Elder law encompasses a broad range of issues affecting older people. A major concern in this area is the vulnerability of older people to financial exploitation and abuse.
What are some of the signs of elder financial abuse?
Older people are vulnerable to financial exploitation by a ‘friend’, ‘carer’ or other family member, particularly where mental competence is declining. Signs of financial abuse listed below use the example of a ‘friend’ but can just as easily apply to a ‘carer’ or other family member. They include:
- a ‘friend’ making him or herself indispensable to the older person including taking responsibility for ‘looking after’ the older person’s finances and using credit cards or cheque-books
- rifts or divisions opening up between the older person and what were previously long-standing, close relationships between the older person and friends and family resulting in increased dependence on the ‘friend’
- the older person visiting a new solicitor at the suggestion of the ‘friend’ for the purposes of having an enduring powers of attorney and/or will signed which favours the ‘friend’
- ‘gifts’ or loans by the older person to the ‘friend’
- irregular withdrawals or significant changes in banking transactions.
I am concerned about my elderly mother being financially exploited. What can I do about it?
Get some advice from a lawyer specialising in elder law about the Protection of Personal and Property Rights Act 1988 (PPPR Act) which specifically targets situations where (older) adults are facing increased difficulty managing their financial affairs, typically because of the early stages of dementia or Alzheimer’s disease. Under the PPPR Act a family member who is concerned about an older person being financially exploited can apply to the Family Court for the appointment of a property manager to manage the older person’s property.
Who can the Court appoint under the PPPR Act to be a property manager?
Often the family member who is applying to the Court for the appointment of a property manager can be the property manager if the Court decides to appoint one.
Where possible the Court will appoint someone who is responsible and who the Court feels the older person would have wanted to have appointed. This might be an honest and reliable friend or family member or, depending upon the circumstances, the older person’s solicitor or accountant.
How does the Family Court decide whether to appoint a property manager under the PPPR Act?
Before a Family Court Judge can appoint a property manager to look after the property and finances of any person the Judge needs to be satisfied that the older person, either totally or partly, does not have the competence to manage his or her own financial affairs.
That means that the older person doesn’t have to be totally incompetent in making financial decisions. So, for example, the person may be able to make day-to-day financial decisions about what to buy from the supermarket but not have the competence to make more complex decisions about how to invest a large sum of money or whether and how the family home should be transferred to a trust.
The fact that the older person doesn’t have to be totally incompetent to make financial decisions before an order for the appointment of a property manager can be made fits with the fact that dementia and Alzheimer’s disease are progressive, starting with things like:
- some memory loss, confusion
- personality or mood changes
- loss of interest in hobbies and other previously enjoyable activites
- difficulty finding the right words
and progressing to total mental incompetence.
Importantly, if the Court decides that an older person partly lacks competence to make financial decisions the Court can take into account whether the person is, or is likely to be, vulnerable to undue influence in making financial decisions.
What is undue influence?
Undue influence is a legal term that, once established, usually means that transactions which happen in an undue influence situation can be set aside. It is based on the principle that a transaction which has been obtained by unacceptable means should not be allowed to stand. Importantly, a person can fully understand and ‘agree’ to the transaction but still be subject to undue influence.
Undue influence involves a relationship where the ‘influencer’ has a relationship of influence over a the older person and uses that relationship to influence or coerce a transaction typically involving the transfer of property belonging to the older person to the ‘influencer’. Conduct amounting to undue influence often happens when the influencer and older person are alone and in circumstances where the older person does not have access to independent advice.
For information on undue influence in relation to wills see my questions and answers on my wills and undue influence page
What sort of evidence does the Court need to see before appointing a property manager under the PPPR Act?
As an experienced elder law lawyer will tell you, typically, any assessment by the Court of competence in the context of whether a property manager should be appointed under the PPPR Act will involve two sources of evidence. The first is medical evidence. The second is evidence of actual irregularities in relation to the management of the property of the older person (money going missing, large ‘gifts’ of money and other signs of financial exploitation).
Medical evidence usually begins with GP’s records. Note here that often patients report concerns about memory loss and other early signs of dementia to their GP which they may not tell family members about. Typically the GP will conduct a mini-mental state test. The GP will use the results of the test to assess whether to refer the patient to Older Persons Services.
