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More Parent Piracy

Brian HerdBy Brian Herd, Partner at CRH Law, our Lead Legal Professionals at Heather Hill Pathways.

A recent Queensland court decision has thrown up some very worrying issues in relation to parents being fleeced by their children.

The Facts

Two elderly parents of limited means and with other children, provided the sum total of $286,000 to one of their children in 13 separate transactions over time.  Remarkably, on virtually every occasion, the forever grateful son recounted this mantra to his parents:

“…I’ll pay you back and more and I’ll look after you in old age.”

None of the transactions were recorded in any document.

As life would have it, the parents then asked for their money back when things got a bit tight and the demands of aged care intervened. Not surprisingly, the son refused on two grounds – the money was a gift and, in any event, the money was mostly provided by his parents to the son’s failing company and therefore, by implication, it was his failed company that owed the money, if any, not him.

The parents then sued their son for the money and it went to court earlier this year.

The Court’s Decision

The parents lost, and comprehensively so.  This is despite the fact that the Court described the son as having “cynically abused their (the parents) generosity and shamelessly sponged on them…”

While the court’s decision is not entirely clear, it would seem, in essence, it took the view that:

  • Most of the money was advanced to the son’s company and not the son; and
  • The evidence did not support the legal requirement that the parents and son intended to enter into a legal relationship i.e., there was no intention that the transactions were loans required to be repaid by the son

As a lawyer, my reaction to this decision is a very considered legal one – HUH? – How can someone who has cynically abused and shameless sponged on their parents not be called to account?

However, if nothing else it brings home one point I have banged on about for years – get it in writing!

Regrettably, too many significant financial transactions between parents and their children are not documented  – why would you?  You trust your children.  But the problem revealed starkly by this case is that the failure to do so can result in significant injustice. Documenting can not only prevent the ‘bad’ child from taking advantage but also helps with the ‘good’ child – it leaves no doubt about what the arrangement was meant to be and avoids confusion and uncertainty later on.

The sad fact of this case is that the parents’ generosity and the court decision may now also have severely compromised their ability to fund their later life demands, such as aged care.

Once more dear friends – put it in writing!

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