• Angela Costin

Protect yourself from financial abuse

More than a matter of law

At Millens, we aim to give advice you can understand. Truly effective advice comes from a complete understanding of your circumstances and the law.

We are noticing more people are seeking our advice about intervention by others into their financial and legal affairs.

As we age, we become more vulnerable to influence by others. Unfortunately, sometimes it is those closest to us that we should be most wary of.

Financial abuse includes the improper use of another person’s money or assets to that person’s detriment. Some examples of cases we have come across;

· Theft or misappropriation of money or property;

· Undue influence or duress to make or change a Will or Power of Attorney;

· Taking control of bank accounts or denying a person access to their own funds;

· Seeking payment for work not undertaken or overcharging for a service;

· Using a Power of Attorney to transfer or control assets against the donor’s wishes;

· Forging or forcing a person to sign a document such a loan agreement, guarantee or bank authority adding a person as a signatory to an account;

· Coercing a person to offer their home as security for a loan;

· Using a person’s funds to buy a property but not putting their name on the title and later refusing to acknowledge any ownership or entitlement;

· gaining control of a family trust and making inappropriate distributions or falsifying loan accounts.

Whilst there may be legal consequences for those that engage in financial abuse, unfortunately in some cases victims are not fully compensated for their loss and do not regain the money or assets they once had. Often, the abuse continues undiscovered until it is too late.

Here are some practical tips to protect yourself and others from financial abuse;

· Signing documents

Don’t sign any document unless you understand it. Seek assistance from others or your advisor where necessary.

· Bank Accounts

Be careful who you allow to access your bank accounts. Set up direct debit facilities to pay your bills instead. If you do allow another person access, put limits on the amount they can withdraw or appoint more than one person to authorise any transfer. Ensure you continue to receive your own bank accounts statements so you can monitor transactions or arrange for someone independent (such as your accountant) to do this for you.

Stop using cheques as others can easily forge your signature to make cash withdrawals.

Talk to your bank manager about other safeguards you can put in place to protect your accounts.

· Loans and repayments

Avoid cash transactions or loans to people as these can be difficult to trace and the other person can more easily deny they received the funds. Always seek advice first and ensure there is documentary evidence of each transaction (and the reasons why and what the funds are to be used for) as well as the transfer of funds.

· Make a Will and Powers of Attorney

Make sure you have a Will and Powers of Attorney (in case you lose capacity) in place so those you trust will have control of your assets and those you wish to receive your assets will do so (subject to any claim being made).

· Executors, Attorneys and the controllers

It is not always easy to choose someone to manage your affairs. Even those you trust can find themselves in circumstances where they are so desperate that they make the wrong decisions (such as financial pressure or a gambling or drug addiction). None of us know what will happen in the future. That’s why it is sometimes best to appoint more than one person (and someone independent who is not a beneficiary) to ensure there are appropriate checks and balances in place so that any inappropriate behaviour by one will be quickly identified by the other. Talk to your advisor about your circumstances and discuss your options carefully.

· Keep your documents and passwords in a safe place

Ensure all your important documents such as your Will, Powers of Attorney, financial information and passwords are kept in a safe place and cannot be accessed by unwanted people. Similarly, ensure those you wish to take care of your affairs know how and where to find these documents and information.

· Superannuation and life insurance

Make sure you have completed a written Binding Death Benefit Nomination for your superannuation and any life insurance policy, identifying the persons you would like to receive your funds and death benefits. If no nomination exists, the trustee of your superannuation fund or insurer (and in the case of large public funds, this will be an employee unknown to you) will have discretion as to who to pay the funds to. It is legally difficult to later dispute or appeal a trustee’s exercise of discretion.

· Family trusts

Increasingly we are seeing large portions of clients’ wealth tied up in family trusts. Seek advice and make sure you have nominated persons to succeed you in any controlling positions. With most trusts it is not the trustee who controls the trust. Rather it is often a person called the Appointor as they frequently have the power to replace the trustee. Whoever controls the trust will have control over the trust’s assets. In discretionary trusts (which most family trusts are), this person will also control distributions to beneficiaries and may distribute the entire trust’s assets to themselves to the exclusion of others. Providing they comply with the trust deed, there may be little that can be done about it. That’s why it is imperative that you have a succession plan in place in the event you die or lose capacity to make those decisions yourself.

· Communicate

If you feel you may be being taken advantage of or are being pressured to do something you don’t want to do, talk to someone you trust and seek advice.

Most importantly, look out for your friends and family and identify signs of abuse early and seek advice as soon as possible. Common signs include;

· Reduced mental health and becoming increasingly forgetful or confused;

· estranged child or other family member visiting more frequently and asking questions about their financial affairs;

· Possessions such as jewellery and other property going missing;

· Missing bank books, credit or debit cards;

· Bills going unpaid despite the fact the person should have sufficient funds;

· Unexplained withdrawals from bank accounts or larger and more frequent withdrawals;

· Person being taken to see an unknown lawyer or accountant who is not their usual advisor;

· Attorney appointed under a Power of Attorney refusing to communicate with others or provide requested information;

· Elderly or vulnerable person being isolated from friends and family by another.

What to do if you become aware someone else is being financially abused?

Talk to the person and if necessary seek advice. If the suspected perpetrator is the victim’s Attorney (or no one has been legally appointed to control their affairs), you may be able to make an application to the Victorian Civil and Administrative Tribunal to have the person removed as Attorney and an independent Administrator appointed to manage their financial and legal affairs. You do not have to be a family member to make an application, any concerned person can do so.

In some cases, it may also be possible to undo certain transactions or seek repayment of funds, but action must be taken quickly.

Our senior lawyers have in excess of 30 years of experience in this area of law, both in private practice and as in-house counsel for a major trustee company. We provide high-level professional advice in an efficient, cost effective manner and in a way clients can understand.

We are here to help.

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