Commonly in applications under the PPPR Act for the appointment of a property manager expert medical evidence from a psycho-geriatrician (a psychiatrist specialising in the mental health of older persons) is involved. The psychiatrist will review the medical notes of the older person’s GP and meet face-to-face with the older person to provide a report which can be used to support the application. An experienced elder law lawyer will be able to arrange for a psychiatric report to be provided, usually before the application for the appointment of a property manager is filed.
What can I do if the person who I suspect of financially exploiting my mother holds an enduring power of attorney in relation to my mother’s property?
Under the PPPR Act the Court can revoke the appointment of a person appointed as a property attorney under an enduring power of attorney where the attorney has mishandled or misused the older person’s property. For example, where the attorney has charged exorbitant fees or taken the older person’s car for his or her own personal use or helped him or herself to the older person’s property on the excuse that the older person has no continuing need to retain ownership of them.
The Court can also revoke the appointment of a person as property attorney under an enduring power of attorney if the older person did not have sufficient mental competence to understand the implications, nature and extent of the power she was giving to the attorney.
At the same time as the Court revokes an enduring power of attorney in relation to property under the PPPR Act it can also appoint a property manager.
What can I do if the property attorney of an older person is him or herself mentally incapable of looking after the older person’s property?
Likewise, in this situation the Court can revoke the enduring power of attorney and appoint a property manager in place of the EPOA holder.
What can I do if my mother has signed a will in favour of the person who I suspect is financially exploiting her?
Once a property manager for the older person’s property is appointed under the PPPR Act she or he can apply to the Court authorising the manager to prepare and sign a new will if the older person’s latest will favouring the ‘exploiter’ was signed when the older person was unable to manage her or his financial affairs. Here the terms of any previous will signed by the older person when she or he was mentally competent would be important because the Court will often authorise the signing of a new will by the property manager on behalf of the older person in similar terms.
What are the steps involved steps involved in applying to the Family Court for the appointment of a property manager under the PPPR Act?
Depending upon the circumstances, the first step that an experienced elder law lawyer would take in preparing an application for the appointment of a property manager would be to seek disclosure of:
- GP’s medical records;
- copies of wills, EPOAs and deeds of trust from the older person’s solicitor;
- a statement of the older person’s assets and liabilities from any existing holder of an enduring power of attorney for the property of the older person.
Often this information isn’t available for reasons of privacy. An experienced elder law lawyer should be able to assist you with finding ways around that problem.
The next step would be to file an application with the Family Court supported by affidavit evidence usually from concerned family members, friends and a psychiatrist who has assessed the older person’s competence. Copies of those documents need to be given to other close family members so they can decide whether to support or oppose the application.
Once the application is filed the Court appoints a lawyer to represent the older person (known as counsel for the subject person). Counsel for the subject person is chosen from a list of qualified barristers who regularly act in that capacity. The lawyer’s paramount concern is protection of the welfare and interests of the older person. Currently lawyers for the subject person are paid according to a scale of remuneration which is considerably lower than what the lawyer would usually charge. Those scale costs can be met from government sources but are typically ultimately paid, in circumstances where the subject person has assets, from those assets.
After appointment, counsel for the subject person would arrange to meet with older person; speak to any family members involved with the proceeding and then report back to the Court on his or her initial views on the best way forward.
Counsel for the older person also has the authority to request the older person’s existing medical notes and to make recommendations to the Court about whether any further medical assessment is needed.
The vast majority of applications under the PPPR Act for the appointment of a property manager are resolved by agreement between the family members having an interest in the case. Often agreement is assisted by the views of the lawyer for the older person and the involvement of experienced elder law lawyers in the case. However for those cases that are not resolved by agreement they progress to a formal hearing where the persons involved give evidence and the Family Court Judge decides the outcome.
Is there anything that can be done under the PPPR Act to retrieve an older person’s property transferred in an elder abuse situation?
If by the time a property manager is appointed the older person has already ‘gifted’ or transferred property to a ‘friend’ or family member who is taking unfair advantage of an older person who has declining mental competence the property manager can apply to the court to retrospectively decide if, at the time the ‘gift’ or transaction was made, the older person was sufficiently competent to decide to make the ‘gift’ or ‘transaction’. Where that happens the property manager has the power to apply to the court to set aside the ‘gift’ or transaction.
Alex McDonald, Elder Law Barrister, Auckland