What are the pitfalls in house legacy plan?

What are the pitfalls in house legacy plan? Proceed with caution, says Rod Cunich.

What are the pitfalls in house legacy plan?

Glenda* is seeking information about leaving a house to a child for the term of his/her natural life and wants to know the potential problems. She asks estate planning lawyer Rod Cunich for guidance.

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Q. Glenda
Can you please explain the pros and cons of leaving a house to a son or daughter for the term of his or her life. I would like to know the implications with regard to the other siblings and whether the one who is left the house can sell it or what restrictions are put in place.

A. Glenda, I could write a book about the pros and cons, and options available in this scenario (in fact I think I have) and it’s a bit hard to cover all bases in a simple or short response to your question. In short, however, you can leave your property to whomever you wish and in any way you wish, so anything is technically possible. But other siblings might challenge what you have done on the basis that you didn’t make adequate provision for them. 

Life estates should be used sparingly, and only when there is good reason for it, as they tend to favour one beneficiary over others which, at the very least, can create family feuds and, at worst, fierce litigation.

You need to see a specialist estate planning solicitor to explain your circumstances and reasons why you have this structure in mind. 

It may be that your reasons are justifiable in your circumstances and that they would be likely to survive a challenge. There are no ‘general rules’ that apply to all situations. There may even be other ways to achieve your wishes.

In all cases where I have clients thinking about this type of restrictive structure, I recommend they discuss it with all parties involved. You may find they accept your proposal and you can proceed without too much worry. On the other hand, if anyone reacts negatively, you know for sure that there is a risk of a future challenge, so you’ll need the best legal advice you can get. 

* Not her real name.

Rod Cunich is a lawyer with more than 30 years’ experience and who specialises in estate planning. If you have a question for Rod, simply email it to: newsletters@yourlifechoices.com.au

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    Disclaimer: This information has been provided by Rod Cunich and should be considered general in nature. Seek legal advice before acting on this information.





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