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The Basics of Elder Law
Substantive Law| What area(s) of law does this episode consider? | Elder law, specifically aged care, retirement villages, estate planning, capacity and elder abuse. This episode touches on both The Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disabilities and The Royal Commission into Aged Care Quality and Safety – specifically in regard to the findings concerning elder abuse. |
| Why is this topic relevant? | The average age of Australia’s population is getting older. According to the Australian Department of Health in the 2018 financial year, over 1.3 million older Australians received some form of aged care and of this amount, 241,723 older Australians received permanent residential aged care. With an ageing population comes an increased focus on and an increased need for elder law, an emerging area of legal practise that requires both a depth and breadth of knowledge of many different areas of the law, from estate planning, to property, to superannuation, to tax. |
| What legislation is considered in this episode?
| Commonwealth:
NSW: |
| What are the main points? | Retirement villages and aged care facilities are governed differently: there are differences in accommodation fees and the services provided. Both are regulated and often include lengthy contracts that set out the users rights and obligations. Aged care facilities are heavily regulated: residents agreements are governed under division 59 of the Aged Care Act and also Division 4 of the User Rights Principles 2014, both governed by the Commonwealth. Retirement villages: have different ownership structures: where the purchaser doesn’t always acquire a proprietary right when ‘buying-in’ but rather a contractual right. It can take the form of a leasehold interest or licence. Retirement villages are governed by the Retirement Villages Act 1999: which sets out the rights and obligations of residents and operators of retirement villages in New South Wales. This Act also establishes mechanisms for the resolution of disputes between residents and operators of retirement villages. The legislation is administered by the Minister for Fair Trading and disputes are managed by The Department of Fair Trading. Advanced care directive: is often referred to as ‘a living will’ – it is an oral or written statement that sets out the healthcare treatments a person would like to have or refuse, should he or she be in a position where they are seriously ill or injured and unable to make or communicate decisions about care and treatment. In regard to guardianship, the NSW Civil and Administrative Tribunal has the power to:
NCAT receives applications, not only concerning the elderly, but for people of all ages where there is an issue of capacity. The Royal Commission into Aged Care Quality and Safety: was established on 8 October 2018; the terms of reference focus on incidences of physical, emotional, financial and chemical abuse, as well as incidences of elder abuse in residential aged care occurring as a result of exploitation by family and friends. Last year the Royal Commission’s Interim Report revealed that 40% of submissions were related to a claim of neglect, and almost a quarter (22%) reported incidences of emotional abuse. The NSW Ageing and Disability Commission: was established in July 2019 with the role of “better protect[ing] older people and adults with disability from abuse, neglect and exploitation from someone they know living in their home or community.” Their submission to the Royal Commission into Violence, Abuse Neglect and Exploitation of People with Disability published in March 2020, found that children were the perpetrators of abuse in more than 15% of cases, and spouses counted for 14%. In addition, the most commonly purported types of abuse were psychological at 25.9%, with financial, neglect and physical abuse all sitting at around 20% each. |
| What are the practical takeaways? | Capacity is an important consideration: in both ensuring that a client has the ability to understand and provide instructions, but also deciding the nature of accommodation that an elderly person needs. Aged care costs are regulated: and can be divided into 4 main categories and are highly regulated:
Factoring in any deposit to the Estate plan: under the Aged Care Act the refundable accommodation deposit in a retirement village comes back to the estate. It can’t be paid out to a third party, even if that third party is the party that contributed to that deposit. For example, if one of five children agrees to pay the accommodation deposit then on exit the deposit is refunded to the estate, not that person. This can be addressed in estate planning documents to account back to the deposit provider. Greater protections relating to the use of enduring powers of attorney: has been recommended by The Law Council of Australia in its recently published article titled ‘Aged Care Quality and Safety’. This article emphasises how protections relating to the use of enduring powers of attorney should be given greater focus, in particular establishing a national registrar to mitigate financial abuse against the elderly. This reflects the view found in the Australian Law Reform Commission’s discussion paper on elder abuse, published March 2017, which focused largely on the risk of elder abuse with enduring powers of attorney and enduring guardianships and the need for a national approach and registrar. Elder abuse is alarming: The Australian Institute of Family Studies estimates that between 2% and 14% of older Australians experience elder abuse in any given year, with the prevalence of neglect possibly higher. Evidence suggests that most elder abuse is intra-familial and intergenerational, with mothers most often being the subject of abuse from their children. Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disabilities: found that 43% of all of the people who reported cases to the Commission were staff members who witnessed or observed behaviours and signs of abuse. |
| Show notes | Advance Care Directives – NSW Parliamentary Research Service, May 2004 The Royal Commission into Aged Care Quality and Safety – Interim report The Law Council of Australia ‘Aged Care Quality and Safety’ 29 July 2020 Law Council of Australia ‘Elder Abuse Discussion Paper’, 6 March 2017 |
| David Turner:
1:00 | Hello and welcome to Hearsay a podcast about Australian laws and lawyers for the Australian legal profession, my name is David Turner. As always, this podcast is proudly supported by Assured Legal Solutions, a boutique commercial law firm making complex simple. Just a quick note before we begin, the episode of Hearsay you’re about to listen to was recorded in the midst of the coronavirus crisis, and as a result of social distancing measures we had to conduct this interview over remote technology such as Zoom or Google Meet. The audio quality might be a little different than what you were expecting. Still, we think it’s pretty good in the circumstances and we hope you enjoy the episode. The average age of Australia’s population is getting older. The Australian Bureau of Statistics has reported that in 2019 almost 16% of Australia’s population, that’s almost 4 million Australians, are over the age of 65 and by 2037 we expect that 20% of Australia’s population will be over that age. With an ageing population comes an increased focus on and an increased need for elder law, an emerging area of legal practise. Joining me today to talk about elder law is Adeline Schiralli from Keypoint Law. Adeline thanks so much for joining me on Hearsay. |
| Adeline Schiralli: | No thank you David, thanks for having me. |
| DT: | Now one aspect of elder law is wills and estates, and that’s a fairly well-known practise area, but elder law covers more than just wills and estates, doesn’t it? |
| AS:
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| Yeah it does, it covers a wide range, it’s a distinct body of law and it deals with issues that affect older persons in our society. So there’s no specific legislation that relates to elder law, rather it comprises of a number of different sub-areas of practise including aged accommodation, incapacity planning, social security, retirement planning, estate planning and also elder abuse. TIP: Now as Adeline says there’s a whole range of legislation that’s relevant to elder law including in the Commonwealth jurisdiction:
