Family Arrangements: Informal agreements pose hurdles when challenged

10 March, 2013

The trust that usually exists in family relationships often leads to arrangements between family members, even major financial ones, being made on an informal basis. This can cause problems when disagreements arise or one family member dies and the arrangement has to be proved in court.

An unfortunately clear message from the many recent court cases arising from disputed informal family arrangements is that the people involved are among those least likely to seek legal assistance to put important understandings in writing until it is too late.

In one case, a young farmer thought he had an arrangement with his father that he would be left a 10-acre farming block of land on the father’s death. The father encouraged that belief by comments he made to others. The son relied on his assumption or expectation of inheriting the farm and made a major life and career choice to stay in the country as a farmer and continue to work the block of land. However, after the father’s death, it was discovered that his will did not reflect the arrangement he had made with his son. The farm was not left to him and he had to go to court to pursue his claim that he had suffered detriment by reason of the expectation not being fulfilled in the father’s will, because his career choices could not be redressed.

In another case, a young man and his wife-to-be were looking for a house to buy. This would be their marital home. The young man’s father bought a house and said to them: “I’ve bought you a house. This is your house.” The young couple moved in, paid all the outgoings and $200 per week to the father. They also spent significant money making improvements to the property in the expectation that their home was later to become legally theirs. However, the father reneged on the deal, later asserting that the couple had merely been renting the house. The young couple had to go to court to try to enforce the promise made by the father.

Other cases have involved relationships between in-laws, estranged spouses, siblings, aunts and uncles, and in one very high profile case, a deceased’s one-time mistress.

Arrangements put in writing with proper legal advice can avoid disputes arising in the future. Consult your solicitor for advice.