Ask Paul: My sister conned my parents out of their house

Dear Paul,

Five years ago, my elderly parents had to sign their house over to my sister to sort out issues with her mortgage.

They had previously built and lived in a large home together, but she then purchased a home before the other house sold and the bank assumed she owned the whole property, not half. At which point they signed it over to her.

She was meant to pay $20,000 off her mortgage in 12 months for it to be signed back into their names.

Five years have passed, and during that time my sister has managed to convince my parents they still own the property by showing them the deed of assignment (where they signed over their house) and telling them it was the deed to their home and, because their names were on it, it showed they still own it.

The certificate of title is in my sister's name. What can they do to get their house back?

They've told me that when they pass, I will get half of the house, but I don't think that just because it's in their will this will happen. Side note: my sister and I don't get along. - Rachel.

This is one of my first answers for 2024, Rachel, and you have not given me an easy start!

Unfortunately, family issues around money and assets are all too common, often causing much angst and many fractured relationships.

Much of the responsibility lies with us parents.

I was reading with interest in The Australian Financial Review an article on why wealth transfers fail. It included a graph, sourced from Mutual Trust, which broke down the primary reasons: 60% of all failures were due to lack of communication, 25% to a failure to prepare inheritors and 12% to a lack of shared family purpose.

The bits that so many people tell me are important - investment strategy, tax planning and all the complex stuff - cause 3% of the problems.

So, come on, parents and grandparents, get your act together while you have the capacity to do so.

Secrecy and sticking your head in the sand about how your money transitions to the next generation is a perfect formula for creating a fractured family. Discuss it before you lose the plot or die.

While I can't guarantee investment outcomes, I can guarantee we will all die!

Now, to your issue, Rachel. I have no idea why your parents did not just go guarantor for your sister's mortgage.

Given the value of property, $20,000 is not a huge amount and clearly it is causing much stress for you and possibly your parents.

If you cannot sort out this issue by meeting with your parents, you need to see a solicitor with all the information you have.

You may or may not want to take action, but the very first step is understanding your rights.

Depending on the solicitor's advice, it may be wise to then meet with your parents and the solicitor. One thing I do know is that there is often as much emotion as logic when it comes to families and money.

An independent third party, such as a solicitor, is separated from emotion and can present your parents with the facts in a neutral way.

Ask Paul: Where are they now?

Has your question appeared in Ask Paul over the years? We want to hear from you! Email [email protected] to let us know how your situation turned out. We will publish a selection of responses.

Get stories like this in our newsletters.