In NSW jurisdiction there’s:
So for an elder law practitioner, there’s a huge range of legislation to be on top of. |
| DT: 3:00 | And we’ll touch on all of those areas today, but one of the ones you mentioned just then was retirement planning and accommodation. Now you advise clients on the acquisition of interests in retirement villages and entry into aged care facilities, what are some important things to look out for in those transactions? And how do they differ from an ordinary conveyancing transaction? |
| AS:
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11:00 | So there are a number of different types of accommodation options that are available for older Australians depending on their level of capacity and what their needs are. These include retirement villages, aged care facilities, over 55’s cluster accommodations, relocatable homes, granny flat arrangements, or living at home either independently or with home care. Now one of the main areas of my elder law practise is assisting clients with entry into either a retirement village or a residential aged care facility. Now there are quite a few misconceptions surrounding aged accommodation. The main one is that aged care facilities and retirement villages are the same thing, and that they are governed by the same body of law. This is not actually correct. Aged care provides support to people as they age and is governed under federal legislation. Heavily government regulated and the support that it can provide can be provided in the home, or in a residential aged care facility either on a permanent or a temporary basis. And a temporary basis usually is if someone’s coming out of hospital for transition type of care or for respite care. Now according to the Australian Department of Health in the 2017/2018 financial year, over 1.3 million older Australians received some form of aged care. And from this, 241 723 older Australians received permanent residential aged care. To be eligible for aged care a person needs to be over the age of 65, or if they present or identify as an Aboriginal or Torres Strait Islander person over the age of 50, and need assistance with things that they can’t do independently anymore. For all types of aged care there is an assessment process and aged care funding and placement is provided on a need basis. The assessment is known as an A-CAT assessment and is undertaken if a person’s initial application for assistance is successful, and that’s usually done via the my aged care website. TIP: Adeline just referred to an A-CAT assessment – this is an aged care assessment which is conducted when a person requires government funded services such as care in a nursing home, in home care, or in transition or respite care. The assessment looks at a range of factors including physical health and medical history as well as psychological needs and the presence of any mental illnesses. After the assessment, the person will be informed of the services they have been approved for and any conditions which attach to that approval. So if a person needs assistance or they’re finding they can’t live independently anymore, or need some help, or if they’ve suffered a stroke, or a situation where they’ve all of a sudden they’ve become unable to live independently, then an application for assistance can be provided on the my aged care website. The website also contains some very useful information on the process and what is expected to happen during the process, and also what services may be available. There are four main levels of care that a person can access. From level one, which used to be classified as the old low-level care, all the way to level four which is what the high care classification used to be. In the context of residential aged care, if a person’s application is successful and they have found a permanent place in a facility, the facility will ask them to enter into a resident’s agreement with the facility. This sets out the care and service that the facility will provide the resident and how much it will cost them as well. Sometimes facilities also require residents to enter into an accommodation agreement or an extra services agreement. Residents’ agreements are governed under Division 59 of the Aged Care Act and also Division 4 of the User Rights Principles, which are both federal based pieces of legislation. Now the costs of residential aged care, so very different to purchasing a property, in effect you’re entering into an agreement with a facility to provide you with a place to live in most circumstances and also for care to be provided to you. Now the costs in relation to aged care are divided into four main categories, the first is accommodation costs. So these depend on the facility’s location, the size of the room that the person is interested in, the room’s amenities, the facility’s reputation etc etc. So there’s a whole host of different reasons why some facilities accommodation costs are different from others. Accommodation costs are also assessed and if a person is classified as a supported resident, so in effect if they don’t have any assets generally if they own a home, then they are no longer classified as a supported resident. TIP: Now Adeline’s just mentioned accommodation costs. Living expenses are a cost for all Australians, and it can cause worry and concern for some, particularly those on the aged pension. This concern was considered by the Senate Standing Committee on Community Affairs which has drawn attention to the financial circumstances of older Australians with few assets who don’t own their own home, particularly those who are single, private renters, and those who have a limited capacity to work or save for retirement. It is these people who will feel additional financial strain when entering aged care; often experiencing anxiety not only about moving, but also the financial impact of entering into care. To add to these accommodation costs, there are additional costs known as daily care fees, means tested care fees and extra services fees which Adeline will now explain. So apart from accommodation fees from an aged care perspective, there are also three other types of fees that may be payable. The first is a basic daily care fee. Now what this fee is for is for the care. This fee is paid by every resident that enters into permanent aged care and the fee is same for everybody and it’s calculated at 85% of the full single age pension. This fee applies regardless of whether the person’s receiving an age pension or not, and it’s indexed depending on the changes and the fluctuations in the age pension. So currently the basic daily care fee is $52.25 a day. There’s also for some clients, they are, really for most clients these days particularly if they own a property, they may also be subject to what’s called a means-tested care fee. Now this is relatively new, it came about in 2014 and the formula that sets out how a person pays those fees is dealt with under section 44.22 of the Aged Care Act. It’s a complex formula and it’s usually an assessment is undertaken by Centrelink or another government department in order to determine what the means tested fee will be for that person. There are also annual caps and lifetime caps on that means tested fee, and those caps are indexed annually. So at the moment the current annual cap is around $28,000 and the current lifetime cap is around $67,000. The other type of fee that may be applicable depending on the facility is what’s called an extra services fee. Now these are additional fees that may also be payable if the resident chooses a higher standard accommodation or wants additional services such as special meals, or hairdressing, or laundry, all of those types of things are classified as additional services. TIP: Adeline has just finished explaining the different types of fees that are associated with aged care. I’m now going to ask Adeline about the rights that exist in aged care and retirement villages, at first glance, you might think that buying into a residential aged care facility or a retirement village creates a proprietary right in that home, in the same way you do when acquiring real property, but that’s not the case. |
| DT:
