Push for change to elder abuse laws to prevent false claims

Australian legislators should consider relaxing guardianship and power-of-attorney laws, argues Dr Ben Chen. This would likely result in fewer unjust claims against family guardians and attorneys.

Laws that aim to protect elderly Australians from financial abuse often end up helping disgruntled relatives in their court battles to increase their inheritance, a new analysis finds.

Dr Ben Chen from Sydney Law School analysed litigation about elder financial abuse across Australia and the United States. He found that the litigation often takes place after the elderly person has passed away, and is often a baseless claim, asserted by an aggrieved relative.

For example, in one study of 85 cases decided by US appellate courts between 1963-2018, he found that more than half of mental incapacity claims against contracts and lifetime gifts were brought by aggrieved relatives.

“These people go to court with the aim of recovering allegedly stolen money or property from the elderly person’s estate,” he said.

“This is particularly egregious when the claim is against the wishes of the deceased person.”

The type of claim

Elder abuse claims are often against family guardians and enduring attorneys, where such people have only breached their duties to avoid a conflict of interest.

For example, in the Victorian case of MYJ (Guardianship), an elderly woman who had dementia lived with her daughter-attorney’s household in a three-bedroom rental property. The mother paid the daughter-attorney about 20 per cent of the total rent cost. The daughter-attorney was sued by one of her sisters for allegedly profiting from her position (a breach of her attorney duty) and would have been found liable if she had taken another $50 per month from her mother. The conflict of interest arose from the fact that the daughter-attorney had a duty to manage her mother’s money.

How the law can fail

Recent reforms to state guardianship and power-of-attorney laws tend to prohibit guardians, administrators, and attorneys – people who are appointed to make health care or financial decisions for someone who may lack mental capacity – from exposing themselves to a conflict of interest. For example, family guardians and attorneys can break the law if they receive gifts of jewellery or holidays from the elderly person they serve.

This leaves a wide berth for aggrieved relatives to allege that family guardians and attorneys have engaged in ‘elder financial abuse’, in posthumous litigation.

This happened, for example, in the Nebraska (U.S.) case of Re Conservatorship of Hanson, which concerned an elderly couple in their second marriages. Years before the husband became mentally incapable, the couple made an agreement where the husband regularly paid the wife for living in her home. The wife became the husband’s guardian when he lost mental capacity, and she continued to receive these payments without proper prior authorisation.

The wife had no sinister motive, the Nebraska court found. Despite this, when the husband died, his children from his first marriage successfully sued the wife to recover these payments.

“This would be the likely outcome had this case been tried in many Australian states,” Dr Chen said.

Towards a better legal model

Dr Chen argues that, given this state of affairs, Australian legislators should consider relaxing guardianship and power-of-attorney laws.

When family guardians and attorneys are sued for breaching their duties to avoid a conflict of interest, they should not be found liable if they had merely carried out what the elderly person would have done if he or she had mental capacity.

“Elder financial abuse happens only infrequently in close families and personal relationships, and many people do not get paid to provide valuable caring or property management services to the elderly,” he said.

“Whether people should lose in inheritance litigation should not depend on a mere suspicion of wrongdoing, but on the elderly person’s own wishes.”


Access an advance copy of the paper on Australian law, published in the Melbourne University Law Review, a published copy of the paper on US fiduciary law, in the Notre Dame Journal of Law, Ethics & Public Policy, and a draft paper on US capacity law, accepted for publication in the Cornell Law Review.

Declaration: no external funding was received for this research.

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