"Five years ago my brother's partner died and left a large life insurance & super payment (over a million dollars, and they already owned their home). My brother at the time insisted on giving me a $150,000 from it, which I have put into my mortgage. He assured both me and his solicitor that this is what he wanted to do, and stressed it was a gift. Now my brother wants me to give him the gifted money back using threatening behaviour."
-Question from Dee in Sydney
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Thank you for sending your question which is as heartbreaking as it is familiar. Financial disputes between family members are far too common and can lead to irreparable damage between siblings, couples, or parents and their children.
Firstly, any bullying behaviour including coercion, intimidation or threats is completely unacceptable. If you experience these behaviours from your brother, please access free help via https://moneysmart.gov.au/financial-abuse or at Relationships Australia on 1300 364 277.
The short answer is that you do not need to return a valid gift. To be considered a gift, the money must be given voluntarily and with no expectation of anything in return. This is a very streamlined definition, and a solicitor can help confirm that the money received five years ago was indeed a valid gift and not a loan, and that you are under no obligation to return the money. They may contact your brother’s solicitor in case they have notes on the discussions of five years ago confirming the payment as a gift.
I recommend you have a confidential discussion with a legal professional at the earliest opportunity. As you live in New South Wales, start with LawAccess NSW on 1300 888 529 who can refer you to suitable solicitors. There are similar referral bodies across Australia, and many solicitors will offer free initial consultations. These consultations can commence discreetly if you believe ‘lawyering up’ might inflame the situation with your brother.
Proving that you can keep the money may not resolve the situation. Your brother might be aware the money was gifted and, despite having no legal recourse, persists in demanding it back.
You may therefore want to seek assistance from a professional mediation service to help you both talk through the dispute in a moderated, neutral environment. This may help you salvage your relationship with your brother and avoid the cost of a lengthy, unnecessary legal battle.
How do disputes occur and how do we avoid them.
The urge to distribute ‘excess’ wealth to loved ones can be heightened at times of grief where money appears to make the world a little brighter for a period. Sudden wealth can also be a factor, where someone receives a relatively large amount of money and distributes or spends impulsively with little regard to long-term outcomes. But over time, as memory of their motivation fades and if their financial situation reverts to pre-wealth levels (or worse), they may resent being so generous.
A financial planner helps clients work through these issues to deliver positive upfront and long-term outcomes and avoid the problems of short-sighted financial decision making. This is done by ensuring the client understands their own needs and circumstances, and the impact of their spending and/or gifting on their ability to meet those needs. An adviser could also intervene where a client spends money at an unsustainable rate over a longer timeframe and, if intervention came too late, could help a client rebuild their finances and work towards new financial goals.
Another key issue in disputes is poor or non-existent documentation. Details of large cash gifts and/or loans between family members or friends should always be prepared with qualified legal assistance and with copies of documents retained by all parties. This may seem onerous and/or expensive at the time but goes a long way to presenting issues in the future.
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