The Law Handbook 2024

Chapter 9.2: Legal issues affecting older people 887 person because buyers must have clear title to finalise their purchase. Seek independent legal advice early on so that any evidence is both well remembered and documents are available as proof. Note that institutions (e.g. banks) often dispose of documentation after seven years. Loans and gifts Parents or older people are sometimes asked (or pressured) by children or other family members for a loan to buy property, or to put money into a business or other financial investment. Unfortunately, these loans are often based on verbal agreements and the terms are not discussed in detail. Assumptions are made by both parties and sometimes these assumptions are inconsistent. When loaning or gifting money to a family member, it is very important to be clear what the agreement is right from the outset. Things to establish include: • Is it a gift? • Is there an expectation that the money will be repaid? • If the money is to be repaid, when and how? Will interest be paid? If yes, how will the interest be calculated? • What happens if the money cannot be repaid? An agreement in writing setting out how and when a loan should be repaid is essential, particularly when things go wrong. Often the family member who has been provided with funds will claim they do not have to repay the money as it was a gift. Under the legal presumption of advancement in parent–child relationships, it is up to the older person to prove that the money was given as a loan and not a gift. Money owing on loans can be pursued through the courts. Action should be taken as soon as possible to try to recover money owed. There is a six-year limitation period for commencing court proceedings to recover money owing on loans (unless special circumstances can be shown to exist). The limitation period starts from either the date the loan was made (if no repayments have been made) or from when the first failure to repay occurred. Impact of loans and gifts on Centrelink payments Another matter that should be considered before loans or gifts are given, is the potential impact on any government payments the older person may be receiving. If considering giving a loan or a gift, older people should be aware that there are strict Centrelink gifting rules that only allow $30000 to be gifted over five years, and no more than $10000 in one year, without impacting Centrelink payments (pt 3.12 Social Security Act 1991 (Cth)). These rules apply to the gifting of both money and assets. If Centrelink believes that the gifting rules have been breached, the older person’s pension can be reduced totally or partially. Loans do not attract this penalty, but Centrelink may require evidence that it was a loan and not a gift: a verbal agreement usually does not suffice. Use of funds without authority If an older person becomes ill or frail, they may choose to provide access to their bank accounts or appoint a payment nominee for Centrelink purposes. In this instance, the older person is requesting that the person acts on their behalf, and they do not give permission for their funds to be used other than for their benefit. If the appointed person misuses this access, they are committing financial abuse. Misusing this access may also constitute a criminal offence, which can be reported to the police for investigation if the victim wants to involve the police. Often the older person is unaware their money is being misused, until they find their accounts have been depleted. Usually, the person wrongly using the money has spent it and has no assets from which repayments can be made. This makes retrieving the money nearly impossible. Obtaining a court order does not guarantee the funds will be repaid, if there is nothing to get. At best, it may provide that should the perpetrator’s situation improve within the next 15 years, the order can be enforced. If action is possible, then attention needs to be paid to any applicable limitation of action period, to avoid missing the opportunity to sue for recovery of the funds. Generally, this is six years from the date the action accrued; however, it is wise to get legal advice as soon as possible. Misuse of powers of attorney Having an enduring power of attorney for financial matters in place is important for when an individual experiences loss of capacity or serious ill health. The person who makes the power of attorney is called