Tuesday, September 27, 2022

Plan to part company** - the need for property owners’ deeds

Last week’s post summarised some of the key issues to consider in relation to agreements documenting arrangements between parents and their children for the provision of elder care.

Where substantive assets, particularly housing accommodation, are to be jointly acquired by a parent and one or more children, best practice is to implement a formal deed setting out the exact terms of the arrangement.

Generally, it will be appropriate to implement a deed that has provisions, which are virtually identical to the type of arrangement entered into by arm’s length parties who jointly own property, or for that matter, family or friends who jointly acquire property where there is no elder care relationship in place.

The exact provisions of any agreement will obviously depend largely on the circumstances.

An example of some of the provisions normally included is as follows:
  1. the exact financial obligations between the parties;
  2. rights of access to the property;
  3. term of the agreement;
  4. events that will trigger an ending of the agreement;
  5. rights of first refusal or pre-emption if a party wishes to sell their interest;
  6. circumstances in which a sale of the entire property is to take place;
  7. whether any existing joint owner can attempt to acquire the entire property if a forced sale takes place;
  8. to the extent the property will be rented in a holiday pool, the basis on which a co-owner can access the property;
  9. how costs are to be apportioned;
  10. what is to occur if a party is in default;
  11. what happens if a party loses capacity or dies; and
  12. dispute resolution provisions.
As usual, please contact me if you would like access to any of the content mentioned in this post.

** For the trainspotters, the title of today's post is riffed from the Go Betweens song 'Part company'.

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Tuesday, September 20, 2022

(all your) Elder** care agreements

One form of legal documentation that is becoming increasingly prevalent is contractual arrangements between children and their parents where those children are providing support to their parents.

Most commonly, the agreements set out the exact legal basis on which support is provided, whether it be direct financial support (such as paying expenses), indirect financial support (for example, providing accommodation without seeking reimbursement of expenses) or in kind support (for example, caring services).

A comprehensive agreement will deal with a range of matters, many of which can potentially lead to later litigation if not appropriately addressed.

Examples include:
  1. agreed financial values for all support provided;
  2. the timeframe over which support will be provided;
  3. legal ownership of any jointly acquired assets;
  4. impact on the entitlements of each child under their parents’ estate plan;
  5. principal and interest repayment terms in relation to any loans that may have been made;
  6. consequences of death or incapacity;
  7. consequences of any relationship breakdowns (for example, the divorce or separation of a child who is a primary carer of a parent);
  8. consequences of any relationship breakdown between the relevant child and the parent;
  9. dispute resolution provisions; and
  10. consequences of termination (including potentially compensation for any foregone opportunities).
Ideally, although arguably not strictly required in a legal sense, the parties to this style of agreement should include all family members, particularly those who might otherwise have different expectations as to what they might receive pursuant to the estate plan for the parents.

** For the trainspotters, the title of today's post is riffed from the Go Betweens song 'Ask'.

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Tuesday, September 13, 2022

Can you make a will for another** person where they are the main beneficiary?

Particularly as people live longer, it is becoming increasingly prevalent that the instructions for someone’s will are provided by a close friend or relative who themselves will be the primary (and in some instance, only) person to benefit under the will.

In order to ensure that the will is not later successfully challenged or held to be invalid, there are a number of critical steps required.

While each situation will depend on the exact circumstances, generally the following steps should be taken:
  1. a specialist lawyer should ideally be responsible for preparing the estate planning documentation;
  2. to the extent possible, that lawyer should tolerance test the integrity of the instructions being received directly with the will maker and without the intermediary being present;
  3. if the lawyer has an ongoing client relationship with the intermediary, then thought should be given to ensuring that the will maker obtains some form of independent legal advice;
  4. if there is any concern in relation to the capacity of the will maker (for example, due to age or mental capabilities), specialist medical advice should also be obtained at the time of signing the documentation; and
  5. comprehensive meeting notes should be prepared in relation to all interactions on the file, ensuring that they are in a format that could be provided to, for example, a court if the will is ultimately challenged.
** For the trainspotters, the title of today's post is riffed from the Coldplay song 'Another’s arms'.

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Tuesday, September 6, 2022

Key factors courts consider before making a Crisp(s)** order

As set out in the post last week, a Crisp order can be made by courts to vary a life interest or right of occupancy in certain circumstances.

Generally, courts are reluctant to grant a Crisp order as they do not bring complete and immediate closure to a deceased estate.

This said, particularly where the house represents a significant proportion of the overall value of the estate, courts will at least consider a Crisp order.

The key issues that the courts normally take into account in this regard include:
  1. The duration or length of the marriage. Generally Crisp orders are most relevant where the deceased spouse is in a second or subsequent life relationship;
  2. The contribution by the current spouse to the deceased’s welfare;
  3. The overall size of the estate;
  4. The financial stability of the spouse, respecting the spouse’s need for security and independence for the balance of their life; and
  5. The financial status and health of the beneficiaries nominated under the will to receive the capital value of the house on the ending of the (initially designed) right to occupy or life interest.
Clearly, each of these factors are subjective and therefore any litigation where a Crisp order is sought will largely turn on the court’s interpretation of each competing interest.

** for the trainspotters, the title today is riffed from the Radiohead song ‘True love waits’.

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