Should freeloading siblings be entitled to the inheritance?

James Steedman from Lavan answers a listener question about whether siblings not pulling their weight should be entitled to part of the inheritance

Introduction: Should freeloading siblings be entitled to the inheritance?

Ross Greenwood: Great to have your company on Work, Life, Money going right across Australia. Now, something from last week’s program and I promised that I would follow this up for you because I think this is so common in families that everybody in some way, shape or form will be affected. It was a woman who we called Gladys. It’s not her real name, but Gladys gave me a call and explained the situation inside her family. So what it is is both Gladys’s parents are in their 90s. So what’s happening is that they are living in a home, they’re home with one sibling. Right? One of the brothers and sisters is living in the home with the two parents in their 90s.

Now, the sibling does not pay rent or does not assist with financial costs in any way. The parents have got a home that’s worth $3 million. There’s no real cash flow coming from that. The slack so these needs be money put in is picked up by two other siblings, one of which is Gladys. What’s happened is, because they think that the sibling who was living with the parents is getting a free ride.

What is happening is that they feel that the sibling, and this is what’s Gladys has written. “We feel a sibling who is living rent free should not be entitled to an even share of the inheritance. Our parents refuse a reverse mortgage. We are constantly told you will be rewarded in the end. Do you have any ideas?” I think this is really common. So immediately what happens is that Vicki jumps online- I won’t say where Vicki’s from, but Vicki jumps online says, “Hi Ross, I came in at the end of the program this morning, called the segment where siblings living in the home rent free caring for parents.

I’ve got a similar situation where my brother’s been living in the family home looking after my mother paying no rent, no gas, no electricity, or fine. My mother has now moved into an aged care accommodation. My brother refuses to move out. He still pays no rent but now pays the bills. When I try to talk to him about it he goes into an absolute rage, I’m at a loss as to what to do. The house looks like a pigsty, is disgusting and unkempt. Any advice would be appreciated.” says Vicki. So I thought what we do is go to Lavan law which is based in Western Australia.

James Steedman is the head of Wills and Estates. I will bet, this is not the first time he’s heard this type of story. Hello, James. How are you?

Interview with: James Steedman, Lavan, Head of Wills and Estates

James Steedman: I’m well, Ross. How are you?

Ross Greenwood:  Good. Thank you. I’m saying, this is not the first time you will have heard of this story.

James Steedman:  Unfortunately, it’s the scenario that we come across from time to time. The first question that is thrown up by the Senate by the fact that you outline is really whether or not the parents have got the capacity to make reasonable judgments about their financial circumstances. That is the first question, they’re in the 90s, it would appear that there is one of the children, adult children who is potentially taking advantage of the situation.

We see this issue arising in cases of what is referred to as elder abuse cases and you have to ask the question as to whether or not if there is a lack of capacity, it is necessary for one of the other siblings, for example, to make an application for an administration order so that person is in the position to make judgments or decisions about financial matters on behalf of the parents.

Ross Greenwood:  Who has the right to make that administration order and how do you do that?

James Steedman:  It’s a state-based jurisdiction. The jurisdictions are very similar from state to state. In Western Australia, for example, the State Administrative Tribunal has the jurisdiction to hear applications for administration orders and also for guardianship orders, and there are similar tribunals in nature in each of the states of Australia. The legislation in Western Australia was the Guardianship Administration Act and there are similar pieces of legislation throughout all jurisdictions.

Ross Greenwood:  Under those circumstances, if they are successful in that application, they effectively can have an administrator or appointed administrator for can then look after the parents affairs which might even include throwing out the sibling from the house and getting them to move on to something else or arranging some sort of financial settlement between them all even before the parents have actually passed on.

James Steedman:  That’s right. I mean, you raise the question of the sibling who was staying in occupation of their parent’s home and circumstances where the parents had gone into aged care. Well, anybody who was occupying premises to this illusion of partial exclusion then another person, even in the absence of a formal lease agreement has an obligation to pay an occupation rent.

Ross Greenwood:  From that point of view, you’ve got a situation where that could– but who would enforce that? That would have to be the administrator because I’m certain if the same sister rocked up and said to the brother, “Listen, we want you to start paying rent.” The brothers already flying into absolute rages. You’d need some other organizational body to actually go and enforce that.

James Steedman:  Yes. That would be the administration order or the administrator under the administration order. An administration order will only be made though if the person is often referred to as the represented person, does not have the capacity to make reasonable judgement about financial matters. We assume here that this is a case where someone is in a vulnerable position unable to make those reasonable judgments and he is in need of an administrator to look after their financial affairs.

Ross Greenwood:  Its complete mess because you can imagine the real stress and trauma it would cause inside the family and also the worry in those sibling’s minds that maybe the other brother or sister living at home might be actually milking the bank accounts of the parents. That wouldn’t be the first or last time that that would occur.

James Steedman:  No. Unfortunately, I’ve got a couple of cases like that that are running, and one of them will be dealt with in the Supreme Court here and another has been dealt with in the state administrative tribunal. It is a common scenario. In Western Australia- I’m not sure what the office is called in the other states, but the Office of the Public Advocate which is a statutory office existing under the Guardianship Administration Act does have a right to investigation if there are concerns about these sorts of things.

Ross Greenwood:  There is one other aspect of this that really strikes me and that is, if these families had much earlier in their lives and the parents when they were thoroughly capable and able to make their decisions and had some power, like financial power over the over the kids to have set down to have worked out powers of attorney, to have worked out maybe some form of trust to actually work out where the assets would go, who would have control that type of thing, that would have made this whole situation a lot easier.

James Steedman:  A hell of a lot easier. Looking at your arrangements seems to be something that the people have a tendency to put off. But it really is one of those things that needs to be looked at as soon as you are in a position where you’ve got independence or any assets of any substance and particularly putting arrangements in place before you get to a situation where you are incapable of making decisions. That can involve appointing enduring attorneys, appointing enduring guardians, so those people are empowered to make decisions on your behalf about financial matters, lifestyle matters with whom you have contact where you reside, and sometimes medical treatment decisions.

Ross Greenwood:  Because the truth is, if they’re sitting on a $3 million house and of course there’s obviously plenty of money riding on this type of thing. There’s money for everybody, there’s a vested interest. Effectively there for people to try and make as good as they possibly can out of these situations. So if the parents haven’t spelled it out, the kids try to fight over it becomes a very fractious situation.

James Steedman:  It certainly does because it raises the prospect of an application being made after the parent’s death under the Family Provision Act, legislation which exists in all of the states where parties withstanding can make and claim for greater provision to be made out of the estate in their favor. If there has been inadequate provision made for adult children who aren’t dependent upon their parents, the primary consideration in those cases is always one of need.

Ross Greenwood:  It’s going to be fascinating to watch that one as well. Really many thanks for your time. James Steedman, as I say the head of Wills and Estates at Lavan Law in Western Australia, is dealing with stuff as you can hear all of the time. But these issues here which regard go to, elder abuse, financial abuse of the elderly, plus also the way in which older Australians are actually ageing inside their own homes and the fights, of course, are left behind for families.

James, we appreciate your time and I really hope to both Vicki and also to Gladys that does help clear up at least a few of the matters. Might not solve them immediately but at least to give you some legal standpoint, at least anyway. James, we appreciate your time.

James Steedman:  You’re most welcome.

Ross Greenwood:  You could be a part owner in more than $100 billion worth of investments. Visit australiansuper.com.

 

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