Why an e-mail on big family decision is better than no records

 If you are making an important financial decision in a family meeting, make sure there is a proper record to avoid any disputes later.

Many families have ended up in court fighting over precisely such things because when relationships sour, it usually boils down to your word against their word.

It’s an uphill task to prove any claim if you don’t have proof in writing because you can count on others in the dispute to cast doubt on your words with their own versions of events.

Similarly, if others make outrageous claims about their entitlements, you can demolish any case not supported by evidence.

A recent dispute involving a family business that was run informally provides a good lesson on why it is prudent to have written records.

Which account is more convincing

One of four siblings involved in the business claimed that during an overseas family gathering, everyone agreed that the money in the family fund was for the benefit of the brothers equally and that it would be distributed equally.

But one of his younger brothers later refuted this, noting that the “informal gathering” was just like any other family get-together. He recalled that there was no discussion of any business matters and certainly no one said anything about any agreement that would enable the brothers to share money from the family fund equally.

As it turned out, this brother’s testimony was convincing because by saying that there was no agreement, he essentially gave up a chance to earn a quarter share of the firm’s profits.

The High Court found this brother to be a more credible witness as he did not wish to be involved in the family dispute and was summoned to testify. As a result, his elder brother’s claim for a quarter share of the family fund was dismissed.

Documents are important

If the same family mentioned above did discuss and agree on the equal distribution of funds, the outcome could have been different if everyone had also signed a simple agreement.

Of course, it may not be possible to produce such an agreement immediately during a family meeting and ask everyone to sign it.

In such cases, it is good practice to note all the points that have been agreed upon and send the document to all relevant family members. If no one objects to the contents, that e-mail could be used as proof of any agreements made at the meeting.

The courts always consider relevant documentary evidence in family disputes, such as letters or e-mails, because these reduce the need to rely solely on the credibility of witnesses.

Claimants who cannot produce any documents usually lose unless they have credible third-party witnesses to speak for them.

Conduct of the parties

If a person making a verbal statement is not legally trained, the court usually does not place undue emphasis on the choice of words.

For instance, if an elderly man had told his three children that all of them had to make their family company successful, but the eldest child later inherited the lion’s share, it would be hard for the other two children to argue that their father had intended them to hold a one-third share each.

This is especially so if the parents’ intention is recorded in their wills; such strong documentary proof is very hard to challenge unless it can be shown that the wills are invalid.

When no documents are available, the courts look at the parties’ conduct to determine whether they are telling the truth.

A man once claimed that he was the rightful owner of the family home as his mother wanted him to have it for a small price before she died.

But his own conduct showed otherwise, as he later asked his daughter to buy the house from his late mother’s estate, something he would not have needed to do if he was the true owner.

So even if your family choses to do things informally, you should still highlight certain decisions in writing in order to ensure peace and harmony.

Tan Ooi Boon is the Invest Editor of The Straits Times

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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