Earlier this week I was contacted by Duncan Hughes from the Australian Financial Review for comment on a topic that we are hearing a lot about in the media, namely “children accessing the Bank of Mum & Dad” – the article published this morning is here.
As lawyers we see this issue arising on a regular basis in a number of different contexts. In the last year, Solomon Hollett Lawyers have had a number of different clients seek advice from us in the following contexts:
- parents wanting to provide parental loans and wanting to ensure they are properly documented to protect the parents (both in terms of security and how it might affect something like their pension entitlements);
- parents wanting to deal with parental loans as part of their estate planning. This ranges from forgiving the debt in their Will to forgiving the debt on the basis that the loan can be treated as part of the child’s inheritance to requiring the child to repay the loan to their estate;
- parents wanting advice on the effect of a guarantee for a loan provided to a child that the parents now want to be released from or where the child has defaulted and the lender is now seeking to enforce the guarantee against the parents;
- parents seeking advice on how to deal with children not repaying loans provided by parents; and
- parents seeking advice on loans that they have given guarantees for their children but have not been afforded the opportunity to seek independent legal advice first.
In some of these cases, our discussions have lead us to consider that a form of elder abuse may have occurred, where parents have been taken advantage of or felt morally unable to refuse their children or were simply forced to sign documents. This is a growing epidemic in our current society where children want their inheritance before their parents have died and are not prepared to wait. This just leaves the situation ripe for family disputes and fractured families.
While we are not against parents being able to spend their money how they wish to, it is prudent that parents take advice on these issues before the deal is done and it is too late to undo the damage.
If this has raised any questions or you’d like advice, just get in touch – firstname.lastname@example.org