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Family

by Jacqui Brauman Jacqui Brauman No Comments

Lending Money to Friends and Family

While you want to be generous in good times, and help a friend or family member out when you can, unfortunately money can ruin relationships.

If you’re lending money to a friend or family, they are probably going to consider it a gift. Or at very least, not think that paying you back is a priority. It will only happen when they end up with some extra money (which is usually never).

But they’re legally right to think the money is a gift. 

lending money

It comes back to contract law, and that two people entering into an agreement need to intend that it is legally binding. Friends and family members don’t usually think an agreement between them is legally binding – they think of it as a lesser obligation.

So what do you do, if you want to get paid back?

If you lend money to friends or family, you need the agreement to be put down in writing, and for both of you to sign it. Without this, the money will be considered a gift, and you will have no legal grounds to try to get it back.

When the arrangement is in writing, it confirms that you both did what the agreement to be legally binding, rather than just a gift.

What needs to be in the agreement?

The written agreement can be simple, but needs to be clear. You are at least going to include:

  • the name of the person lending the money (your name)
  • the name of the person getting the money
  • how much money
  • maybe, what they are using it for
  • when they need to pay it back by
  • whether they are going to pay some instalments
  • the interest rate, if you want to charge interest
  • the date
  • both need to sign.

What do you do if they don’t pay the money back?

Just like a personal loan, you would be able to sue them for the money. But this is a bit extreme, so what options do you have first?

Well, you could talk to them first, and agree to extend the loan, if they need more time. You would have to have a written agreement of the extension.

You might be able to change the terms of the payment. Maybe they have a house that they will sell in a couple of years, or something else of value. If they agree that you can get paid when the house or the thing sells, ask them if you can put a caveat or charge on the property. 

A caveat on real estate, or a charge on personal property, makes sure it cannot be sold without you knowing. And if you know they’re selling it, then you won’t agree to removing your caveat or charge unless you are paid. 

You could also consider using a dispute resolution service. This might be free or paid mediation. Or instead of making a claim in court, you could make a small claim in your State Civil and Administrative Tribunal which can be far cheaper and easier. 

So if you’re lending money to a friend or family member, then make sure to have the agreement noted down on paper, and have them sign it.

by Jacqui Brauman Jacqui Brauman No Comments

I’m getting separated – where do I start?

I’m getting separated – where do I start?

Your marriage is nearly over, or you’ve just left or kicked him out. So you’re getting separated – where do you start?

Your first priority should always be to make sure you are safe. If you’re not, go to the police, and get the support that you need.

Being separated also means having independent finances, so make sure you have your own bank account and your wages are being paid into that. 

separated

Neither of you should clean out any joint accounts and leave each other with nothing. If this does happen, the money will still be taken back into account later, and potentially so will the behaviour.

Divorce

You do not need to get divorced straight away. If fact, you can’t get divorced until you’ve been separated for 12 months.

After being safe, your next priority will depend on whether you just need a financial settlement with your ex-partner, or whether you still have young children. 

Trying to come to an agreement about everything should always be the first step. But it’s hard to come to an agreement when you don’t know what your rights are. 

Here are some videos to start learning your rights.

You may also want an initial, one-off appointment for advice from a lawyer. There should be no ongoing obligation.

Children

If you have children your next step is to contact a Family Dispute Resolution centre to have a mediation. Quite often, parents reach an agreement this way, and then they need to put that agreement into an enforceable format, such as Consent Orders (which a lawyer can help you with).

If you cannot come to an agreement through mediation with the Family Dispute Resolution centre, then you will be given a certificate to confirm that you have tried. Without this certificate, you cannot make an application to Court.

Court should be your last option, but sometimes it is necessary to force the other party to negotiate, or to force the other party to give you full disclosure of all their financial affairs. Even if you end up in Court, the majority of matters settle without a trial. But the road in Court can still be long and expensive.

There are also other avenues to formalise an agreement that you and your ex-partner reach, such as a Binding Financial Agreement.

Or there are also other ways to try to reach an agreement, if the Family Dispute Resolution centre doesn’t work, such as a Divorce Coach. 

Utilise whatever resources you can that are suitable for your situation. 

by Jacqui Brauman Jacqui Brauman No Comments

How to tell your kids about your divorce

Children grow up surrounded by notions of what is “happily ever after” and what their family should look like and how they should behave. When parents fight or just don’t get along, although the child is sad, in most cases, they don’t conceptualise their parents getting divorced. 

So how do you tell them?

Remember, it is not about you! You have made the decision to change your life and that is an empowering and brave decision – telling your child is not about that – it is about their world and their fears and aspirations.

There is a plethora of articles’ on the web that give noteworthy tips on what you should do, but life is not a planned event and not everything can be controlled. So a fail safe way on how to tell your children that you are getting divorced is to be mindful of what not to do. 

divorce

Pick your moment

Telling them when they are tired, angry or sleepy is standard poor communications if you were presenting something to a seasoned adult but to do that to a child is just plain cruel. Be mindful of how your child is feeling at the time and what is happening in their lives. In other words, telling your 13year old that you are getting divorced just as she is sitting for an important assessment is sub optimal. 

