Christmas is a joyful time for many, but as we know navigating the holiday season can be fraught with challenges. Whilst financial elder abuse may not be top of mind, at this time of year often complex family dynamics sit alongside pressures to overspend, and with a dousing of alcohol added to the mix, these combined forces may create the perfect storm for our most vulnerable people.

We have now seen our third prospective client in as many weeks, that has suffered some form of elderly financial abuse from their children.

Financial abuse of the elderly, a troubling yet often unspoken issue, is becoming an increasingly prevalent trend. We see cases where adult children, typically in their 40s, 50s, or 60s, subtly or overtly exert influence over their aging parents' financial decisions.

In recent weeks, we have seen demands made by children to;

review bank statements,
trying to block the sale of the family home (as someone in their 80s no longer needs a 5 bedroom, two storey home with a pool), and
an elderly client having a “friend” who needs to authorise each internet banking transaction on their mobile phone. This alone may not seem like much, however when the “friend” then informs the kids about each transaction their parent is making, as the kids no longer have a relationship with their parent - as they have stolen money in the past.

The need for parents to support their children is natural, deep-rooted, and often extends well into their children’s adult years. According to an article in Financial Planning OWS, a significant percentage of parents are still financially aiding their adult children, with 24% helping them pay rent.

We have a 75 year old client, Bruce, whom could not retire, as his daughter, Emma, wished to take time off work to go back to university and change careers. However, with the 13 interest rate rises over the past two years, and now with a reduced household income, Emma and her husband John, were unable to meet their mortgage repayments for their family during this period.

So despite the pressure Bruce was experiencing in the work place to retire, including bullying, stress, anxiety, chest pains, a decline in mental health and overall well being, Bruce put his hand up, to jeopardise his health and well being, by continuing to work so he could support Emma (35 years old daughter) with mortgage repayments to the tune of $3,000 per month, as Emma wished to change career paths and take some time off work to study and could therefore no longer afford their mortgage repayments.

This is after Bruce provided both Emma & her sister Lauren (both in their 30s ) with a $250,000 gift each to reduce their overall mortgages.

Such ongoing support, while well-intentioned, risks depleting the parents' retirement savings and impairing their investment strategies, not to mention the affects on one’s health and well being.

Put your oxygen mask on first, before helping your adult children.

Money and Family Don’t Mix

The intersection of family relationships and money can be complex and full of emotional entanglements. When adult children feel entitled to their parents' inheritance, it not only strains family bonds but also disregards the autonomy and rights of the elderly.

The financial resources of an individual are theirs to manage and enjoy.

Whether they are 30 years of age, or 80 years of age, they can manage and enjoy their financial resources as they see fit. Whether they wish to indulge in the pleasures of their retirement, generously support charitable causes, or thoughtfully plan their estate, the decision lies solely in their hands.

As financial planners, we can navigate through these complex family dynamics, ensuring that the financial autonomy and well-being of our clients are preserved.

We had a 71 year old client last week, Betty, that said her son was blowing up that Betty was giving money to one sibling so they could build a granny flat to live in. Saying they are advantaging one child over the other.

Betty turned around and said, you are not a child. It is my money and I do as I please.

You are so entitled that I may look to change my retirement plan, and look to live on a cruise ship for the next 10-15 years and spend any future inheritance you thought you were entitled to.

We had another client, Blanche (80), that wanted to sell everything up and bury her money.

However, after listening to their frustrations around Blanche’s children, we formed a more elaborate estate plan, that involved setting up a charitable trust, which each of their “entitled” children (whom are all in their 50s and 60s) would have to distribute their “inheritance” to charities each year in their parents name.

For example, if Blanche had $1m, and were to donate this into a “structure” she could donate between $50-75,000 from the underlying investment returns each year to her charities and causes of choice. This would surpass a lump sum $1m donation after 13-20 years, during which time this structure can operate to honour Blanche.

In addition, this can be shared with their family members and descendants, which will support in establishing a tradition of social responsibility for future generations to come. Creating this type of legacy may be appealing for some in this situation given concerns with children around money, greed, and entitlement, however this is not for everyone.

*In addition, we have referred Blanche through to a specialised estate planning lawyer to support with the strategy and advice.

The Signs of Financial Abuse

Unusual Financial Transactions: Sudden changes in banking activities or unexplained withdrawals.
Altered Estate Plans: Sudden changes in wills or power of attorney, especially under questionable circumstances. Such alterations may signal undue influence or coercion.
Increased Dependency: A parent becoming overly reliant on an adult child for financial decisions.

Steps to Take and Things to Consider

Open Communication: Encourage discussions about financial plans and wishes. Ensure that the voice and wishes of the individual are central in all discussions and decisions.
Legal Safeguards: Establishing clear, legal documentation like wills and powers of attorney, to provide a robust defence against undue influence and exploitation.
Professional Involvement: Involving a financial advisor to monitor and manage financial transactions can offer an impartial viewpoint and an additional layer of protection against financial abuse.
Education and Awareness: Educating both the individual and their families about the risks and signs of financial abuse.

At Newcastle Advisors, we advocate for the financial independence and rights of our elderly clients.

Our role is to offer guidance, support, and the necessary tools to protect our clients from potential financial abuse, ensuring their peace of mind and the respectful stewardship of their assets.

We act as the gladiator for our clients.

An advocate on the client’s behalf, protecting them from bullying, abuse, undue influence and exploitation.

We also act as the Guru for our clients.

Where we look to improve our client’s financial knowledge, imparting objective wisdom, so they can make more informed decisions about their financial well being.

We act as a guide for our clients.

Where we help manage both the practical and emotional burden of financial decision-making for clients.

If you are looking for a gladiator to protect and support you, contact our team at Newcastle Advisors.