Hello all,
Parent A passed away several years back and to date, the will has not been executed. In the will, Parent A left their share of the property (50%) equally to three children as tenants in common. Parent B has the other 50% share in the property. Parent B's will eventually will leave their 50% share to the three children as well.
Parent B now wants to execute the will so that the three children become legal owners of their part of the property - the split would be something along the lines of (excuse rounding errors):
- Parent B - 50%
- Child 1 - 16.5%
- Child 2 - 16.5%
- Child 3 - 16.5%
The property is worth $800k. There is also a mortgage over the property of $80k.
My understanding is that each child would have an interest in the property worth around $132k. However, as tenants in common, each child would still be responsible for the entire mortgage of $80k - is that correct? I ask as our main interest is how it would affect our borrowing power.
There is also an arrangement (informal, not legal) between all parties in respect of paying off the loan. Each is contributing an amount (Parent B contributes half, Child 1,2 & 3 collectively contribute the other half), however, some are ahead in repayments compared to the others - i.e. Child 1 will finish paying their share before Child 3 does. However, if executed as tenants in common, Child 1 would still be responsible for the remainder of the loan, despite having paid off their agreed amount - is that correct?
Is there any reason why a will should be executed sooner rather than later? The way I see it, it would be best to continue the informal arrangement to pay off the mortgage (and perhaps formalise that arrangement), and then execute the will, so that each child benefits from a share in the property, without having responsibility for the entirety of the mortgage.
Happy to receive any thoughts and be corrected where I am wrong.
Cheers.
Parent A passed away several years back and to date, the will has not been executed. In the will, Parent A left their share of the property (50%) equally to three children as tenants in common. Parent B has the other 50% share in the property. Parent B's will eventually will leave their 50% share to the three children as well.
Parent B now wants to execute the will so that the three children become legal owners of their part of the property - the split would be something along the lines of (excuse rounding errors):
- Parent B - 50%
- Child 1 - 16.5%
- Child 2 - 16.5%
- Child 3 - 16.5%
The property is worth $800k. There is also a mortgage over the property of $80k.
My understanding is that each child would have an interest in the property worth around $132k. However, as tenants in common, each child would still be responsible for the entire mortgage of $80k - is that correct? I ask as our main interest is how it would affect our borrowing power.
There is also an arrangement (informal, not legal) between all parties in respect of paying off the loan. Each is contributing an amount (Parent B contributes half, Child 1,2 & 3 collectively contribute the other half), however, some are ahead in repayments compared to the others - i.e. Child 1 will finish paying their share before Child 3 does. However, if executed as tenants in common, Child 1 would still be responsible for the remainder of the loan, despite having paid off their agreed amount - is that correct?
Is there any reason why a will should be executed sooner rather than later? The way I see it, it would be best to continue the informal arrangement to pay off the mortgage (and perhaps formalise that arrangement), and then execute the will, so that each child benefits from a share in the property, without having responsibility for the entirety of the mortgage.
Happy to receive any thoughts and be corrected where I am wrong.
Cheers.
