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QLD Bankruptcy - Joint Title Holder and Beneficiaries?

Discussion in 'Wills and Estate Planning Law Forum' started by KnowledgeSeeker, 12 June 2015.

  1. KnowledgeSeeker

    12 June 2015
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    My adult stepdaughter is in bankrupt administration (for a $20,000 debt and discharge up to 2034, in 20 years time). She is a joint beneficiary of my home under my late husband’s Will that bequeaths 45% title share to his two adult daughters from his previous marriage and 10% to me. The Bankruptcy Trustees have expressed interest in her share. As stated in the Will, she will not acquire the property until my death. I have sole Life Tenancy and the right to use the home as I wish while I am alive; to rent or to sell and buy another home with the proceeds of the sale.

    Question: As there is no present entitlement for the bankrupt to realise her inheritance now from the sale of my current home, my main concern is to ascertain what practical problems will be created by the involvement of the bankruptcy Trustee when I next choose to move and sell my home to buy another, e.g. How could this affect the Contract of Sale that previously would have been signed by the three of us as sharing the Title. Can the Trustees realise her share/Title or demand monies be paid out of the sale proceeds before she realises her inheritance on my death - as I require all monies to repurchase.

    Can the Bankruptcy Trustee lodge a Caveat or transfer her Title or share of Title? This would add so much complication as the bankruptcy is for $20,000, so much less than her share of Title.
  2. Tracy B

    Tracy B Well-Known Member

    24 December 2014
    Likes Received:
    Hi KnowledgeSeeker,

    Your stepdaughter owns 45% of the legal title to the property. She cannot exercise this because of your life tenancy. As for whether or not she (along with the other owners) can sell the property if you move out, this will depend on the deed/will. Does the will state that the life tenancy ends if you move out?

    The trustee in bankruptcy takes the place of your stepdaughter. This means, the trustee manages the 45% right (that comes into effect after your life tenancy ends) and can sell this to another buyer. If the trustee does sell this share, that buyer then takes the place of your stepdaughter. The buyer will have exactly the same rights and responsibilities as your stepdaughter would have had had she not become bankrupt (e.g. sell their 45% share, take possession or sell the property with the consent of the other shareholders in the property).

    There is a difference between realising the inheritance legally and realising it physically. Your stepdaughter (and therefore, the trustee) cannot realise the 45% share physically (i.e. they cannot sell the house and get 45% of the proceeds), but they have already realised the shares legally (at distribution of the will). What they have is a future right. They can sell this future right so that another buyer then has the future right. So yes, the trustee can sell the 45% "share in remainder" (the legal term for it). If the cost of this is higher than the $20,000 debt then the bankruptcy will end, your stepdaughter's debt will be discharged and any extra proceeds (less costs for the trustee and expenses for the transfer) will be returned to your stepdaughter.

    If you wanted to sell, you will need to formally write a notice that you are ending your life tenancy in the property, then you will be selling it along with the other 45% holder and the trustee.
    winston wolf likes this.

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