‘I’m worried my brother will get $100,000 more in our inheritance’

A Melbourne woman is gearing up for a battle with her brother over money gifted by their parents that wasn’t put on their will.

A Melbourne woman is gearing up for a battle with her brother over money gifted by their parents that wasn’t put on their will.

Welcome to Sisters In Law, news.com.au’s weekly column solving all of your legal problems. This week, our resident lawyers and real-life sisters Alison and Jillian Barrett from Maurice Blackburn advise about your rights when it comes to an inheritance.

Question: I have one brother who I adore. We are both in our 30s and around two years ago I bought a place. He is also trying to buy but has been struggling to put together a deposit.

I had no help from our parents when I bought my apartment – instead, I saved for years and sacrificed luxury items so I could afford to do it. I also bought a small place in an undesirable area just to get on the property ladder.

My parents recently disclosed to me that they’re giving my brother $100,000 as he’s been struggling to get the money together for a deposit.

My mum said, “Make sure you take what your brother got out of the will when we die!” I know their will splits everything 50/50 between me and my brother and this extra money for my brother hasn’t been written into the will.

Does my mum’s casual message count as proof that he’s already had a big chunk of their money? I’d hate for this to cause an issue between us but I want to know where I stand. – Anon, Melbourne

The woman had no help and made many sacrifices to buy her home. Picture: Gaye Gerard

Answer:

Unfortunately family disputes over an estate can occur when a loved one passes away.

This is often heightened due to the emotions involved when a loved one dies.

Conflict can occur when there has been some money given to one of the beneficiaries of a will before a person’s death, as it is often not clear whether the money was a loan or a gift.

Loans and gifts between family members, usually a parent and a child, are common. However, these payments are rarely documented so the true nature of the payment is unknown. Often the receiver of the money considers it a gift, but the giver thinks it is a loan.

In your family’s situation it appears your parents gifted your brother the $100,000, but on the understanding that he will receive less in the distribution of the estate after your parents pass.

The gift should be documented. Picture: iStock

To avoid future issues, it firstly is important to correctly document the nature of the payment.

If it is a loan, then the terms about when it is to be repaid, any interest to be made, if it will be forgiven on death or if it should be offset against your brother’s share of the estate should be documented.

If it is a gift, and your parents’ intention is that it will be offset against your brother’s share of the estate when they die, then this should be included in their wills.

The will should also outline whether the amount offset will be the entire $100,000 without any consideration of interest or increase in the value of the property your brother purchases, or whether the offset will include equivalent interest at relevant market rates.

Your parents should obtain legal advice and redraft their wills stipulating the offset.

It is also important to note that usually spouses will pass their estate on to each other in the event of their death. If one spouse dies, then in order for the other spouse to inherit their share of the estate they must live for an extra 30 days.

Most couples have mirror wills that is, the estate passes to the other spouse and then it is identical.

The will should also outline whether the amount offset will be the entire $100,000 without any consideration of interest or increase in the value of the property your brother purchases. Picture: Supplied

If your parents were to pass away without updating their wills stipulating the offset for the $100,000 payment to your brother, and if your brother does not agree to a different distribution to what is outlined in the will, then you would be required to dispute the will. This is called a family provision application.

If this were to occur, prior to making the court application, the ideal situation would be for you to speak with your brother about the dispute in an attempt to reach an agreement without having to proceed down the formal court path.

If you can reach an agreement, then this should be confirmed in writing and all of the parties should sign it.

If the informal discussions are not successful, then the court application will need to proceed.

Generally speaking, the legal costs of making an application will be paid from your parents’ estate, however if you are unsuccessful in challenging the will you may be ordered to pay the costs of the estate.

If the dispute gets ugly you may have to take it to court. Picture: iStock

In a family provision application, the court will look at a broad range of factors to determine what the outcome should be.

Evidence about the gift (or loan) to your brother and your parents’ intentions will be most crucial.

The court will also look at your and your brother’s needs for financial support and maintenance and your parents’ relationship with each of you.

Strict time limits apply to make a court application to dispute a will, so if you find yourself in this situation, you should seek legal advice quickly.

This legal information is general in nature and should not be regarded as specific legal advice or relied upon. Persons requiring particular legal advice should consult a solicitor.

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