Plan your moment

There is no need to choreograph your news like a wedding but there is merit in having a plan of what you want to say. Have an agenda in mind and a general flow of things that you should cover. Again, remember, it’s not about you – it’s about them. Yes, you can start with the statement that you are getting divorced but then shift the focus on issues that will affect the child, for example how it will affect their living arrangements and how often they will see the other parent. Redefine the perception of the family unit i.e. just because you are no longer going to be living together does not mean that they are no longer part of a healthy and functioning family. Remind them that this is your decision and not a reflection of anything that they may have done. 

Managing responses

Your children may surprise you and say that they knew that it was coming or they may burst into tears. Whatever the response is, a good way of keeping communications flowing is to be respectful that there is no right or wrong way to react. The right or wrong way is in how you respond. Children are vulnerable as well as ego centric and as such, their responses are clues on underlying concerns or fears. The news you are giving has many implications – know the implications to your child and you can prepare for the reactions. Tune into what they are saying, ask questions and respond to their underlying issues. You know your child best and you will have an idea if they are not satisfied with your responses. 

Keep an open dialogue

So you have told your children that you are getting divorced and it went well – at the time. After the talk about getting divorced, comes the reality of the divorce i.e. the change in living arrangements, dinner times, family get together, to name a few. Each change in event will come with a new set of challenges the child has never faced before. Let them know that the discussion of “we are getting divorced” is never over and if need be, they can talk about it and raise questions as they arise. Most of all, if you don’t know and don’t have an answer to something, be brave enough to be honest and say you don’t know. You were in a family together – you can deal with the implications of a divorce together. 

by Jacqui Brauman Jacqui Brauman No Comments

Superannuation succession for blended families

Mark and Jenny are married. Both of them had previous marriages, and Mark has no children from his previous marriage, Cara and Chris who are now both adults. Jenny has a son, Lachlan, who is 12 years old and lives with her and Mark. They have no children together.

After his first divorce, Mark has very few assets. He was able to retain his superannuation with AustralianSuper, an industry super fund. He and Jenny have bought a house together, jointly owned, and mortgaged up to 70% of its value.

superannuation

Mark has $600,000 in his superannuation fund, and has life and total permanent disability insurance cover for a further $750,000. He would like to divide his superannuation benefit between Jenny 60%, Cara 20% and Chris 20%. Remember, superannuation is not an estate asset that can be dealt with under a Will, unless Mark makes a binding nomination that all his death benefit goes to his estate.

Without a binding nomination to AustralianSuper, the trustee of the super fund is likely to determine to leave the majority of the superannuation (if not all) to Jenny and Lachlan (as a financial dependent and step-child). If Mark wants to ensure Cara and Chris get some of the benefit, he will need to make a binding death benefit nomination. It is important to find out from AustralianSuper whether the binding nomination can be non-lapsing, or whether it lapses every 3 years and Mark needs to remember to redo it. There is a risk that the binding nomination would lapse if Mark forgets to redo the nomination, and his own children could miss out. 

Out of Jenny, Cara and Chris, only Jenny would be within the definition of a death benefit dependent for tax purposes. Cara and Chris would need to pay part of the benefit that they receive as tax, at the income tax rate that they otherwise earn. They may not each receive an equal amount after tax. 

If Jenny died before Mark, Mark would like to have Lachlan receive part of the superannuation. But if Jenny was dead, then Lachlan would no longer be a ‘child’ of Mark (as he was only a step-child under the definition whilst his mother was alive). However, if Lachlan is still a minor and still living with Mark, then Lachlan would likely fall within the definition of a financial dependent instead, so Mark could nomination Lachlan in that situation.

Mark has given Jenny a power of attorney if he loses capacity. If he loses capacity, he could be entitled to the insurance cover associated with his benefit. Jenny, as his attorney, could withdraw from his fund on his behalf prior to his death. This would render the binding nomination either useless (depending on how much was withdrawn), or would significantly deplete the amount of money that his children would inherit. This would either be a risk that Mark would have to take, or he could prepare a Will with a specific gift clause that tracks any superannuation and ensures it is equalised between his children.

For more on money or estate planning.

by Jacqui Brauman Jacqui Brauman No Comments

Common parenting mistakes to avoid following a separation

Parenting is challenging for those that enjoy a successful relationship and there is an added level of complexity when parents are separated. Whilst a separation brings with it emotional turmoil and adjustment, if not mindful, parents can make mistakes which can end up causing their children significant distress. These are some of the most common mistakes separated parents make and we hope that recognising them will assist you in avoiding them. 

