Financial abuse of elderly: what accountants can do

Accountants are in a unique position, having detailed information about people's financial affairs

With victims reluctant to report it, abuse of elders frequently goes under the radar. Accountants can form a frontline defence, and help protect assets from “inheritance impatience”.

Updated 24 April 2017

When Melbourne-based lawyer Paul Welling of Clayton Utz took on the case of Cirillo v Mainieri & Anor in 2010 pro bono, he may not have known it at the time but he was representing much more than the interests of his client, Cirillo.

The case, which ended up in the High Court of Australia in 2014, helped to highlight the plight of thousands of vulnerable victims, silenced by family dynamics and fear of abandonment.

The features of this case were typical of abuse. It was committed, not by a stranger, but a trusted relative, and the victim was left to face devastating consequences for the remainder of her life.

Almost half of all elder abuse is financial.

In this instance, the abuse of elderly widow Rita Cirillo was financial. Cirillo had sold her home and contributed the proceeds of the sale towards her son Frank's mortgage. In turn, Frank agreed that Rita could live with him indefinitely and that he would take care of her. When the relationship broke down, Rita was left to live in an aged care facility. Her son claimed that the money was a gift and that he had no obligation to repay it.

This was a classic case of “assets for care” (PDF), a risky trade that can leave elderly parents in the red.

The Elder Abuse Prevention Unit, based in Queensland, defines elder financial abuse (EFA) as the illegal or improper use of a person's finances or property by another person with whom they have a relationship implying trust.  

It’s the most common type of elder abuse, with studies in Australia indicating that a half to five per cent of people aged 65 and older experience elder abuse. Almost half of this abuse is financial, according to a 2009 review of the evidence conducted by Monash University.

Women are more likely to be victims, apart from the fact that they live longer than men. Sons are more likely to be perpetrators.

After five years the Cirillo case was finally put to rest, with the court ruling that Rita Cirillo was entitled to a charge over the property, to secure repayment of her money with interest.

“It was a lot of work and took much longer than we’d hoped, but it was a great result that was very satisfying personally and professionally,” says Welling.

When love and money go wrong

Senior Rights Victoria, which referred Cirillo to Clayton Utz, sees the worst of family fall-out when love and money go wrong.

“Some older people leave their child’s home with no money at all, and not even able to claim the age pension because the money given to the child is deemed a gift by Centrelink,” says Jenny Blakey, Manager of Senior Rights Victoria

“We’ve had people who have worked all their lives suddenly lose their home at 80 and 90 years of age, not realising that the paper they signed to guarantee a child’s business was a transfer of title. We see children pressure their parents into transactions, using threats to deny access to grandchildren or to place the older person in a home.” 

Much financial abuse, however, takes place away from the obvious extremes, in shadowy grey zones where ethics become clouded by self-interest and opportunity. A child who has been given a parent’s PIN number, for example, starts buying personal items justifying this as a reward for services.

 

A sense of entitlement can also muddy one’s moral compass: “It’s going to be my inheritance anyway so what does it matter if I get it sooner?” Throw some inter-generational resentment into the mix about the “lucky generation” that enjoyed free education, good job opportunities and affordable housing, and the right to claim a piece of your parent’s pie seems entirely justifiable.

By 2055, 25 per cent of the Australian population will be over 65, according to the 2015 Intergenerational Report of the Australian Government. A staggering 40,000 Australians will be over the age of 100. As people live longer, they become more vulnerable due to conditions such as dementia, which is being diagnosed at a rate of 1800 new cases each week, according to Alzheimer’s Australia.

This trend worries advocates of seniors’ rights. When an asset-rich group of people declines in function, chances are that more children will act according to the law of the jungle, which is to prey on the vulnerable.

“No matter how old, parents want to take care of and look after their children,” says Blakey.

“This is what gets abused, fuelled by ageism, which disregards older people’s needs and wants – that they might want to use their money for a holiday, or need it later in life for their health care.”

Accountants on the frontline

In past generations, it was the norm for older parents to be taken care of by the children, with the accompanying expectation that family wealth would be passed down from generation to generation.

With extended family living arrangements becoming increasingly rare, and a move towards user-pays aged care, the need for older people to provide for themselves is growing.

“The expectation that the younger generation will acquire their parents’ assets needs to be seriously reconsidered,” according to Richard Blakeman, accountant and member of a CPA Australia taskforce on EFA.

Related: Considerations for the accountant who suspects abuse

While accountants might not consider it their role to be on the frontline defence against abuse, they are actually well placed to do so.

“We are in a unique position of being a trusted profession, and we have detailed information about people’s financial affairs,” says Blakeman.

“We have a responsibility to the community to play our part to help ameliorate this significant and growing problem.”

To help accountants, the taskforce created a set of tools to help accountants prevent, detect and respond to the unethical draining of elders’ assets.

Stephen Jones CPA, partner at ATM Consultants, was also involved with the EFA taskforce.

“When I first heard the term ‘abuse’ I thought it was a bit extreme, but having seen some of the case studies, I now understand,” says Jones, who has seen one of his own clients pressured into acting as a guarantor for a child’s business, only to lose hundreds of thousands of dollars when the venture failed.

“Our job is to make sure everyone is totally informed about what they are doing,” says Jones.

“We ask, ‘Do you understand the implications of this for your mother?’ Or, ‘Do you realise you could lose your house?’  Sometimes people don’t want to hear it, or they do understand the risk but go ahead anyway. People have the right to make poor decisions.”   

