as a result of an inability to cope, frustration, ignorance or negligence. Abuse can be unintentional or deliberate. Some forms of abuse are criminal acts, for example, physical and sexual abuse. Other types, such as financial misappropriation, may not reach the level of criminality, but may require redress through guardianship or civil proceedings. Other situations might be best regarded as forms of domestic violence, with interventions shaped accordingly. Economic abuse is included in the   definition   of family and domestic violence.

Remember, in most cases you will be looking at potential elder abuse and your objective will be to ensure that the older person is making an independent and informed decision and has considered and canvassed the full implications of any transactions and possible changes in circumstances into the future.

WARNING SIGNS AND INDICATORS

Senior Rights Victoria   has listed the following signs and risk factors, which may indicate potential financial abuse.

  • promises of "good care" in exchange for transferring property or money to the carer
  • gear, stress or anxiety expressed by the older person
  • unfamiliar, new or forged signatures on cheques and documents
  • the older person has given their bank PIN number to another person
  • the older person is unable to access bank accounts or statements themselves
  • large, unexplained withdrawals from bank accounts
  • sudden transfer of assets at a time when the older person may no longer be competent to manage their own affairs
  • accounts suddenly switched to another financial institution or branch
  • drastic changes in the types of banking activities – erratic or uncharacteristic
  • drastic changes to a will, power or attorney or other legal documents
  • valuable assets, such as a car, jewellery or artworks go missing
  • signs of physical or psychological abuse of the older person
  • no money available for aged care bond when there should be money available
  • no money to pay bills when there should be, for example, older persons complains of no heating when in fact they can afford it
  • an increase in the number of unpaid bills handled by a family member
  • an absence or lack of amenities when the older person seemingly can afford them, for example, television, clothes, clean linen
  • secretiveness of the older person
  • secretiveness of the "carer" – siblings not being informed
  • a family member is borrowing against a major asset owned by the older person
  • older person is regularly paying someone else's bills
  • the "carer" is an adult child, living with the older person, who does not appear to be contributing to the housekeeping expenses
  • older person expresses concern about missing funds
  • older person complains of no longer receiving any mail.

RISK FACTORS

The following factors, if present, indicate the person may be at risk of financial abuse. The practitioner should be vigilant for signs of abuse, such as:

  • physical frailty
  • lacking self-confidence
  • dependency on others for basic needs
  • reduced capacity to understand information or make decisions
  • isolation from neighbours, family or the community
  • a trusting relationship with a person who has influence over decisions
  • appearance of not being in control of their affairs
  • evidence of undue influence of a family member
  • unkempt or unclean appearance
  • lack of formal arrangements for care and management of financial affairs
  • history of physical or other forms of abuse
  • apparent lack of a loving relative who clearly cares for the older person's welfare
  • impatience or secretiveness of person purporting to manage the older person's affairs
  • language difficulties, requiring a family member to translate
  • the older person suffers from dementia and is aggressive and difficult to manage.

SIGNS OF POSSIBLE LACK OF CAPACITY

The following factors, if present, may indicate a lack of capacity on behalf of the older person:

  • poor concentration – limited ability to interact with practitioner or to repeat advice and ask key questions
  • appears overwhelmed
  • difficulty with recall or memory loss
  • ongoing difficulty with communications – difficult to understand
  • lack of mental flexibility – not open to even hearing about options or risks
  • poor insight or judgment
  • problems with simple calculations which they did not have previously
  • sense that "something about the client has changed".

Financial abuse of older people is usually accompanied by other forms of abuse. Where there is a history or evidence of physical, psychological or sexual abuse, or where a beneficiary appears to exercise undue influence over the older person, or where the older person appears fearful and reluctant to speak in the presence of a person with influence over their affairs, financial abuse should also be suspected.

Accessing super from age 60 to 65

By Grahame Allen • August 30, 2024
From 1 July 2024, the rules for accessing superannuation became somewhat simplified: the preservation age when you can begin to access your benefits is now effectively age 60. However, until you reach age 65, there are still potential restrictions on how you can access your super. You’ll need to “retire” before you can make lump sum withdrawals from your super account or move it into the favourable “retirement phase” when investment earnings within the fund become tax-free. If you’re aged between 60 and 65 and wish to access some of your super, now is a good time to re-examine the rules. 60 is the new threshold For anyone born after 30 June 1964, preservation age is simply age 60. You may recall that some members could previously begin to access their superannuation at various stages between 55 and 59 years. Those lower preservation ages applied for older Australians who are now all over 60 and who have already attained their preservation age. Therefore, those rules regarding ages 55 to 59 are no longer an active consideration. How much super can I access? If you are between 60 and 65 years old but haven’t yet retired, you can commence a transition to retirement income stream (TRIS). This allows you to receive a regular income of between 4% and 10% of your pension account balance each year. If you want to access more of your super, or withdraw it as a lump sum, you’ll need to satisfy a further condition of release. This includes: reaching age 65; or “retirement”. Meeting these conditions also becomes relevant for tax purposes. While TRIS payments to a person aged 60 or over are generally tax-free – regardless of whether they are retired or not – the TRIS itself does not move into the “retirement phase” until a further condition such as retirement (or reaching age 65) is met. This means that while you may start a TRIS, the TRIS will not qualify for the tax exemption on the investment earnings from fund assets that support the TRIS until you meet one of those further conditions. What does “retirement” mean? To satisfy the “retirement” condition, the first key requirement is that an arrangement under which you were gainfully employed must have come to an end. If you had already reached age 60 when that position of gainful employment ended, there are no further requirements, and your future work intentions are not relevant. However, if you had not yet reached aged 60 when that position ended, the trustee of your fund must be reasonably satisfied that you intend never to again become gainfully employed, either on a full-time or a part-time basis. For these purposes, “part-time” means working for at least 10 hours per week. This means you could intend to work for less than 10 hours per week and still meet the “retirement” condition. Planning is key Any withdrawal strategy should be carefully planned beforehand to ensure you understand the implications of accessing your super. There are many factors to consider, such as: the ongoing requirement to withdraw minimum pension amounts each year if you start a pension; implications for your transfer balance account; and interaction with the Age Pension. Contact our office if you need help understanding your eligibility for accessing your super, or to begin a discussion about your long-term retirement planning.

