Australia was shocked recently by the case of deceased fraudster Melissa Caddick. 

Between 2012 and 2020, Caddick convinced more than 60 people to entrust a combined $30 million of their savings to her sham wealth management business, then took their money instead of actually investing on their behalf. Of the $30 million, only about $7 million was returned to clients, leaving as much as $23 million unaccounted for.

Caddick’s family members are among the victims of the unlicensed “financial adviser”. Her parents, Barbara and Ted Grimley, trusted their daughter. They sold their home for $1.55 million in 2017, and put the money towards a $2.5 million unit in Sydney’s eastern suburbs. 

The unit was bought in Caddick’s name, but everyone understood that her parents owned it and would live there forever. Can you see where this is going?

Sadly, nothing was put in writing to prove Barbara and Ted’s financial contribution, or the agreement that they were the “real” owners.

As a result, Barbara and Ted, who are in their 80s and in poor health, are likely to lose the unit and be evicted when it is sold to help pay back their late daughter’s swindled investors.

This result may have been able to be avoided had arrangements been documented. There are a few different ways of protecting family members in this situation, including various kinds of contracts and trusts.

Documenting arrangements between family members can seem awkward. You can almost hear Barbara and Ted saying “Of course I trust her to do the right thing! We don’t need that sort of stuff.”

I would argue that instead of being a barrier, having a mature and logical discussion about these arrangements can deepen the bond between family members. It shows respect and love on both sides.

Sometimes, the legal advice results in the arrangements changing to better suit the intentions. Sometimes, the legal advice isn’t acted on, but the parties understand their positions and go in with their eyes open. Sometimes, it leads to the arrangements not going ahead. And sometimes, it protects people such as poor Barbara and Ted who, had they taken legal advice and had their interest documented, may not be facing the dire consequences.

Once these sorts of arrangements are made, in the majority of cases the parties honour their agreements and there is no problem. But when things unexpectedly go wrong, they can go very wrong; the emotional consequences can’t be avoided, but you can at least protect yourself financially.

Whatever you decide to do, there are a number of legal issues involved, and every situation is different. We can help with your individual situation and can sensitively and commercially help to protect you as best possible. It can be difficult discussing these issues with family, but your peace of mind is the most important thing.

FC Lawyers have expertise in helping families (or friends/business partners) who want to help each other out financially.

Contact our property and commercial team if you would like our help.