Making a Family Agreement

By 31 October 2017Uncategorized


There is definitely a case to be made for a written family agreement which includes private commitments made between elders and their relatives friends and carers designed to accommodate the health care and security needs and wishes of the elder in their advancing years, consistent with the needs and resources and other or competing commitments of friends and family who may decide to assume the position of carer. Many such arrangements are made on an ad hoc basis even though sometimes involving a significant amount of money or property. Most commonly they are made between an ageing parent and an adult child.

Such an agreement may take the form of a deed of family arrangement, a co-ownership agreement in relation to sharing possession of particular property, a ‘granny-flat’ type of agreement, a care and residence agreement, or a contract to make a will which may be conditional upon carer services being provided. The form of agreement and the possible circumstances are almost infinite.

Who makes them- and why?

The lawyer and commentator1 Brian Herd suggests that family agreements are also known as independent care agreements, personal services contracts and lifetime contracts. He suggests that there are modern factors which promote the role of family as carer to the elders within it.

Some of those factors are:

  • A general aversion to ‘institutional ‘ care of nursing homes and hostels;
  • A perceived lack of more empathetic or sympathetic (or perhaps more individualised) facilities;
  • A general wish to preserve assets for later generations;
  • A consequent reluctance to realise assets such as the family home for paying premiums and bonds for assisted care;
  • A tendency to organise affairs so that access to social security is maximised.

Herd says that the family agreement becomes a means to maintain independence for the aged as well as satisfying the important need for elders to maintain contact with their familiar and familial environment. For many, the idea that it is necessary for a parent to pay, in some way, for care by offspring, or enter into a care agreement, is distasteful. However, the modern reality is that of adult children, highly leveraged with debt, little savings and with financial commitments which make it very difficult to reduce working hours or give up work altogether. A carer’s pension is inadequate for many in such a situation.

The Family Agreement – form and substance

From the legal cases and from common experience of human affairs, it is well understood that written agreements may be helpful to crystallize the thinking and intentions of each party to the agreement as well as to assist in a permanent way the recollection of the arrangements as originally conceived.  A written agreement may be looked at years or perhaps decades after it is made to assist the recollection of the parties to it.

In a case of Schmutz  Justice Bryson of the Supreme Court of New South Wales had this to say about the importance of intention to make a binding agreement:

“Although Courts have frequently concluded that agreements and arrangements among family members are not intended to be binding and hence do not give rise to contractual or other legal obligations, the key to the question whether they give rise to contractual obligations is the intention of the parties … when arrangements are made among family members, the nature of the arrangements, the value of the property affected by them or the extent and nature of the participation required and the period over which it is required may indicate an intention to create obligations.”

It is important, if the parties have already made a written agreement for personal accommodation and obligations under a family arrangement, that the question of whether or not the parties of the arrangement intended to their obligations, duties and responsibilities to be binding, as expressed in the agreement, should not be left to guess work and certainly not, later litigation, to discover.

Some issues to consider

From a review of a number of cases it is clear that some recurring problems in human relationships and risks may be, or ought to be accepted as possibilities such as:

  • Marriage breakdown;
  • Relationship breakdown;
  • Discord and conflict among siblings;
  • Serious illness or serious disability;
  • Vague recollection of original arrangements or agreement;
  • No proper discussion of proposals either between the principal parties or other members of the family who are affected;
  • Death of any of the principal parties;

Quantifying a carer’s contribution

One of the difficulties with family arrangements involving the assumption of a caring relationship by one party for the other is quantifying the contribution which the carer makes over time.

It is necessary to consider for example what would happen in the event that a parent whose illness has compelled intensive care on the part of an adult child, with a capital contribution to improvements to the child’s home, dies prematurely.  In such a case if there are other children involved or other persons who may anticipate receiving something under the parent’s will, the circumstances could easily give rise to dispute and discord unless some pre-agreed formula has been arrived at for calculating over time, the contribution which the caring child may have made.

Quantifying a carer contribution may be done on the basis of a pre-agreed remuneration such as:

  • an hourly remuneration;
  • a carer payment;

There are many ways of putting a value on the work of a carer.

In any event, whatever the formula, it is possible in circumstances which require it and where there is agreement, to find ways to calculate contributions in financial terms by carers to avoid later dispute, especially due to unexpected events and premature termination of the arrangement.

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