Aging population ‘may lead to family disputes’

Date: May 16, 2011

As our population ages, family disputes over money may be on the increase - with disagreements over estates and superannuation death benefits among the main areas of conflict.

The Treasury's latest Intergenerational Report reveals that between 2010 and 2050, the number of people aged 65 to 84 are projected to more than double. Numbers of people aged 85 and upwards will quadruple over that same period.

So-called blended families are more and more common, with divorce and remarriage leading to complicated family legal and financial disputes, as well as personal suffering.

Information from the Australian Bureau of Statistics indicates 30 per cent of marriages now involve at least one previously married partner. There are also a large number of de facto couples.

Disputes can arise between the children of a first marriage and a second spouse or de facto partner, where people challenge a will or lodge a claim with the Superannuation Complaints Tribunal.

Superannuation is a particularly thorny issue and Jocelyn Furlan, chairwoman of the tribunall, says it sees many disputes over how superannuation death benefits are distributed by the trustees to family members.

The inter-generational change of ownership of family businesses is another rich source of family disputes.

The average age of family business owners is 55, according to the most recent MGI Australian Family and Private Business Survey. In another MGI survey five years ago 81 per cent of family business owners indicated an intention to retire within ten years.

In addition, elderly people suffering reduced mental capacity and other age-related illnesses run the risk of becoming the victims of financial abuse.

Jo Wainer, an associate professor and medical sociologist at Monash University told The Australian she believes both the proportion and number of the elderly being subject to financial abuse are increasing.

"This generation of older people are wealthier, so they have assets (that the perpetrators consider) worth stripping,” she said.

The abuse can take the form of saving the inheritance by putting elderly people into inferior aged-care accommodation or simply appropriating their assets.

People should carefully consider granting an enduring power of attorney, which can be used to access finances when an elderly person suffers diminished capacity.

Getting the best advice from a family lawyer and a wills and estates lawyer earlier rather than later is clearly the best way to minimise the risk of family disputes occurring or at least control their outcomes in an equitable way.

Considering measures such as mutual wills contracts, succession planning, as well as good old fashioned discussion, is important to manage expectations and set ground rules.