Sydney woman misappropriated $1 million after inheritance fight with brothers
A Sydney woman is facing possible criminal charges after embezzling more than $1 million from her late mother’s estate following an inheritance fight with her siblings.
Following their mother’s death in 2016, the three siblings filed a lawsuit in the NSW Supreme Court seeking a larger share of their mother’s inheritance. His sisters were managers of the estate.
In 2021, the court approved the settlement in the case against the manager. In his ruling this month, Judge Michael Slattery said the ruling gave the three brothers rights “totaling approximately $1.9 million.”
But Slattery said the brothers were “increasingly disturbed by the lack of response” from their sister to requests for their rights.
In June last year, the court issued a freezing order against the sister and asked her to explain the delay.
“A painful story emerged,” the judge said. The court heard that after the settlement, the sister took steps to have the estate’s funds paid into a bank account she controlled.
‘He spent this on various personal expenses, living expenses, entertainment, gambling, legal expenses and gifts given to him.’ [family].’
Judge Michael Slattery
Slattery said he later stopped working with lawyers to act on behalf of the estate. This meant there was no greater control over the management of the funds.
Slattery said his sister “misappropriated approximately 90 percent of the estate funds by making unauthorized payments for the benefit of herself and several other members of her immediate family.”
“The mismanagement of the property now leaves a residue of just under $170,000 for distribution.”
The judge said the woman objected to answering questions in court but was obliged to do so after she was given certification under the NSW Evidence Act. This prevents evidence from being used against you in subsequent trials.
“During examination, he admitted to misappropriating a total of $1,141,286.15 (after payment of property expenses),” the judge said.
When asked if he needed money, he said: “I didn’t need it, I wanted it.” When asked if he knew what he was doing was wrong, he replied: “Yes, I knew I was going to get in trouble.”
“He spent this on various personal expenses, living expenses, entertainment, gambling, legal expenses and gifts given to him.” [family]said Slattery.
The judge said the woman’s admitted misconduct disqualified her from continuing as administrator of the estate, but it was “unrealistic” for an independent administrator to step in as there were not enough funds to cover costs.
He invited other members of the family to “discuss among themselves which one should be appointed.” If they cannot agree, the court will appoint an administrator.
‘This case shows what can happen when professional oversight disappears: beneficiaries can lose their inheritance overnight.’
Mary-Ann de Mestre, lawyer
Slattery ordered that the evidence in the case and his decision be sent to NSW Attorney General Michael Daley for “assessment … as to whether it exists and, if so, whether it would warrant criminal action”.
However, he said that its decision “does not by itself mean that this court has reached the following opinion”: [a] crime has been committed.”
The judge also forwarded his decision to the Law Society of NSW for consideration of potential law reform to ensure beneficiaries are notified whether lawyers should cease acting on behalf of an estate before any change is organised.
Mary-Ann de Mestre, principal of Sydney law firm M de Mestre Lawyers, is a lecturer in probate law at Macquarie University.
He said the case should serve as a “wake-up call” that “properties are vulnerable when left without professional supervision”.
“People are under tremendous financial pressure. We are seeing an increase in ‘inheritance impatience’, where beneficiaries under pressure are trying to access estate funds before they are eligible,” De Mestre said.
“This case shows what can happen when professional oversight disappears: Beneficiaries can lose their inheritance overnight.”
He said the decision was “a clear example of the dangers of having an estate manager who is also the beneficiary and operates without adequate oversight”.
“There is a clear loophole in the law: no one has to tell beneficiaries once lawyers come forward. This lack of transparency puts estates at real risk,” De Mestre said.
He said that in many estates, “attorney supervision ensures that funds are held in escrow accounts, payments are reviewed, and distributions are properly authorized.”
“Without this oversight, the risk profile changes significantly, but beneficiaries are often not told this,” he said.
He said it’s rare for a judge in a civil case to refer an executive to the attorney general for possible criminal investigation, and that it “sends a very clear message that the behavior is out of line.”
“The court was considering proposing a simple but important reform: a rule that would require that if an estate lawyer intends to step down and a new lawyer does not take over, the outgoing practitioner must notify all beneficiaries in advance,” De Mestre said.
“This will give beneficiaries the opportunity to ask the court for protection of funds.”
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