| The thing that really interests me about your description of the aged care regime is that I would’ve thought it would be almost a kind of proprietary right and a lot of the features of the value of the right that you’re acquiring have the features of a proprietary right, that it has to do with the location of the residence, or its reputation, or its location. But it’s actually not a proprietary right it’s really a contractual or even statutory right. |
| AS:
12:00 | Yeah that’s right David. So yeah particularly with aged care, retirement villages again they’re not proprietary rights in the general sense of purchasing a property like you would a general conveyancing transaction, and I’ll talk more about them in a minute, but yeah it is. It’s a statutory right and it’s a right more like a licence or an ability to be able to live and have that enjoyment of life, without actually owning physically any property that relates to it. |
| DT: | And so in terms of the practical aspects of those transactions, do you often find that the agreement, the licence for lack of a better term on my part, is often the subject of negotiation? Or are the terms of those agreements often a sort of ‘take it or leave it’ on the part of the resident? |
| AS:
13:00 | In regards to most aged care facilities, the agreements are very similar. So they’re very heavily government regulated, the main differences are the accommodation fees. And the services that that facility provides. So in terms of the agreement themselves and how that agreement is structured and what a facility can put in that agreement, very heavily government regulated and therefore, and the reason that that’s the case is to enable a resident or a prospective resident to compare an apple to an apple. So if they look at a few different facilities, they can have a look at those agreements and make sure that you know they tick all those boxes in the same fashion. |
| DT: | Even though it’s not a proprietary right, they’re still comparing the proprietary sort of features, they’re comparing location and service, not this legal aspect of my licence agreement. |
| AS:
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| Correct. And I mean there are legal aspects as well, so some facilities will request for instance, I’ve seen some where they’ve asked a power of attorney to sign a guarantee for that person’s aged care fees, particularly if there’s no other income anywhere else coming in and they’ve decided to not sell the home to pay for the aged care fees, or caveats on properties, those types of additions to those agreements are where a lawyer would really come in to advise the client on. But really first of all what generally in my practise what I do is recommend that a client seeks financial advice first, because there are different ways that that accommodation fee can be paid as well. So the first way that it can be paid through is what’s called a refundable accommodation deposit. So for instance, as you said before David, there are some proprietary aspects to it in terms of location, so a facility in Vaucluse is going to have a higher, more than likely a higher accommodation fee than a facility you know in a rural area. And the reason that’s the case is it’s modelled based on the property market. So it has that element to it in terms of determining what the fees are. Now most aged care rooms, I mean some are different, but most of them unless they’re approved by the Department, then the last time I saw the figures it was around $750,000 and if they were higher than $750,000 they needed to get approval from the Department to be able to charge more than that. So that’s a lump sum that would ordinarily be paid and generally the way that’s paid is an older person would sell their home to be able to afford to pay the lump sum. If they can’t afford to pay the lump sum or if they decide ‘no I don’t want to sell family home because we want to keep that in the generations, we want to rent it out,’ then the second way of payment is through what’s called a daily accommodation payment. So what the daily accommodation payment is it’s essentially what the interest would be had the facility received the refundable accommodation deposit, what interest they would have derived over that deposit. The refundable accommodation deposit on the death or on the exit of that resident from the facility is fully refundable. |
| DT: 16:00 | I imagine that question also feeds into an estate planning question in the sense that if you do sell real property to make that deposit, of course the deposit isn’t appreciating in the same way that real property would, and so the value of the estate that you’re leaving to your beneficiaries is going to be very different. So I imagine there’s a lot of connected questions about planning the bequest and legacies you make under your will along with the accommodation question. |
| AS:
17:00 | Yeah and look another important point to note there in relation to estate planning is, say for arguments sake a beneficiary assists the client in order to pay for the refundable accommodation deposit. So one of the children, say there’s two children, one of the children has enough funds in surplus to be able to assist their parent in order to get them into a better facility, or in order for them to be able to not have to sell the home, and assist them financially in order to pay for that. Under the Aged Care Act the refundable accommodation deposit comes back to the estate. It doesn’t, it can’t be paid out to a third party, so even if that third party is the party that contributed to that deposit, then they can’t receive it in that fashion, so estate planning in this circumstance is critical in order to ensure that when it is received by the estate, those funds are directed to the beneficiary that essentially paid for it. |
| DT: | Yeah, absolutely. And how do you do that from a structuring perspective? |
| AS:
18:00 | Yeah look it can be done in a variety of different ways, and it obviously also depends on whether the age person has capacity when they are entering into a facility. Most clients will move into aged care facility when they can no longer assist themselves independently at home. And that can sometimes be if they no longer have mental capacity. So if they no longer have mental capacity it becomes very difficult because you can’t update their will and other arrangements need to be put in place. But in a perfect world you would have some form of loan agreement between the person that is entering care and the person that’s provided the funds, and it would also be reflected in their will so that you know that there’s no queries in regards to how those funds are to be repaid. |
| DT:
| TIP: Capacity is always a consideration for lawyers, but particularly in the context of elder law. A person’s capacity can vary depending on a whole range of different circumstances, and it’s not always obvious that someone has lost capacity to make a particular decision. I’m glad you mentioned capacity again actually because at the top of the episode you mentioned that capacity is an important aspect of deciding the nature of accommodation that an elderly person is seeking and that there’s, you know, an enormous range of potential options but some are more conducive to a particular level of capacity and physical and mental health than others. I imagine capacity is also an important thing for you personally to assess because frequently your clients are probably seeking advice from you directly and whether or not they have capacity to instruct you is probably something that’s on your mind. |
| AS: 19:00 | It’s a huge area David and particularly in relation to estate planning but also in relation to elder law. |
| DT:
| We’ve discussed the issue of capacity and analysing the capacity of a client to instruct you on other episodes of Hearsay, particularly where there might be some other vulnerabilities involved like English as a second language and things like that. When you do have an elderly client instructing you directly as opposed to through their attorney, what are some of the tips that you might have for our listeners about assessing capacity? Or satisfying yourself of the capacities there? |
| AS: 20:00