The danger of standing by

It’s sensitive stuff, suggesting to a client that her child may be ripping her off, or that you, the child, may actually be engaging in theft.

So perhaps it’s no surprise that Monash University’s Associate Professor Jo Wainer AM found evidence that professionals are often reluctant to report abuse when suspected. It’s easier to remain a bystander than get involved.

“Our research has found that elder financial abuse is a real problem for workers who encounter it in their work as lawyers, accountants, home care providers or district nurses,” says Wainer, author of five reports on the issue.

“They know it’s wrong but simply don’t know what to do.”

Related: It's your funeral - An investigation of death care and the funeral industry in Australia (PDF) 

“We are in a unique position of being a trusted profession. We have a responsibility to the community to play our part.” Richard Blakeman

Blakeman urges accountants to use the EFA toolkit to educate themselves about the issue, their responsibilities and the indicators of potential abuse, which relate to vulnerability, reduced capacity, dependency and isolation. 

“Prevention is so important because the courts take too long,” says Blakey of Senior Rights Victoria. “Five years… especially if you are already in your seventies…” 

 

“Families like to help each other out, and this can work well when family members are very conscious of not exploiting the older person. The most effective antidote is a caring and loving member of the family.”

Scams: Are older people more prone to falling victim to scams?

“Our data shows a pretty even spread of reported scams across the age groups,” says Delia Rickard, Deputy Chair of the Australian Competition and Consumer Commission (ACCC).

“Everyone is vulnerable to scams at different times and for different reasons. Being new to the online environment can be one risk factor.”

Romance and investment are two scams older people should be especially alert to, says Rickard.  

Romance

When it comes to the search for love, it’s people aged 55 and over who are most likely to get sucked in by false lovers on dating sites, asking for money to be sent to them after a prolonged period of “grooming”, according to the ACCC.

“This is just the tip of the iceberg, as untold cases go unreported,” says Rickard. “Men and women are equally like to be affected.”

  • In 2014, 28 million dollars were lost to romance scams. Eighty-one people lost more than A$100,000. (ACCC)  

Investment

Those nearing retirement should also be alert to investment scammers who can prey on concerns about having enough money for the future.

“Even experienced investors have fallen victim to very slick operators selling worthless shares,” says Rickard.

  • In 2014, 12.5 million dollars were lost to investment scams. (ACCC)

What’s the latest scam? Subscribe to scam alerts at scamwatch.gov.au  

Top tips

  • If it sounds too good to be true it probably is
  • Never send money to someone you met online
  • Never give personal information, or access to your computer, to people who contact you out of the blue
  • Report a scam to Scamwatch on 1300 795 995. 

10 signs of financial abuse

  1. Promises of “good care” in exchange for transferring property or money to the carer
  2. Fear, stress and anxiety expressed by the older person
  3. Unfamiliar or new signatures on cheques and documents
  4. Inability of an older person to access bank accounts or statements
  5. Significant, unexplained withdrawals from accounts
  6. Transfer of assets when the person is no longer competent to manage their own financial affairs
  7. Accounts suddenly switched to another financial institution or branch
  8. Drastic changes in the types of banking activities, or to a will
  9. Valuable assets, such as cars, jewellery or artwork going missing
  10. Signs of physical or psychological abuse of the older person.

For a comprehensive list of signs and risk factors see CPA Australia’s Elder Financial Abuse tools and the Senior Rights Victoria Online Elder Abuse Tool Kit

Cultural differences matter

Elder abuse is found across all cultures, but attitudes vary significantly. In some cultures, the expectation is that whoever in the family or community has money should lend it to others.

“You have to take cultural diversity into account, especially if working with communities from a non-English speaking background,” says Wainer.

“Don’t assume the person in front of you has your values.”

Conversation starters: Raising potential financial abuse with a client

When your client is at risk:

You could say: It can be helpful to think through possible scenarios that could occur in the future before making a decision. Have you thought through what will happen if:

  • you do not enjoy living with your children anymore?
  • they are unable to provide you with care or you need specialist care into the future?
  • your children cannot afford to continue living in the house or wish to sell it?

If your client is the perpetrator:

You could say:

  • The consequences of this act, if unlawful, are...
  • It may be highly detrimental for me if I were found to be involved in any way
  • Here are some options for going about this which are not unlawful…

 Source: CPA Australia’s Financial Abuse of Older People Tools

Avoid double dipping

“When working in country areas or for small businesses, it’s not uncommon to end up being the accountant for the parent initially, then as things progress, for the children as well, who go on to inherit the business,” says Blakeman. “You become a family friend.” 

But where there is actual or potential conflict of interest between an older person and their adult child, the accountant must not act for both clients, the toolkit stipulates.

How does it feel?

"When it happens, you feel scared, disappointed and yes, angry. And you can't believe that it's happening to you. You feel overwhelmed. When I asked for information I was told that I couldn't have any information of my own… when you're told that you feel powerless".

Hollywood star Mickey Rooney, who died at the age of 93 with $18,000 in his account following alleged financial abuse by his stepson.

Source: U.S. Senate Committee on Elder Abuse, 2011

Read next: Understanding elder abuse can help practitioners protect their clients


Like what you're reading? Enter your email to receive the fortnightly INTHEBLACK e-newsletter.

August 2017
August 2017

Read the August issue

Each month we select the must-reads from the current issue of INTHEBLACK. Read more now.

PURCHASE CONTENTS