Are you vulnerable to Financial or Elder Abuse? Important Considerations When Electing a Power of Attorney
What is Financial Elder Abuse?
The World Health Organisation defines elder abuse as “A single or repeated act, or lack of appropriate action, occurring within any relationship where there is an expectation of trust which causes harm or distress to an older person.”.
Elder abuse may arise through financial, emotional, physical or criminal harms to a person, where an unethical advantage is sought by the perpetrator.
Financial elder abuse is prevalent in the area of wills and probate, and it is essential to understand what it looks like in order to protect yourself or your loved ones. It can involve someone misusing or controlling an elderly person’s finances or property or coercing someone to change their will. Additionally, elder abuse can arise where an individual abuses a Power of Attorney.
What is a Power of Attorney?
A Power of Attorney (POA) is a legal document that nominates one or more individuals (known as attorney or attorneys) to act on behalf of the person making the POA (known as the principal) and manage the principal’s legal and financial affairs.
A POA may be General or Enduring. A General POA authorises the attorney to act on behalf of the principal, only while the principal has mental capacity to make their own decisions. Whereas an Enduring POA enables the attorney to act on behalf of the principal and continues to operate after the principal loses capacity.
Duties and Breaches of Power of Attorney
As they are placed in an important position of trust, an attorney has the duty to act in the best interests of the principal. This means they must avoid circumstances where the attorney’s own interests conflict with that of the principal, they must follow the conditions and directions set out in the POA document and not benefit from their position as POA, unless they are explicitly authorised to do so.
Abuses may occur when these fundamental obligations are breached. Issues arise in circumstances where the principal is elderly and vulnerable, which leaves them open to financial elder abuse.
This was seen in the recent decision of Case 662814 concerning Westpac Banking Corporation. In this case, an elderly customer opened a bank account and added their daughter, the complainant, as a signatory. In July 2019, the complainant attempted to withdraw $100,000 in cash, and one month later $800,000. Westpac refused to authorise both transactions, despite the customer appointing the complainant as attorney. The daughter complained to the Australian Financial and Complaints Authority (AFCA) who maintained that Westpac was correct in declining the transactions. AFCA stated that ‘the bank does have a duty to exercise reasonable care and skill in carrying out transactions for its customer, particularly if the customer is vulnerable’. Vulnerable customers were said to include those suffering from an age-related or intellectual impairment who would be likely targets of elder or financial abuse.
This case shows the importance of electing an attorney who the principal deems trustworthy and will fulfil their duties and obligations in favour of the principal. Additionally, it illustrates the duties of financial institutions to exercise diligence and care when receiving instructions from an attorney.
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