21:00 | Yeah look definitely see them on their own. So if they are instructing you they should be the only person in the room. If they do want a support person with them, make sure that that support person doesn’t have any financial benefit, can’t receive any financial benefit from the older person. Asking them open-ended questions is a really important tip, you know questions that entice answers such as ‘yes or no’ quite often aren’t enough to be able to prove that a person does have capacity. Because quite often people will, if you ask them a question such as ‘do you understand,’ quite often they will nod or say yes they do when really they don’t. What I generally like to do in practise is explain a concept to a client and then ask them to then reiterate that concept to me in their own words. And that gives me an idea as to whether they understand it or not. So these types of tips, there are also some toolkits that are available through the Law Society and also through some other organisations that can assist solicitors in determining whether a person has capacity. And depending on the transaction will depend on what level of capacity is required. So capacity to put in place an enduring power of attorney obviously is going to be much higher than a, you know, capacity to instruct in relation to another type of transaction. |
| DT: | Have you ever had an experience where you felt uneasy about the level of capacity that the client who is instructing you had and you had to make a decision to either not take instructions from them or interpose some other arrangement in order to take their instructions? |
| AS:
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| Yeah David quite often this occurs in practice. Unfortunately, because of elder abuse and the prevalence of elder abuse, there are more and more checkpoints that need to be undertaken in order to ensure that a client has capacity and that they’re providing their instructions through their own free will. I have attended hospitals before and one time, I remember very early in my career, attending a local hospital to see a client. I was asked to go there by the client’s daughter to put in place a power of attorney. I saw the client on their own, the client could not even speak to me. They were completely incapacitated, could not provide me with instructions, did not know who I was, why I was there, what a power of attorney was, what a will was, could not provide me with any instructions. And so in those circumstances it’s clear the person doesn’t have capacity, they can’t provide you with instructions. In other circumstances it can be a little bit tricky because on the face of it they might look like they have capacity and then they really might not be able to grasp the concepts that you’re discussing with them. And in my, a lot of my practise deals with powers of attorney and appointments of enduring guardians and it’s a very high threshold they have to reach in order to be able to put these documents in place. So I’ll quite often, you know, in those situations if you have doubts, you should cease to act in that circumstance, and maybe obtain a doctor’s report, or a report from a specialist geriatrician, or a neuropsychologist, in order to satisfy yourself. And if you’re on the fence as well it’s important for you to be able to do that. Again different transactions will cause a different outcome in that circumstance but yeah I definitely, in practise, I’ve had to say no. And I’ve had to confront family members who really just want to do the right thing and want to avoid problems occurring down the track but the person has just left too late to put the documents in place. So my advice to particularly junior solicitors, is don’t be afraid to say no because it’s your practising certificate on the line if you, you know, put something in place and the person doesn’t have capacity, you’re going to be the one in the witness box to give evidence as to what you did in order to prove that person had capacity or not. |
| DT:
24:00 | Absolutely. It’s so easy to be overborne by that pressure of instructions either from a client or from a superior but as professionals we all have to exercise an independent mind. Your example about attending the hospital to meet with the client is an interesting one because in the example that you described, it was such a clear case of incapacity, but as you say capacity isn’t a ‘one size fits all’ test and the test will be different for different documents and it will be different for different individual circumstances as well. It might be the case that you do meet with a client who is hospitalised but is otherwise lucid and entirely capable of giving instructions, though parties who are challenging that document perhaps after that person has died, will view the question of that document being executed in a hospital room in a very different light. To cover off on our discussion about incapacity, you mentioned before that an enduring power of attorney for example is the sort of document where you have to be very satisfied about the capacity of the person signing it. Can you tell me a bit more about those incapacity documents and why they are important from an elder law perspective? |
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27:00 | Sure David. Incapacity documents are, in my opinion, as part of the elder law estate planning process, one of the most important things a client can do and the message I want to get across is it’s not just for elderly people to think about putting these documents in place. It’s important that as solicitors we recommend these types of documents to all clients. As long as they’re over the age of 18, and particularly if they have assets it’s important to have these documents in place. Because they can be changed as time goes on, but if you leave it too late and the person’s lost capacity, then sometimes it’s too late to put them in place. So the two main types of incapacity documents that I generally deal with in practise in the system are enduring powers of attorney, which look after their legal and financial decisions in the event that they, that the person loses capacity down track. And also an appointment of enduring guardian which appoints guardians to make medical and lifestyle decisions on their behalf. And in the appointment of enduring guardian sometimes clients like to what we call an advance ‘care directive’ or a ‘living will’ which explains what their wishes are regarding end of life care. Now this can be done as a separate document or it can also be partially included in the enduring guardianship. Both are extremely important and both have to be put in place before the person loses capacity. If the client doesn’t have these documents in place and they’ve lost capacity and decisions need to be made for them, particularly in relation to financial decisions, nobody is authorised to make those decisions and accordingly an application to the NSW Civil and Administration Tribunal in New South Wales, or in other reciprocal tribunals across the country, may be required in order for a financial manager or a guardian to be appointed. TIP: The NSW Civil and Administration Tribunal, also known as NCAT has a range of powers in relation to elder law including the power to: (1) appoint a guardian under the Guardianship Act 1987; (2) appoint a financial manager to make financial and legal decisions on behalf of someone; (3) provide consent to medical and dental treatment for patients who cannot provide consent themselves because of a loss of capacity; (4) to review an enduring power of attorney and make orders under the Powers of Attorney Act 2003, in addition to making declarations varying or revoking an enduring power of attorney. NCAT receives applications, not only in regards to the elderly, but for people of all ages where there is an issue of capacity. |
| DT:
| I’m glad you mentioned the idea that you know it’s not just for elderly clients these documents. I was speaking with another lawyer in this area a little while ago who said to me that a great 18th birthday present is a power of attorney. But I’d like to ask you a little bit more about the living will or the advanced care directive. I know from speaking to some other lawyers in this area that a memorandum of wishes is sometimes a document that someone executes to give some direction about lifestyle decisions, either during the course of their life or after they’ve died, but that that’s more of a morally binding document rather than a legally binding one. Is an advanced care directive lawfully binding? |
