Helping the kids may not be your best bet

The family home is a vital asset, which should not be disposed oflightly, writes Laura Slattery.

Vulnerable elderly people are being pressurised into selling or refinancing their property for the benefit of a younger generation by a combination of aggressive marketing from financial institutions and emotional blackmail within families, according to the Law Reform Commission.

These deals may lead to a financial problem if the older person eventually needs long-term nursing care or home help.

Not many cases come before the court, often because people's pension income is insufficient to fund a court action, according to law reform commissioner, Ms Patricia Rickard-Clarke.

But from the odd case, it is clear that elderly people are being encouraged to transfer their assets against their best interests, she says.

Solicitors need to clarify whose side they are on in cases involving property transactions between elderly people and younger family members, according to guidelines proposed by the Law Reform Commission.

The guidelines are designed to assist solicitors and other professionals in detecting cases of undue influence.

To ensure that no undue influence is prompting a property deal, the elderly donor should have a separate solicitor from the beneficiary, it recommends.

Failing that, solicitors should make sure to interview the older person on their own, even if the older person requests that the other family members remain present in the room.

"The solicitor needs to decide whether they are acting for the potential beneficiary or the elderly person. If they are acting for the elderly person, they must act in their best interests and they must give advice," Ms Rickard-Clarke says.

Separate legal representation is something that the National Council on Ageing and Older People (NCAOP) has been recommending for some time, says Mr Bob Carroll, director of the NCAOP.

"There isn't sufficient alertness to what might be happening in these cases," he says.

The NCAOP plans to make a formal submission to the commission before the September 30th deadline.

Hanging on to property could prove crucial for older people in the current economic environment, Ms Rickard-Clarke notes.

"Interest rates are down, so investments are yielding very little. With pensions, again the return is quite small. Property is really the only asset that will facilitate the elderly person's needs in the future."

The commission suggests that financial institutions should be on notice that elderly customers may be the victims of undue influence, and as such they should be obliged to ensure that those entering equity release or loan guarantee arrangements have independent legal advice.

Loan guarantees and equity release schemes assume that the younger person will have a job on an ongoing basis, that their marriage won't break up and that they will be able to afford the repayments, even if they have a number of very young children, Ms Rickard-Clarke points out.