A large sum of money arriving at once changes your legal position, usually overnight. A lottery win, an inheritance, a compensation payout, the sale of a business or a substantial superannuation death benefit all raise the same questions. Who is entitled to it? How should it be held? Who might come after it? And what happens to it when you pass away?

Most people who receive a windfall get financial advice. Fewer get legal advice, and those who do usually get it too late. By then the money has been spent, promised, gifted, or paid into an account where it sits exposed.

At PGC Legal, we advise clients on the legal side of sudden wealth, from the week the money arrives through to the structures, agreements, trusts and Wills that protect it over the long term.

Get Advice Before the Money Lands

The period in which you have the most options is also the shortest. Before you claim a prize, sign a release, or accept a distribution from an Estate, it is worth working out:

• Who should receive the money, and in whose name or in what structure
• Whether anything in your existing financial position affects what happens to it
• Whether anyone else has an interest in the entitlement itself
• Who needs to know, and who does not
• What you should avoid saying or promising until you have advice

Once the funds are in your personal bank account, some options close and others become expensive. It is almost always cheaper to deal with these questions before the money arrives than to unpick arrangements afterwards.

If you have existing debts, personal guarantees, Court judgments, a bankruptcy in your background, or a separation on foot, your position may not be what you assume. Speak to us before you claim anything.

Who Is Entitled to the Money?

Windfalls generate disputes about entitlement far more often than people expect. We act for clients on both sides of these disputes, including:

• Syndicates and office pools. Whether a ticket was held for a group depends on the circumstances: what was agreed, who paid, what the group had done in previous weeks, and what records exist. Informal arrangements are the ones that end up in Court.
• Entitlements held in one name. A ticket bought with joint funds, or an account held by one person for the benefit of several, can become the subject of a claim.
• Promises made after the win. A casual promise to share can come back to bite, particularly where someone has relied on it.
• Estate entitlements. Claims by family members, disputes between Executors, and challenges to the validity of a Will.
• Payouts with strings attached. Settlement and compensation money is not always yours to keep in full. It is worth understanding what has to come out of it first.

We can also prepare a syndicate agreement or a written record of an arrangement in advance, which costs a fraction of what it costs to argue about afterwards.

Asset Protection

Asset protection means deciding, in advance and lawfully, who owns what, so that a future problem in one part of your life does not consume everything else. It is not a way of putting assets beyond the reach of creditors you already have, and arrangements put in place too late can create more problems than they solve.

We can advise on and prepare:

• Discretionary trusts, unit trusts and company structures, including who controls them and who succeeds to that control
• Separation of investment assets from business and trading risk
• Loan agreements, mortgages and caveats where you are lending to family, a friend or a business
• Co-ownership and joint venture agreements
• Shareholder and unitholder agreements, including buy-sell terms
• Reviews of your existing personal guarantees and director exposures

Structures carry costs and consequences as well as benefits, and those consequences differ from one person to the next. We work through the trade-offs with you and your accountant before anything is signed.

Relationship Breakdown

A windfall received during a marriage or de facto relationship can become part of what is divided if the relationship ends. How it is treated will depend on the circumstances. If this concerns you, there are options, and they work best when they are put in place early. We do not practise family law, but we will tell you when you need a family lawyer and we will work alongside one.

Succession Planning

A Will drafted when you owned a house and had a superannuation balance is unlikely to do the job once you hold several million dollars, a trust and an investment portfolio. A Will may also not deal with everything you own, and working out what it does and does not cover is part of the exercise.

We can prepare and advise on:

• A new Will, including a Will that establishes one or more Testamentary Trusts
• Testamentary Trusts for children and grandchildren, and what they can and cannot achieve in your circumstances
• Protective arrangements for a beneficiary who is vulnerable, or who may not be able to manage a large sum
• Control of your family trusts after your death, including who becomes trustee and who holds the power of appointment
• Superannuation death benefit nominations, and how they sit alongside your Will
• Ownership of life insurance policies
• Powers of Attorney and Advance Care Directives

Reducing the Risk of a Claim on Your Estate

A larger Estate attracts more claims, and from a wider circle of people. We advise on how to structure an Estate, and how to record your reasons for the decisions you make, with a view to reducing the prospect of a claim succeeding. Because we also act in Estate disputes, we know what those claims tend to look like.

Helping Family Without Creating a Problem

Most people who receive a windfall want to help family. Almost all of the disputes that follow could have been avoided with a one page document.

• Gift or loan? If you do not make it clear at the time, the question can be argued about later, and not always between the people you expect.
• Money towards a home. Contributing to a child’s house purchase without documenting it can produce a very different outcome from a properly documented loan, particularly if his or her relationship later ends.
• Lending to a family business. Terms, security, and what happens if the business fails.
• Pensions, benefits and aged care. Helping family can affect means tested entitlements, either for you or for the person you are helping. It is worth checking before the money moves rather than after.
• Buying property with or for a family member. Who goes on the title, who pays what, and what happens when one of you wants out.

Putting the Money to Work

Once the money is secure, we can act for you on the transactions that follow:

• Buying residential, commercial or rural property, including contract review, due diligence and settlement
• Buying a business or shares in a business, including due diligence, warranties, restraints and employee entitlements
• Commercial and retail leases, whether you are the landlord or the tenant
• Private lending, including documenting the loan and taking security
• Joint ventures and development agreements
• Protecting the intellectual property of a business you buy or back
• Employment agreements, if you become an employer

If Something Goes Wrong

People with money are targets. We act quickly where:

• You have been induced to invest in something that is not what it appeared to be
• Money has been transferred to someone who will not return it
• A family member, former partner or business associate is asserting a claim over your assets
• You need urgent orders to freeze assets or preserve evidence before they disappear
• A bank, a regulator or a government agency is asking questions about where the money came from

We are experienced in urgent Court applications, including freezing orders and search orders, and in dealing with government regulators.

Inheritances and Deceased Estates

If your windfall comes from an Estate, there is a further layer of work:

• Acting as Executor, including obtaining a Grant of Probate or Letters of Administration
• Administering an Estate where the assets are substantial, complex or held overseas
• Dealing with an Estate where there is no Will
• Making or defending a claim against an Estate
• Disputes between Executors, or between Executors and Beneficiaries
• Timing, which tends to matter more than people expect

Working With Your Other Advisers

We are lawyers. We do not tell you what to invest in and we do not give tax advice. What we do is work out who should own what, prepare the documents that give effect to it, and act for you in the disputes that arise. We work alongside your accountant and your licensed financial adviser, and we can introduce you to one if you do not have one.

A windfall is easier to protect than to recover. Contact PGC Legal for an initial discussion, and we will tell you what is urgent, what can wait, and what it is likely to cost.

Contact us to discuss your matter with our experienced lawyers.

This information is general in nature and does not constitute legal advice.