| AS: 28:00
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30:00 | So there’s no specific legislation, in New South Wales in particular, that deals with advanced care directives, but yes they are legally binding in New South Wales and in other states. TIP: An advanced care directive is sometimes referred to as a living will – it is an oral or written statement that sets out the healthcare treatments you would like to have or that you would refuse, should you be in a position where you are seriously ill or injured and unable to make or communicate decisions about your own care and treatment. If valid, a living will must be followed and cannot be overridden by health professionals and family members. The concept of a ‘living will’ first originated in the United States in the late 60s and they came to Australia in the 1990s, and since that time there has been continuous debate about whether and how these directives should be implemented. In 2004 the NSW Department of Health published guidelines which outlined best practice on the use of Advance Care Directives within an Advance Care Planning process. This guidance stated that an Advanced Care Directive is legally binding in NSW and “functions as an extension of the common law right to determine one’s own medical treatment”. That’s subject to certain requirements though including specificity, currency (or how recently it’s been made), competence and witnessing. We’ll include a link to this guide from NSW Health in the Show Notes. Generally, in term, depending on the client’s wishes and how extensive they want to stipulate what those wishes are in regards to their care and end of life, I recommend that if clients have very specific wishes and they want to put in place a separate advanced care directive, that they speak to their doctor. And I know a lot of the local area health districts have forms that can be filled out in terms of advanced care directives and they can provide and ask specific questions in order to be able to, you know, have an idea of the sort of questions or the sort of things they want to discuss during that document, but my view is it quite often you’re best seeing your doctor in order to be able to answer those questions because they will know most about your health. But in the appointment of enduring guardian, the majority my clients would like to include wishes regarding things like life support, so just the basic declaration to say they authorise their enduring guardian to refuse medical treatment on their behalf, and then also stipulate their wishes. In that sort of context it’s up to the guardian to make that decision, but the principal’s made, you know, their wishes explicit in that document, so that if the situation arises and the guardian follows those wishes then nobody on the outside can say that they made the wrong choice. |
| DT:
31:00 | Yeah I think it’s a very difficult position to be put in as an enduring guardian there and those wishes even if they’re not legally binding at least give some guidance to that person who has to make a very difficult choice about what the person would have done in their shoes. TIP: You’ll recall that Adeline previously mentioned that there is a difference between aged care facilities and retirement homes – while both provide housing and care options for the elderly, they’re subject to different rules and regulations. Retirement villages are governed by the Retirement Villages Act 1999 which sets out the rights and obligations of residents and operators of retirement villages in NSW. This Act also establishes mechanisms for the resolution of disputes between residents and operators. The legislation is administered by the Minister for Fair Trading and, you guessed it, all disputes are managed by The Department of Fair Trading. You mentioned that the retirement village agreement is quite different to the aged care agreement and often it can actually take the form of a proprietary interest in the form of a leasehold interest. Do you find from a practical perspective that there’s often negotiation on those documents? Or are those also quite strictly regulated by legislation in terms of their content? |
| AS: 32:00 | So these contracts, they are governed under state legislation and in effect an older person who’s generally over the age of 55 can enter into a retirement village either through what’s known as a loan licence agreement or leasehold agreement. In these types of arrangements the contracts they vary between facilities quite substantially. There are some elements that are required to be the same, but the majority of their terms are quite different. The contracts, particularly the leasehold agreement contracts, can be up to you know 85-100 pages long, filled with legal jargon. And accordingly from a capacity perspective, it’s important that the person that’s instructing me to review these contracts or to assist them with settlement has capacity to be able to understand it. Sometimes, particularly in relation to aged care, you’re often seeing their attorney as opposed to them in order to provide advice to them on their behalf because they no longer have capacity. So particularly if the right documents are in place, there are ways around it, but yeah capacity is a huge issue in estate planning and elder law. There is some scope depending on the village, with negotiations. Obviously if the village is an extremely popular village, has a waiting list as long as the person’s arm, you know doesn’t have issues with retaining residents, their contracts are going to be more ‘take it or leave it’. So, and it depends on the particular circumstances of the client. There’s also things like refurbishment costs after the person leaves, so there’s some, potentially some negotiations there, but that’s again you know it’s difficult in some circumstances because a lot of villages are popular and they often say ‘if you don’t take it up, the next person on the waiting list will.’ |
| DT:
33:00 | I’m glad you mentioned moving out as well from a retirement village, because we talked about what happens to the deposit in the aged care context that that’s ultimately coming back to the estate though that has some estate planning dimensions in terms of real property being sold, which might be an appreciating asset compared to the deposit which isn’t where the interest is being earned by the aged care facility and not the estate. What happens at the end of a retirement village leasehold interest and how does that affect the value of the person’s estate? |
| AS:
34:00
35:00
36:00 | That’s an excellent question and it’s something that needs to be highlighted in this area. With retirement village contracts, and each are different, and depending also on whether it’s a leasehold agreement, so when I say leasehold it’s classified as a registered interest holder versus a non-registered interest holder. And the two main ones are a loan licence agreement, which is the non-registered interest holder and a leasehold agreement which is generally a lease that is a long term registered lease which is over 50 years, generally they’re the 99 year leases, and the main issue with retirement villages and the main point that I make to clients when they come and see me about retirement village contracts, regardless of which type, is that it’s not a financial investment to enter into a retirement village. When you leave the village, and depending on the village there will be a departure fee, if it’s a loan licence agreement then there will also be no capital gain that’s preserved by the resident. If it’s a lease, a registered interest holder, generally they share in at least 50% of the capital gain but the departure fee sometimes is based on the entry fee that the client pays, and sometimes it’s not. Sometimes it’s based on the entry fee that the person that replaces them pays. TIP: Now the entry fee for a retirement village varies depending on the type of property, the facilities and the services offered. In addition to deposits, an entry fee or entry price is often payable depending on the type of tenure being purchased. Leaseholds and licences tenures are generally set up so the entry payment is usually the current market value of the property. We’ll get to exit fees on the other end soon. There are also potential delays in receiving payment, particularly with the registered interest holder there’s at the moment no time limit in terms of when a village has to repay what the person is owed. So if for instance a client leaves a retirement village to go into aged care and their particular unit isn’t taken up by somebody, because the market is down or the village isn’t doing very well, more often than not they will continue to pay the recurrent charges which are like strata fees that generally a retirement village resident has to pay on top of the accommodation fee, and the funds that they’re due back are often withheld until the next person comes in. Now some contracts will cap that at a certain number of years, generally it’s between 3-5 years. Under the unregistered interest holder, so the loan licence agreement, there is a cap of 6 months, but there’s no capital gain that’s shared between them. So there’s pros and cons of both different types of agreements but regardless they’re not financial investments. |