 

1. Showcasing the worst of the worst conflict to the children 

Children that have to witness the awful scenes where spouses insult, threaten, belittle, and even resort to physical violence can suffer from a lack of security. Criticising the other parent can cause the child to feel guilty for loving that parent. Children also may start to believe that there is something wrong with them, since they are related to the person being criticised. Moving forward, children may have anxiety disorders, sleep issues, and even problems forming stable relationships themselves. Parents should also be mindful that such emotional abuse constitutes child abuse and when reported, the Department of Human Services is duty bound to investigate. 

mistakes parents make

 

2. Using the Children like ‘Messenger’

A common follow on from a separation is the unwillingness to communicate with your ex-partner. The alternative of asking your children to act as go between for messages translates to asking your child to do something you and your partner could not handle doing yourselves. 

Using your child as a quasi ‘MSN’ is a mistake, frankly, and it can lead to the alienation of the other parent over time. Partners should instead use email or text messages, and these can serve as record in case where one party is not complying with court orders.  

 

3. Your Child is NOT a ‘Stand-in’ for your ex-partner 

A separation of partners does not mean that now the boy becomes the man of the house and the girl does not turn into the woman of the house. The responsibilities of parenthood are not a child’s burden to bear. It is important that parents don’t cheat their children of their childhood by making them the ‘man of the house’/woman of the house. 

4. A Spanish Inquisition post weekend with the other parent

 

When your children return home after their weekend with your partner, they should never be interrogated. It is not a child’s role to act as an umpire whilst parents are engaged in mortal combat. Such a burden is another example of emotional abuse and can lead to long term emotional damage. The opposite of the Spanish inquisition is to prevent a child from mentioning their time with their other parent. So, don’t interrogate your children and don’t pretend like the time with their other parent is a taboo discussion. Instead focus on asking fun questions and restrain yourself from giving a commentary on their experiences. 

 

5. Your child is not part of the asset pool nor are they part of a contract

Don’t discuss property settlements, parenting time and primary care in front of your children. If you are discussing such matters, be mindful of the ‘little ears’. To you its just a discussion about the ‘nitty gritty’ of property and parenting but to a child it feels like they are just part of a business deal and that they are a burden on one or both parents. 

What if I have already made these mistakes?

If you recognise that you have made any of these mistakes, you can repair the damage caused by doing the following:

  1. Identify your mistake in detail and have a conversation about why it was wrong;
  2. Say sorry;
  3. Commit to changing your behaviour from that moment on.
  4. Permit your child to tell you if and when you inadvertently make that mistake again.

For more information on family and separation click here.

by Jacqui Brauman Jacqui Brauman No Comments

Homemade Wills and Will-kits

Another homemade will has just cost a family tens of thousands of dollars in Western Australia, with the family having to work out what the Will actually says in the Supreme Court. 

The will-maker must have thought they were very smart, but the language used in Wills has been developed over hundreds of years, for a reason. There are phrases that create trusts, and gifts, and duties and instructions that are in-built, not having to be spelt out. 

This Will was a 14 page will, without numbered paragraphs, but headings on each page dealing with different assets. Despite thinking he was thorough, the will-maker left out instructions as to what was to happen to the proceeds of the sale of many of the assets. He put time into giving instructions that he didn’t need to do, about how assets were to be sold, and about opening special purpose bank accounts, but then failed to direct who they were to be left to!

This case caused a flurry of comments from lawyers around the country on LinkedIn, and I was directed to a fantastic article written about a year ago by Darryl Browne. He succinctly confirms that will-making is not like filling in a form, although will-kits and online wills try to fill this gap. 

Darryl’s article highlight a few priceless comments by Supreme Court judges over the years:

‘Homemade wills are a curse”

“All of this could have been avoided if the testator had consulted a lawyer and signed off on a will which reflected his wishes. There is no question but that engaging the services of a properly qualified and experienced lawyer to draft a will is money well spent”

“But way [this will-kit will] has been drafted is difficult, and the parties have been put to the trouble and expense of coming to the court seeking directions as to its proper interpretation. If the will had been drafted by a competent legal practitioner, this problem would not have arisen, and the parties would have been speared a great deal of trouble and expense”

The finest being about a ‘friend’ who helped prepare a will: “The deceased either was offered, or sought, the assistance of an entirely unqualified person to prepare these three documents. That person would no doubt protest that she was just trying to help a friend. She was no help at all. A claim of good intentions is no defence. The fact is that unqualified people who intermeddle in the preparation of documents that have legal operation cause great harm. The defence for such officiousness is often one of trying to save the will maker money. That is sterile. This deceased could have had several wills professionally prepared for a fraction of the cost that has been imposed on her estate by this application. The legal system should not be blamed for that expense”

It will be interesting to see in the future whether friends who ‘intermeddle’ with the creation of wills could actually be charged with providing legal advice without the proper qualification, or at the very least be legally liable for the cost the estate incurs in having to get a badly drafted will interpreted by the Supreme Court. 

We do offer an online will service, for very simple situations, but we also offer a review service so that you can have your draft professionally reviewed, so that the cost of the online will and review costs less than a properly drafted will. This small cost saving might make you sleep at night, but with the cost of a will starting from $350, it’s a very cheap solution to preventing your hard-earned assets disappearing in legal fees later. 

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