Super guarantee a focus area for ATO business debt collection

By Grahame Allen • August 16, 2024
The ATO has revealed its focus areas for this year, with business debt collection identified as a key strategic priority. In its Corporate Plan 2024–25, the ATO says that it will have “an increased focus on business debt including superannuation guarantee, pay as you go withholding and goods and services tax”. This is a timely reminder for all businesses to ensure they’re meeting their obligations. Superannuation guarantee (SG) remains an important compliance focus. The most recent ATO statistics show that although 94% of employers are meeting their SG obligations without ATO intervention, the ATO still raised over $1 billion in SG charge liabilities in the 2022–23 financial year. That figure reflects a lot of extra super liability for Australian businesses that could have been avoided if they had paid the required SG contributions on time. To ensure your business doesn’t incur these extra liabilities, you must pay SG contributions for your employees and eligible contractors on time and to the correct fund. The quarterly due dates are as follows: Q1 (1 July – 30 September): 28 October; Q2 (1 October – 31 December): 28 January; Q3 (1 January – 31 March): 28 April; and Q4 (1 April – 30 June): 28 July. Some important things to remember include: Some contracts and awards may require you to pay contributions more regularly than quarterly. If you make contributions to a commercial “clearing house”, the contribution is considered to be paid when it’s received by the employee’s fund, not by the clearing house. However, if you use the ATO’s Small Business Superannuation Clearing House, the contribution is “paid” when received by that clearing house. From 1 July 2026, employers will need to pay SG at the same time as salary and wages (commonly known as “payday super”). What if my business misses an SG payment? Taking action promptly is essential to accessing the ATO’s support services and minimising your exposure to penalties. The ATO says that it’s willing to work with employers who want to put things right. When you miss a payment, you must lodge an SG charge statement with the ATO within one month of the missed quarterly due date. Lodging on time is important, as failing to do so will incur a further penalty known as a “part 7 penalty”, which can be up to 200% of your SG charge liabilities. Also, when you lodge on time, you may then be able to set up a payment plan to pay your liabilities in instalments. You can ask the ATO for an extension to the lodgement date, but you must do this before the due date. You’ll also need to pay the SG charge. This charge is more than the amount of contributions you would have paid if you had paid them on time, and it’s not deductible. The charge comprises: the amount of the missed contributions (but calculated on salary and wages, including overtime, which is more than the usual “ordinary time earnings” basis for on-time SG contributions); interest of 10% pa (which accrues from the start of the relevant quarter); and an administration fee of $20 per employee, per quarter. This is paid to the ATO, not your employee’s fund. General interest charge will accrue on any outstanding SG charge, and the ATO may also issue a director penalty notice if it remains unpaid. We’re here to help Mistakes happen, but getting on top of problems early will lead to a better outcome for your business. Contact our office for expert assistance in addressing your business’s SG obligations.

Claiming the tax-free threshold: getting it right

By Grahame Allen • August 9, 2024
If you’re an Australian resident for tax purposes, you don’t have to pay income tax on the first $18,200 you earn each year, from any source. This is called the “tax-free threshold”. If you have multiple income sources, it’s important to consider which one you’ll claim it for. The ATO advises claiming the tax-free threshold once from your “main” payer – typically the job, gig or payment that pays you the most during the year. That payer will not withhold income tax from the first $18,200 they pay you but will withhold tax from payments once your earnings go over the threshold. At the end of the financial year, the ATO calculates your total income and tax withheld. If not enough tax has been withheld, you can expect a tax bill. If more tax has been withheld than you owe for your total earnings, you can expect a refund. Claim the tax-free threshold When starting a new job, your employer should ask you to complete a withholding declaration. To claim the tax-free threshold, you must be an Australian resident for tax purposes on the declaration and answer “yes” to the question “Do you want to claim the tax-free threshold from this payer?”. Where you answer “no”, tax will be withheld from all income from that payer. Avoid claiming the threshold from multiple payers simultaneously unless you’re sure you’ll earn less than $18,200 total for the year. Overclaiming might make your take-home pay higher each pay cycle but will likely mean a tax debt later. Changing jobs When changing jobs you can claim the threshold from your new payer even if you have claimed it from your previous one. If you add a job or side gig that will provide more income than your existing main payer, you can change your claim at any time. Altering your tax-free threshold claim Change your claim using ATO online services, via your myGov account: Sign in to myGov and access ATO online services Select Employment from the menu Choose either New employment (for a new job) or Employment details (for an existing employer) Update your tax and super details as needed. Don’t forget your side gig If you’re earning income outside of employment (eg as a sole trader) you’ll need to pay tax yourself on that income. Consider setting aside a percentage for tax or using pay as you go (PAYG) instalments each time you are paid.
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