| DT: | And when we say that, can you tell me a bit more about the loan licence structure? Because is the reason there’s no capital gain there because it’s structured as a loan from the resident to the facility, and then the principal is repaid on exit? |
| AS:
37:00
38:00 | Correct, correct. There’s still departure fees payable there so, and these departure fees regardless of the type of agreement can range up to about 35%, that’s usually the terms that I see, but yes you’re correct in that term. TIP: Now an exit a fee of up to 35% of value can be paid to the operator. Now that exit sounds high but the exact amount of the fee depends on the type of tenure; and it’s often a percentage of the ingoing fee or the sale price and it’s agreed up front. These exit fees enable residents to pay a lower upfront payment by increasing the amount that will be retained by the operator when they leave. Structuring the fees in this way allows more people to access retirement villages initially. These fees are a source of income for operators which can be used to improve and expand the village. Now back to Adeline on the fee structure relating to a loan licence agreement. There’s no capital gain, the exit fees are sooner so that you know they have more in the event they need to move into aged care, they have access to those funds quicker than they would under a registered interest holder particularly if the village isn’t a popular village, along those types of lines. There is no capital gain share, which you would ordinarily do so if you were to purchase a property unit or something in a normal sort of strata type of environment. The main benefits entering of into a retirement village isn’t the financial benefit, it’s more the community atmosphere, the help when they need it. In regards to aged care, if the person falls ill, or starts to lose capacity, or can no longer live independently and needs aged care, it’s all well and good that there’s an aged care facility on site, but that doesn’t necessarily mean that that facility will have a place for them at that time. And there are also fees potentially that they could be paying at both ends during a period of time whilst their unit is being sold or handed over to the next person. So there’s all sorts of issues that can arise from that. |
| DT: | Because of that delay in terms of those funds being returned. |
| AS:
39:00 | Yeah so as I said, even under the loan licence fee David, there still is a departure fee. So, and it’s much the same as on the other end, the only difference is there’s also calculations of capital gain. The main difference I’ve noticed is, and it depends on the facility, so they have the ability to do it either way, but the main difference I’ve noticed is particularly in recent times, is that under the leasehold agreement they will set the departure fee on what the new resident pays to enter into the facility. So say for argument’s sake a client purchases their interest for $1 million and then 10 years later they “sell” it, and the person that gets the interest assigned from them pays the village $1.5 million. Even though with the $500,000 there’s a capital gain there and for all terms and purposes under the contract most of the time registered interest holders they have to receive at least some form of capital gain incentive, so that capital gain is shared generally it’s 50/50 between them and the village. The departure fee is also calculated on that new entry payment, so it’s calculated on the $1.5 million not the $1 million, and therefore you can say that a lot of villages will take a portion of that departure fee, a portion of that capital gain, they make up for it because that departure fee is not based on what the resident paid, it’s what the new person paid. |
| DT: | Yeah even though the capital gain is supposed to be shared 50/50, in reality that share ends up unequal because of the different departure fee. |
| AS: | Correct. |
| DT: 40:00
41:00 | Yeah there are just so many dimensions to this planning aspect isn’t there because there’s not just the estate planning aspect but, as you said, there’s also social security aspects in terms of how it interacts with the aged care pension, and there are also health and medical aspects in terms of the advanced care directives, it’s a really interdisciplinary, multi-faceted area. TIP: Adeline and I are now going to move on to discuss elder abuse. The Royal Commission into Aged Care Quality and Safety was established in 8 October 2018; the terms of reference for that commission focus on incidences of “physical, emotional, financial and chemical abuse, as well as incidences of elder abuse in residential aged care occurring as a result of exploitation by family and friends.” Last year the Royal Commission’s Interim Report, titled ‘Neglect’, revealed that 40% of submissions were related to a claim of neglect, and almost a quarter (22%) reported incidences of emotional abuse. Elder abuse is clearly a problem in our society and one that need to tackle head-on to ensure that we’re protecting those who are the most vulnerable. One area I’d like to ask you about now, and it’s an area we touched on briefly earlier, is an aspect of elder law that we hear about more in recent years. I think there was a Law Society journal feature article about this topic relatively recently, and that’s elder abuse. Now I don’t know that everyone has a good understanding what elder abuse is though, even though we hear the term relatively often, what is elder abuse? |
| AS:
42:00
43:00
44:00 | OK David, elder abuse, so the World Health Organisation defines elder abuse as a ‘single or repeated act or lack of appropriate action occurring within any relationship where there is an expectation of trust which causes harm or distress to an older person.’ And according to the World Health Organisation, 15.7% of people 60 years and above are subject to elder abuse around the world. TIP: 15.7%! That’s an alarmingly high amount of people suffering elder abuse, here at home the Australian Institute of Family Studies estimates that between 2% and 14% of older Australians experience elder abuse in any given year, with the prevalence of neglect possibly higher. Evidence suggests that most elder abuse is intra-familial and intergenerational, with mothers most often being the subject of elder abuse by their children. So it’s an alarming figure there particularly with an aging population. There are a number of different forms of elder abuse, so the most common that you would think of is physical abuse, just like you would, you know, with a domestic violence type of situation. There are also other forms including financial abuse and financial abuse is actually the most common form. Sexual abuse, is another form of elder abuse. Emotional or psychological abuse, neglect is also a form of elder abuse, and also social abuse, so isolation and all of those types of things. And the difference between elder abuse and other forms of abuse, or other crimes that can be committed, is that elder abuse is usually committed at the hands of someone the elder trusts. In a lot of circumstances unfortunately it’s usually a family member. And in a lot of circumstances as well, it’s usually somebody that’s appointed under one of the enduring documents, so they’ve been appointed as their power of attorney, they’ve been appointed as their guardian, and that person is utilising that position of power over the elder person. And the Australian Law Reform Commission stated in a report entitled ‘Elder Abuse: A National Legal Response’ that evidence suggests that financial abuse is the most common form of elder abuse and that in a significant minority of cases the financial abuse is facilitated through the misuse of a power of attorney. It’s a concept that is prevalent in society, it’s happening more and more and as solicitors we need to be more attuned to elder abuse and how it can affect our clients. |
