VIC Leaving Property to Children - Will or Family Trust?

[Herbie]

Hi, I have a house that I bought in 1984 that I am planning to sell so that I can purchase a bigger house for my daughter and her husband to live in (paying rent to me rather than an agent). In the future, I will probably live there if my 2nd husband (married in 1990's) passes away.

I have right of abode to live in his house following his death but it is being left to his children (from his 1st marriage). I would like the new house that I am purchasing to be left to my daughter and would like to ensure that it can not be contested.

Do I need to purchase it through a family trust or in her name or just specify in my will what I want to happen with the house?

 

[Victoria S]

There are various ways of passing property to an intended recipient. Two good ways are: (1) Putting her on the title as a joint tenant together with yourself. That way when you die the property automatically passes to her - and does not even become part of your estate which is to be dealt with under the will. It bypasses all that so it can be more secure than going through will. (2) If you don't want her name to be on the title yet a family trust is another option - I would speak with an estate lawyer regarding your options there. Even though a testamentary trust is considered by some to be a prudent choice to protect assets, like all testamentary gifts, it may be attacked by eligible family provision claim applicants.

In Victoria, like most states, family provision claims can only ”attack” property that forms part of their estate. This means that property held as joint tenants such as bank accounts or real property or nominations on superannuation death benefits which automatically transfer on death are generally outside the realm of a claim. Therefore option 1 is likely the most secure in this regard.

One simple tip to defeating family provision claims is to clearly spell out with gifts in your will the reasons for your gifts and if you are leaving anyone out or not leaving them with a substantial gift, including your reasons for this, as they will be relevant to the court when deciding the matter.

 

[Matthew Karakoulakis]

Hi Herbie,


Given your situation, there are a number of ways that you are able to pass the property to your daughter. Please feel free to contact me via the link Matthew Karakoulakis, Lawyer, AMK Law - Melbourne, VIC - LawTap - Find a Lawyer & Book Online Instantly and arrange an appointment where we can explore the means of passing the property, the strengths and weaknesses of the methods, maintaining your living arrangements, outlining your estate and ensuring that any method is compliant and will not fail. Your first 30 minute consultation is free!

I look forward to hearing from you.


Yours faithfully,

 

[Jacqui Brauman]

Lots of considerations for you Herbie. I agree with Victoria S that owning the property jointly with your daughter is probably the best way of keeping it out of your estate, and hence it cannot be contested. But then as a joint owner, your daughter has rights that could even force a sale before you're ready.

There are also tax and Centrelink consequences to consider with joint ownership or with setting up a family trust just for this property. If you own the house outright and leave it to your daughter in your Will, giving reasons in your Will is something a court would consider if there was a contest of your Will, but certainly not a deterrent from the claim itself.