No difference in French. "Son" can mean "his" or "her".

Chris (not a native speaker).

Right. so how does a person know which one the speaker means???

From context. Or you could explicitly say, "le frère de Sarah" or "le frère de Paul". 

-- Chris. 

From context. Or you could explicitly say, "le frère de Sarah" or "le frère de Paul". 

-- Chris. 

So one just assumes the son refers to the person following unless stated as le frère de Paul?

I don't know that one assumes this. Either is possible. In my understanding, only context can tell. It's just like in English when you say, "I'll let you know." There simply is no way to tell whether you are speaking to a si gle person or a group, except context. 

-- Chris. 

The closest equivalent in English would be:

"Paul reminds Steven of his brother."

This might seem ambiguous, but I think most people would assume it's Steven's brother, because that's the closest antecedent to the pronoun. If it were Paul's brother you'd probably rewrite the sentence to make that clear.

I don't know whether a native French speaker would think that Ann's example was completely ambiguous, or whether one interpretation is more likely.