This week, it’s National Consumer Fraud Week.
And today I’m going to talk to you about the dirtiest, slimiest, most heartbreaking scam of them all.
(No, it’s not the Nant Distillery in Tasmania — although I’ve got my eye on you guys.)
What makes this scam so shocking is that it’s an ‘inside job’. And it happens every single day.
Here’s a real-world example, courtesy of a woman who rang my radio show a few years back:
Woman: “A year ago my mum had to go into a nursing home because she has dementia. She has almost $115k in savings which she no longer has any use for, and I have a son who has just been accepted into acting school in New York.
My siblings and I are wondering what the cost implications would be if we take the money out now and divide it between the family.
Will we pay more tax doing it that way?”
Barefoot: “Can’t you wait until the poor woman dies?”
Barefoot: “You are stealing her money.”
Woman: “No, I’m calling because I want to know about the tax implications of…”
Barefoot: “No, you are stealing her money.”
Woman: “She doesn’t need it.”
Barefoot: “Who says?”
Woman: “I do!”
(And with that the woman hung up on me.)
The Worst Scam in the World
Clearly, this woman didn’t feel that she was doing anything wrong.
In her mind, she and her siblings were going to get the money eventually … why not just speed it up?
This is known in the industry as ‘inheritance impatience’.
Though I prefer to call it ‘Granny Greed’ (or Grandpa Greed).
“It’s pretty consistent,” says Greg Mahney, the CEO of Advocare.
“Research shows that about 1 in 20 will experience some form of elder abuse, and the most common is financial abuse.”
Though no one really knows the true figure of course.
After all, what parent wants to admit their family are ripping them off?
And sadly, it mostly is family that do the damage: the latest research from Advocare suggests that 89 per cent of perpetrators are family members.
We’re not talking peanuts either. In the 2013-14 financial year, the Elder Abuse Prevention Unit in Queensland uncovered 139 older people who were ripped off to the tune of $56.7 million in total. And that’s just in one state.
Statistics are one thing, but let’s look at three real-life case studies, given to me by Advocare:
Case Study 1: Down in the Dumpster
An elderly woman lived in a nursing home while her son took care of her home. He got her to sign some paperwork for bills relating to the house, which she did without checking. An aged care advocate drove past her home later that day and saw that her possessions were being thrown into a skip, and a ‘for sale’ sign was placed on her home. He’d had her sign an authority to sell.
Case Study 2: Granny Falls Flat
An elderly woman sold her house and gave the proceeds to her daughter and son-in-law, so they could build a granny flat onto their home, where she could live for the rest of her life. A few years later, the couple divorced and the family home was sold in the separation of assets. It severely limited her aged care options.
Case Study 3: The One-armed Bandit
A frail elderly man living in a retirement home gave his daughter his ATM card to get some basics from the shops. An aged care advocate checked their bank account and found thousands of dollars of unauthorised transactions — from pokie venues.
Here’s the thing: most of the kids get away with it.
First, it’s the circle of life (as Elton John sang). Elderly parents often rely on their kids to dish out their pills, feed them, clothe them and drive them around. They rely on them.
Second, they’re coming to the end of their lives and don’t want to harbour a grudge.
Third, there’s the grandkids.
Well, mark my words, this is going to become a much bigger problem, for a few reasons.
The property boom has many oldies living in million-dollar homes while their kids and grandkids struggle under the weight of massive mortgages. Rising superannuation has meant that we’re creating the wealthiest generation to ever retire. And then there’s another boom: it’s predicted that by 2050 in Australia people aged 65 and over will double, and dementia will triple.
So what can you do to protect your ageing loved ones?
Well, on a practical level, you need to ensure that your entire family are on the same page, and that they respect your parents’ wishes — even if they don’t agree with them.
And make sure that everything is documented with an independent legal expert — keeping a close eye for the idiot brother-in-law who’s always scratching around with a sob story looking for a ‘loan’.
The other thing to do is appoint two enduring powers of attorney:
One from the family and one from outside the family (preferably a trusted friend or even a lawyer) who doesn’t have dibs on Aunt Mavis’s BHP shares in the will. If they’re appointed jointly, it means they’ll have to make their decisions jointly.
And hopefully they’ll act in the best interest of the person who matters most.
Tread Your Own Path!