Protection and Peace of Mind.
Paul and Beth had been married for 35 years. They worked hard all their lives and with their first grandchild on the way, were very much looking forward to retirement. The nest egg they had grown was recently added to when Paul’s mother died. The basic three-bedroom home that she had lived in since Paul was a child was now in a sought-after area. When it sold, Paul and his brother received nearly one million dollars each. With the current turmoil in the financial and property markets, Paul and Beth weren’t sure how to invest, so their money sat in a joint bank account.
Paul and Beth were looking to downsize. There were a lot of new townhouses being built and they liked the idea of having a “lock and leave”, low maintenance property for their retirement. So, they put the family home on the market and signed off on the plans contract for a new build in a neighborhood close to their kids. The difference in the sale price of their home and the purchase of their new property got added to the joint account.
Sadly, only a couple of months after moving into their new home, Paul had a massive heart attack and passed away. Beth was devastated, as were their children. Beth joined an online grief forum and spent most of her days talking to people online.
As we’re always telling our young people — you have to be very careful who you chat with online. But it’s a message we all need to hear — especially when vulnerable.
Unfortunately, Beth became friendly with a woman in the grief forum who was there with ulterior motives. It started small, first she asked Beth for a nominal loan, which Beth gladly gave her. A few months later, another request came, this time for a larger amount. The original loan had not been repaid, but Beth liked her new friend and felt she had plenty. And on it went until Beth had lent this woman the best part of $750,000.
Beth’s children had no idea what was happening until one day her daughter was visiting and noticed a bank statement sitting on the kitchen bench. Not usually nosy, she glanced at the statement and saw several large withdrawals and a bank balance significantly less than she thought her parents should have. She questioned her mother who became very defensive, but eventually confessed about her “friend” in the online chat.
Beth’s daughter swung into action, and the police were called. Some of the money was recovered ultimately, but the whole episode was hugely traumatic for Beth and her family. Beth was so rattled that she never really regained her confidence.
Could this have been prevented? The answer is yes.
On the face of it, there was never any real reason for Paul and Beth to establish a trust, but trusts do help protect vulnerable people. In this case, if the funds had been in a trust rather than a bank account, Beth would not have been able to make the payments that she did. The trust would have added a layer of protection.
Under the present law, if Beth had changed her will to leave her online “friend” all her assets, thereby disinheriting her children, her children would be able to make a claim under the Family Protection Act. However, there are current recommendations before parliament for changes to inheritance laws. If enacted, these new laws will take away the rights of children over the age of 25 to have a claim against their parents’ estate. As having a trust in place would protect families from this potential disaster, we believe it may result in a resurgence of trusts to protect family assets.
Your assets are worth protecting, consult a trust specialist for peace of mind.
If you feel you could use some specialist advice, don’t hesitate to contact the Trusts & Wealth Protection Team.
