QLD Who can be Party to a Personal Loan?

[Moriarty]

Several years ago, my wife contacted her mother to ask about financial help. She knew her siblings had been able to borrow money from their mother basically as an advance drawing from their family inheritance. Her mother agreed to do the same for my wife.

Essentially the personal loan was secured against any future inheritance. A couple of years later, a second much smaller amount was similarly advanced. Her mother (now 87yo) realised recently that her solicitor held no documents on the first advance although there was a document for the second advance. My wife had signed the second document.

The discussions for both advances were entirely between mother and daughter. I was never involved and had no part in deciding or discussing terms and conditions and neither was I entitled to any part of the inheritance. The funds were paid into my wife's bank accounts and all interest payments have been made by my wife from her personal bank accounts. The interest payments have always been met and in fact more interest has been paid than has accrued.

My wife's mother is now wanting to reinstate a document that acknowledges and records the terms of the first loan. However she also insists I should be included as a party to the loan despite the fact I have had nothing to do with either loan.

What is the law? How could I be a party to a debt that I have had no involvement in and which is secured by an inheritance I have no rights to?

 

[DMQC]

Did you benefit from the loan? Or was the loan used for any shared liabilities between you and your wife, i.e. a mortgage etc?

 

[Moriarty]

Indirectly I may have received benefit inasmuch as my wife and I obviously share overall family expenses. But I would contend that my benefit was no more than my stepchildren (my wife's children) whose upbringing, education and general living expenses were all a drain on household expense. There is no suggestion that the stepchildren be added as party to the loans.

 

[DMQC]

I dont think you have any reason to worry from what you have said. You didnt sign anything, were not party to any discussions, did not directly benefit nor were you involved in repaying the loan. I don't think think you wold be any more liable that I would be for the loan. Did your mother-in-law justify why she was of the view you should be a party to the loan?

 

[Moriarty]

My mother in law is 87yo and is increasingly unsure of what is what. She gets something in her mind and stubbornness takes over. She has not put forward any justification nor evidence to support her claim and we know the evidence is simply not there. My wife is quite adamant that I was never involved. We have the bank statements to show where the money went and where the interest payments came from and she would have to lie on a stack of bibles to say her and I ever had a discussion or meeting on the matter. Whilst she is in the twilight of her years we are quite sure she is not up to lying - being confused yes, but not lying.

 

[DMQC]

That makes sense, I am quite surprised your mother-in-law's solicitor has not advised her that you are not a party to the loan (I am assuming he/she has not, although could be mistaken). It may be worthwhile considering a discussion re Power of Attorney if your mother-in-law is having difficulty managing her estate, if she hasn't already. You can be confident however, you are not, and would not, be liable for any part of the loan.

 

[Moriarty]

Thanks for your help.

In fact, I sought advice from my own solicitor - a managing partner in a long established city firm with more than 35 years experience in law. He courteously wrote to my mother in law's solicitor - a sole practitioner in a small country town with five years experience since admission to the bar - outlining the situation but it has not made any difference.

My solicitor is no doubt, as I am and as you appear to be. My reason for coming to lawanswers.com.au was simply for reassurance. I wanted to be sure I was not missing something here. I believe the problem is that my mother in law is not getting sound legal advice.

 

[DMQC]

Good to hear. Indeed, I am of the opinion you would not be liable in any way, shape or form for the loan and also that your mother-in-law may not be getting sound legal advice. In fact, I would suggest you attempt to persuade your mother-in-law to change firms, or perhaps report the lawyer to the legal board of your state. Any legal practitioner, giving the advice he seems to be giving, should be investigated and appropriate action taken if necessary.

 

[Moriarty]

Thanks for your comments and advice - much appreciated. I don't suppose the DMQC moniker reveals you are or have been a law practitioner yourself?