Law Talks Episode: Was a grandmother’s $200K transfer to her granddaughter a gift or elder abuse? Estate disputes and unconscionable conduct

Robyn: Good morning and welcome to Law Talks here on 4CRB, where we dive into important legal issues that impact our community. And today we have joining us from Attwood Marshall Lawyers Estate Litigation Senior Associate Martin Mallon. Martin is an experienced lawyer who specialises in estate disputes and succession law. Thank you for joining us today, Martin.

Martin: Thanks for having me, Robyn.

Robyn: Well today we are going to be talking about a topic that’s both sensitive and incredibly important, unconscionable conduct and disputes over estates. We will be discussing a recent case that made headlines and unpack some of the legal and practical steps families can take to protect their elderly loved ones from unconscionable conduct.

Firstly, Martin, can you explain to our listeners what is unconscionable conduct?

Martin: Sure, Robyn. Well, unconscionable conduct is a broad term and it’s typically used in relation to transactions, so to be considered unconscionable, the conduct must be more than simply unfair.

The conduct must go against the conscience, as judged against the norms of society. Unconscionable conduct occurs where a dominant party gains a benefit through deliberate exploitation of a power imbalance or special disadvantage of a weaker power. And, Robyn, we see this quite often in elder abuse cases.

Robyn: So, you mentioned that elder abuse is a common context for unconscionable conduct. What makes elderly individuals particularly vulnerable to this kind of exploitation?

Martin: Well Robyn, just generally, I think elderly individuals are more often or more vulnerable due to factors like declining mental or physical health, isolation and increased reliance on others for care and support.

These circumstances can create a power imbalance, making it easier for unscrupulous individuals to exert undue influence or unconscionably take advantage of the person who has a disability or manipulate them for personal gain. And financial abuse is particularly common for elderly people as they have accumulated significant assets over their lifetime, making them a target for exploitation and we see this where sometimes a family member may get advanced in advanced age and then a long lost relative comes out of the woodwork and they get a close relationship with this person and with the purpose of unconscionably taking advantage of that person.

Robyn: Yeah. So almost like deliberately targeting them. So, Martin, can you tell us about a recent case that brought this issue to light?

Martin: Absolutely, Robyn. Well, there was recent case that involved a dispute over a grandmother’s estate in Sydney which occurred after she passed away.

93 years of age with Covid. So, prior to her death, the 93-year-old woman had been living with her granddaughter, who had been acting as a caregiver.

Three months before the grandmother’s death a suspicious transaction took place where the granddaughter had taken her grandmother to the bank and assisted her in transferring $200,000 from the grandmother’s account into her own.

Robyn: Okay.

Martin: The deceased’s will outlined her wishes for her estate being a home worth 2.8 million, and 200,000 dollars in savings being distributed equally between her four children and granddaughter.

Well and behold, while the $200,000, well that was already taken out of the account, transferred from the grandmother into the granddaughter’s account before her death.

After passing, the granddaughter filed court proceedings seeking a greater share of the estate. Better known as a family provision application, despite her already receiving over 200,000 prior to the grandmother’s death.

But in response, the executor of the estate filed a cross claim, seeking to have the $200,000 gift set aside and resisted the granddaughter’s claim for greater share for provision. And the judge ultimately found that the grandmother had not freely intended to gift the $200,000 to her granddaughter, citing concerns about her capacity at the time of the transfer and the granddaughter’s conduct. The granddaughter took her to a bank, and effected the transaction. And as a result, the judge ordered that the $200,000 that the granddaughter had already received be deducted from her share of the estate and an additional 55,000 was also deducted due to the granddaughter leaving the property that she had lived in with her grandmother in an unliveable condition which required substantial repairs before it could be sold and the proceeds distributed to the beneficiaries.

So, the granddaughter wanted further provision and as a result, not only did not get further provision, but had to pay the $200,000 back plus the $55,000 for the repairs.

And whilst it’s unclear, I would imagine she was ordered to pay an adverse costs order as well.

Robyn: Yeah, seems fitting to me. In situations where someone suspects an elderly relative has been exploited, what steps can they take to address it while the person is still alive?

Martin: So, this sometimes can be a difficult matter to really address, but in my view the first step is to speak with the person who you believe may be being exploited and speaking to them in a compassionate and non-judgmental way to better understand the situation.

But in Queensland, concerned family members can contact the Elder Abuse Prevention Unit for advice and assistance, and in Queensland, concerned parties can also file a complaint with the Office of the Public Guardian, who will investigate claims if it is established that the allegations have merit.