| DT:
45:00 | It’s interesting that you say that there’s, you know, so many different kinds of elder abuse and that the most obvious kinds aren’t the most common kinds. I think when we do think of domestic violence for example, we often think of that in its physical form, but financial abuse is very common and also very difficult to diagnose. TIP: The Law Council of Australia recently published an article in July 2020 emphasising how the use of enduring power of attorneys should be given greater focus. In particular the Council advanced the idea of establishing a national register and to create national consistency to mitigate financial abuse against the elderly. This reflects the findings found by the Australian Law Reform Commission’s discussion paper on elder abuse published in March 2017 which focused largely on the risk of elder abuse with enduring power of attorneys and enduring guardianships, and the need for a national approach. I think it’s hard to see it sometimes when it’s right in front of us, and as you say those incapacity documents can give an abuser the means to inflict that kind of abuse. Have you seen in your practise an example of something that, when you reflected on it or when you learnt more about it you came to realise that there was some abuse going on? |
| AS:
46:00
49:00
50:00 | I had a client a few years ago who presented to me, I think, just to put, she was just coming to put a will or a power of attorney into place, and something just didn’t seem right. She then removed her jacket and I saw bruises all over her body, all over her arms, she was wearing a t-shirt at the time. And so I kind of delved more into about her family circumstances and as it turns out she, her daughter was living with her, her daughter had left a relationship, was living with her, was physically abusing her in the home. The client had also transferred large sums of funds to the daughter because the daughter would threaten physical abuse if she didn’t do so. She lost literally her whole life savings, had sold properties, transferred properties to assist this daughter, and no matter what she did, the daughter would still hurt her, and you know the issues there. Now obviously from my perspective it was absolutely heart-breaking to see something like that take place, and so I wanted to assist this client and get her out of this relationship, get her out of this situation, but the problem is it was her home, she had nowhere else to go, she had another daughter who she didn’t really want to inflict with any issues, the daughter had her own family. So it’s something that I mean we did end up assisting her, you know we recommended that she speak to the police and that she get a least an apprehended violence order against the person, so you know I recommended a lawyer to assist her with that. Very very heart-breaking but it can take all different types of forms, so quite often solicitors will talk about the prevalence of an attorney withdrawing funds from a person’s bank account, or convincing an elderly person to transfer funds to them, they’ll look after them for the rest of their life, such as granny flat arrangements. I’ve also seen those lead to elder abuse types of situations. I had a client once in that situation who got on really well with her daughter at the time, decided to sell her property and move in with her daughter, the daughter had a granny flat, gave her the funds that she had sold her property for to her daughter for the right to live in the granny flat, didn’t enter into any agreements with the daughter. The relationship then broke down, her electricity was cut off, her internet was cut off, the daughter had convinced her to open up a joint bank account with her, all sorts of issues that can arise. And I mean, as you said David, sometimes it’s very very difficult to see that in practice, to be able to determine that when you’re meeting with a client on a 1hr basis or even generally in society for these types of issues to come to light because they are behind closed doors most of the time. |
| DT:
51:00 | Yeah and I think when we talk about financial abuse in the context of a marriage or a de facto relationship, sometimes the victim of that abuse isn’t even aware that it’s being perpetrated against them because it might be framed in terms of ‘oh well I’m just better at managing the money, so I’ll manage all of it’ or ‘all the bank accounts will be in my name and I’ll give you a pittance to live on each week.’ But here there’s a completely separate dimension because in terms of financial elder abuse, there might even be that legal imprimatur in the form of an incapacity document or in a power of attorney or guardianship, that empowers the abuser to lawfully control that person’s finances. |
| AS:
52:00 | Yes, yeah, and that’s why it’s important when you are advising clients about putting in place enduring powers of attorney, in particular, and appointments of enduring guardians as well because there’s abuse that occurs at that end too if say the guardian wants to ensure that the largest amount of inheritance is maintained to them on the death of the elder person, they might decide to put them, when they’re deciding on which aged care facility to put them in, put them in one that costs a lot less than another, or those types of neglect types of situations. But in those circumstances, we always advise clients that it’s important to have these documents in place. We also need to advise them that it’s important to ensure that the person you appoint is the right person in that role and that you trust them and that. Sometimes having one person is the appropriate thing for that client, sometimes having multiple people involved in those powers can offer a check and balance as well. |
| DT: | And when you have multiple people, are they jointly and severely empowered? Or do they exercise those powers jointly? How does that work? |
| AS:
53:00 | It really depends on the circumstances. In a perfect world, my recommendation is generally if you’re appointing more than one person, have them jointly, have them make unanimous decisions, particularly if there’s two. If there’s three you can rely on a majority decision-making scheme. Jointly and severally sometimes works in a situation where say one of the attorneys is overseas and you want the other one to be able to have access because it’s more logistically easy for that to occur. But if you have a joint and several appointment, my opinion there is, unless there are those other extenuating circumstances, is that if you have them where they’re appointed jointly and/or severally, if they can act independently of one another, one person could make a decision one day and the other person could override that decision the following day. The main thing here is to ensure that the people that you appoint to act together, can act together. There’s no point appointing two siblings who will never get along, who will always argue about, you know, one thing or another. It’s important that the people you appoint 1) you trust them 2) they can operate, they will follow your wishes, and 3) that they can act together. |
| DT: | When you do have that kind of conflict between two jointly appointed attorneys, such that they’re just incapable of making decisions on behalf of the principal, what can be done there to get the principal’s decision-making matrix back on track? |
| AS: 54:00 | Yeah, I mean sometimes in an enduring power of attorney document there is a dispute resolution function. So, it will say that if, and it’s quite often the case where there’s two people appointed in a role, that if they reach a deadlock then this third independent person can step in and will, you know, listen to both positions and make a decision, and that that decision must be followed by both the attorneys. So that’s one way of doing it if it’s done at the outset. If the document doesn’t provide for that dispute resolution then an application to NCAT to have the documents reviewed, or to have the powers reviewed, or to have a financial manager appointed in order to make that decision, is sometimes the only option. |
