Unfortunately, financial abuse of older people is quite common. We’ve all heard horror stories of people who have lost their home because they used it to guarantee loans for a child or grandchild.
While this is a painful experience for the younger family member, it’s an absolute disaster for the older parents who have just lost their home and in all likelihood, have little chance of owning another.
This sort of financial abuse can occur in a number of ways:
- pressure to act as a guarantor for a loan
- pressure to transfer ownership or sell the family home
- pressure to give away money as “gifts” (find out more about the rules around gifting)
- money parents have loaned not being repaid
- people authorised to manage someone else’s money using it for themselves.
Financial safeguards and good advice on how to respond to various forms of financial pressure is provided by the Age Discrimination Commissioner (Hon Susan Ryan AO) in a book titled “Your Rights at Retirement (July 2013)”.
Get independent legal advice
Never sign a legal document under pressure and always ensure you understand what you are signing.
Know what dangers might be involved
If you use your home as security for a loan, you risk losing it. There could also be issues that affect your pension.
Can friends or family members repay the loan?
If they can’t, your house can be at risk. Are they asking you for a loan because the bank has said “no”? If the bank doubts their ability to repay the loan, you should too.
Get it in writing
Make sure all arrangements are clearly documented before any money changes hands. Your solicitor should view this written arrangement before you sign it.
Don’t be afraid to say ”no"
It’s your future security on the line. You may be unpopular for not providing the money, but that’s better than losing your home or most of your savings.
Paul McKeon, My Life Change