Financial Abuse And Forfeiture

While there are various forms of elder abuse such as psychological and physical abuse, financial abuse is the most common to come to the attention of the legal profession. Common ploys involve improper dealings via an enduring power of attorney, misusing electronic PIN access to bank accounts, coercion in will making and improper dealings with real estate.

Unfortunately, very few cases of financial abuse result in criminal prosecution. Civil address via the equity division of the Supreme Court is the most common but difficulties arise when the victim lacks mental capacity to give coherent evidence e.g. the property was not a gift but fraudulently obtained.

In Smith v Smith a recent Supreme Court case the second wife, under a power of attorney, used her husband’s assets and money for unauthorised, extravagant expenses such as holidays, gambling and jewellery and also to benefit her family members to the detriment of her husband and his estate. The Court found she had breached her fiduciary duties towards her husband and ordered appropriate redress.

Proposals have been made to the Australian Law Reform Commission enquiry extending the “forfeiture rule” to elder abuse. The forfeiture rule states that if someone causes the death of another they cannot benefit from their death. In relation to inheritance law this means that such persons are disqualified from inheriting from the deceased’s estate. In the USA the forfeiture rule has been extended in several states to cover financial or physical abuse to disqualify persons from inheriting in such situations. It is proposed that similar legislation be introduced in Australia to disinherit beneficiaries who have been guilty of financial or physical abuse of the elderly.

A National Plan to combat elder abuse is being developed by the Australian Commonwealth and States. It is timely to start a national conversation about the extension of the forfeiture rule to underserving beneficiaries which could act as a deterrent to abusive behavior.

Hilltops Phoenix
Hilltops Phoenix

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