‘Disturbing’ trends identified with mortgages and elder abuse
The rise in property prices has seen some adult children pressuring older parents into withdrawing funds from bank accounts and contributing the money from those accounts towards their own mortgage.
Speaking at an SMSF Association event, Protecting Seniors Wealth chief executive Anne McGowan said SMSF professionals should be mindful of situations where elder abuse may be occurring, and should also be aware that other professionals that deal with their client may be complicit with what’s occurring.
In her role at Protecting Seniors Wealth, Ms McGowan said she is regularly contacted by professionals who are concerned their clients may be subject to financial abuse by either family members or other individuals.
One of the cases she was contacted about involved an accountant whose stepfather was suffering financial abuse from another member of the family.
“What was happening was another member of the family had begun to take the older gentleman in around to all their banks, and this family member was closing all the bank accounts and putting the money into his own companies,” Ms McGowan explained.
This family member had enlisted the help of a lawyer to set up a number of these companies, she said.
The accountant, through his firm did a number of searches on these companies, and they started to trace what was happening with the companies and then chase the funds.
“It ended up going to court, it took him a while and he was the one that had to drive it all,” Ms McGowan said.
“The outcome of that court case was that the funds had to be paid back to the older gentleman, and the lawyer's professional indemnity had to pay all the court costs.”
While the older gentleman hadn’t necessarily lost capacity, the perpetrator had somehow convinced him that it was a good idea, she said.
Verante Financial Planning director Liam Shorte said he has likewise seen adult children of clients come into the firm and state that because their mother or father are only receiving a small return on their term deposit, that perhaps the money in the account should instead be put towards their own mortgage.
“We see situations where someone comes in and says ‘dad or mum are only getting 2.5 per cent on the term deposit, so what we've agreed with dad or mum is that we'll put the money towards our mortgage where it saves us interest but we'll pay mum or dad 3 per cent,” explained Mr Shorte.
“It starts off being all legal, and then six months later some expense comes in and they can't afford to pay mum or dad the money, and they say 'they don't need the money anyway'. Then we have to raise the point, ‘well you may not think it, but your siblings probably do’. I've seen that a few times with clients in the past few years. It's disturbing.”
Ms McGowan said with property prices edging higher, there's a trend now where younger family members are looking to access mum and dad's cash somehow to help them.
“If you're going to lend younger family member's money, and sometimes it can be okay to help younger family members out, then have a family agreement,” she said.