If the elderly relative has lost capacity and is currently being financially exploited under an enduring power of attorney, an interested party can file an application in what’s called the Queensland Civil and Administrative Tribunal to review or revoke the power of attorney or appoint the new decision maker. In cases of immediate financial harm, it’s also possible to seek an injunction through the courts to freeze the accounts or prevent further exploitation. And in cases where someone believes that a transaction took place as a result of unconscionable dealings, we recommend to seek advice from a lawyer who specialises in estate litigation who can provide advice on prospects and applying to the court and to seek monies obtained to be repaid.

Robyn: So, Martin, if there’s evidence that the will was changed under pressure or undue influence, what legal options are available to ensure the person responsible does not benefit from the estate?

Martin: Sure, Robyn. So, a will can be challenged on the grounds of undue influence, lack of testamentary capacity or knowledge and approval. Robyn, to successfully dispute the validity of a person’s will on the basis of undue influence, and applicant must establish the following three things.

Firstly, that the influence amounted to force and coercion, destroying the person’s free will.

Two, the will-maker did not intend or desire to make the gift or was coerced into making it.

And three, whether evidence is purely circumstantial, which is often the case, it must be proven that such power was exercised and because of that power a will was produced which did not reflect the free, independent and voluntary will of the testator.

So, in relation to evidence, it is attempting to get evidence which supports that the changes were not made freely or independently. That could be getting a copy of the will file from the solicitor if a solicitor drafted the will, getting evidence of the person’s health and the change from the will from the previous will to the current will and the factors surrounding that. So, witness statements about their view on how this person was potentially unduly influenced, and I must say that undue influence is a very high bar. It is more than just people where someone was pressured into changing the will, because I think that a lot of people may have some type of pressure to change or even draft a will, but some pressure does not amount to undue influence. It needs to be at a level where, essentially a court can no longer be satisfied that it reflects the true wishes of the testator.

In Queensland if you believe that someone was unduly influenced to change their will, you can seek an order from the court to declare that the will is not the person’s last valid will, and if it’s determined that the person was unduly influenced, the court will look at the testator’s previous will, or if the person did not have a previous will, then the estate would be distributed under the rules of intestacy.

Executors and beneficiaries can file a claim to set aside gifts made prior to death if they believe they were a result of coercion or undue influence.

Robyn: So, how does the court determine whether a gift or a change to a will was the result of coercion or exploitation?

Martin: Well, the court will closely examine the circumstances surrounding the transaction or the creation of the will. This will include the physical and mental health of the elderly person at the time, whether the person was under any undue pressure or influence from another party, the role of the alleged influencer in arranging or, or witnessing the transaction of the will, that often happens a lot where someone might unduly influence to change the will, and not only they draft the will themselves, give it to the will-maker to sign. That is a very red flag on when these types of matters can come up.

Also, the evidence of the elderly persons independent decision making, such as whether they’ve received independent legal advice. And medical records, financial records, testimony from witnesses or legal professionals involved can also be critical evidence in these type of cases, and the burden of proof lies with someone making the allegation. So, the person making the allegation that was unduly influenced you must satisfy on the balance of probabilities that coercion of undue influence occurred. And again, there’s only a handful of cases in Queensland, or successful cases in Queensland, on this when someone has been unduly influenced and a will has been declared invalid on that basis.

Robyn: Hmm, what advice would you give to families to prevent these kinds of disputes and protect vulnerable family members?

Martin: Robyn, you’ve probably heard me say this answer many times before, but the most important step is to get your estate planning done by an experienced lawyer who practises in this area. In my view, everyone should seek independent legal advice when creating or updating a will, to ensure that it reflects your genuine wishes and is free for from undue influence.

Robyn, a lawyer can also help document major financial transactions or gifts with supporting evidence of the individual’s intention and capacity at the time. They can see the person by themselves to avoid being unduly influenced by someone in the room, the lawyer would ask open and closed ended questions, which would be documented, and if ever a dispute arose, the solicitor’s file would be admitted into evidence to support that undue influence did not occur. If not getting proper legal advice often in often will result in costly litigation. So as opposed to spending a relatively minor outlay for an estate planning, could cost 10s or hundreds of thousands of dollars in litigation after you have passed away. So, the importance is to get a will done as someone who practises in the area.

And lastly, if you suspect a loved one is being coerced or manipulated, I encourage you to speak up and to seek advice. Elder abuse thrives in silence, Robyn, and as you would know, calling it out and taking action is essential in protecting elderly people and their best interests.

Robyn: Yeah. Thanks for your time today, Martin. I’m sure it’s been beneficial to many of our listeners today.

Martin: Thanks Robyn.

Robyn: You’ve been listening Law Talks here on 4CRB, which you can hear every Friday morning from 9 o’clock.