| DT: | I suppose one interesting question of that is who makes that application? Because frequently it will be the attorney who has standing to do that, as the representative of the principal, who else can apply to have that sort of investiture of power review? |
| AS: 55:00
| Well really it’s anybody that has a genuine interest in the affairs of that person. So sometimes you’ll get an aged care facility that makes an application to NCAT because they’ve observed that things aren’t quite right or like you said before, two attorneys can’t agree and a decision needs to be made about that particular person and they need authority to make that decision. Quite often an aged care facility will make an application to have that position reviewed and for the tribunal to make a decision in relation to that person’s care. But it can be anybody that has a genuine interest. And when an application is made, say for a financial manager or a guardian, any interested parties need to be notified of that application and need to be listed on the application. So say one child is the attorney and that child is, you know, exhibiting issues of abuse of power, all those sorts of things, the other children can apply but all the children will be listed on that application as interested people along with the person’s doctor, potentially an aged care facility if they’re involved in one etc. etc. So you know, anyone with a genuine interest can make an application. |
| DT: | And can become a party on the application of someone else as well? |
| AS: | Yeah. |
| DT: 56:00 | And taking that back to our discussion about elder abuse, in that situation where the abuse is physical and overt, of course that’s a matter for the police as you’ve identified before and there’s mechanisms both in the criminal law and with apprehended violence orders to take steps to prevent that, but when it comes to financial abuse or things like social abuse, how can we as lawyers address that? Is taking steps to review or remove an attorney one possible way to do that? |
| AS:
57:00 | Yeah David, so again an application for a review of the power of attorney can be made to either NCAT or the Supreme Court in the protective jurisdiction. What that does though is it generally if the positions are founded, they will remove that person as attorney and cancel that enduring power of attorney and potentially appoint a financial manager in that person’s place. And generally, you know, depending on the circumstances, sometimes that’s a private person and sometimes that’s the NSW trustee and guardian. But what that doesn’t do is then replenish the principal with the funds that were lost. So quite often they’ve taken these funds, they’ve used them, there’s no trace of them, there’s no way of getting them back, they’re bankrupt, or the principal doesn’t want to take legal action against, you know, their child or, you know, another close family member in order to get their funds back. So there’s, it’s quite a delicate area and there’s a bit of grey there as well. There’s also possibility of taking out criminal prosecutions, so, you know, obviously reporting to police and all of those sorts of things, but once again it’s not very often that a person, an elderly person is going to report their family member to the police for financial abuse. |
| DT: 58:00 | Yeah it’s a difficult dimension to that kind of abuse, and it’s the same in a domestic relationship that often those sentiments and feelings prevent any action being taken even if there is a legal avenue to seek redress. I suppose the other option for someone who has lost money as a result of elder abuse and as you say has ended up bankrupt, their bankruptcy trustee as a neutral third party could possibly claw those transactions back but it’s a bitterly sad situation to be in, to be an undischarged bankrupt at that point in your life. |
| AS:
59:00 | Absolutely. So in relation to elder abuse, the NSW government has recently, so last year, there was the implementation of the Aging and Disability Commission. TIP: The NSW Ageing and Disability Commission was established in July 2019 with the role of “better protect[ing] older people and adults with disability from abuse, neglect and exploitation from someone they know living in their home or community.” In other words, elder abuse. Their submission into the Royal Commission into Violence, Abuse Neglect and Exploitation of People with Disability was published in March 2020, and found that children were the perpetrators of abuse in more than 15% of cases, and spouses accounted for 14%. In addition, the most commonly reported types of abuse were psychological at 25.9%, with financial, neglect and physical abuse all sitting at around 20% each. In terms of detection, 43% of all of the people who reported cases to the Commission were staff members who witnessed or observed behaviours and signs of abuse in the course of their work. And that government department has the ability to receive reports of elder abuse, particularly elder abuse that’s occurring in the home, or in a family setting, as opposed to a residential aged care facility setting because there’s different mechanisms available there. And so anybody again that has a genuine concern about a person, whether, it doesn’t have to be financial abuse it can be any form of elder abuse, can make a report to the Aging and Disability Commission and that report can be followed up and quite often they involve the police in those investigations. |
| DT:
| That’s a really important avenue for clients to know about and for the relatives of elderly people who might be experiencing abuse to know about because as you say, even if that elderly person is unwilling to make a complaint themselves because of the feelings they have for their child or their relative, another interested person can make that complaint and an impartial person from the Commission can involve the relevant parties to try and address that so that’s really good to know. It’s a deeply concerning area of the law but it is good to know at least that its coming to light and that there are methods through the law or by other means to identify elder abuse and seek redress of it. Even if there are a number of barriers to that both emotional and legal. Adeline thanks so much for explaining the facets of elder law and elder abuse to us here on Hearsay. |
| AS: | You’re welcome David. Thank you for having me. |
| DT: | You’ve been listening to Hearsay The Legal Podcast. I’d like to thank our guest Adeline Schiralli from Keypoint Law for coming on the show. Now if you like this episode about Elder Law, listen to our episode about estate planning with Simon Bennett from Southern Waters Legal which touches on some closely related topics. Or, for something different, listen to my interview with Oliver Berkmann, barrister at 6 St James Hall, about state revenue. Now if you’re an Australian legal practitioner you can claim one continuing professional development unit for listening to this episode. Whether an activity entitles you to claim a CPD unit is self-assessed but we suggest this episode constitutes an activity in the substantive law field. If you’ve claimed five CPD points for audio content already this year you might need to access our multimedia content to claim further points from listening to Hearsay. Visit www.htlp.com.au for more information on claiming and tracking your points on the Hearsay platform. The Hearsay team is Tim Edmeades, our audio engineer, Kirti Kumar our researcher, Araceli Robledo our business development adviser and me, David Turner. Nicola Cosgrove is our director and executive producer and brings it all together. Hearsay The Legal Podcast is proudly supported by Assured Legal Solutions, making complex simple. You can find all of our episodes as well as summary papers, transcripts, quizzes and more at htlp.com.au that’s HTLP for Hearsay The Legal Podcast.com.au. Thanks for listening. |
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