It is often the case when people remarry or when an adult child resides with their parents that there is a need to consider the continuing occupation of a new spouse or child following the passing of the owner of the family home.
When the owner of property passes away, the beneficiaries of the will become entitled to the benefit of the property and the executor of the estate is under a duty to administer the property for the benefit of the beneficiaries. If there is not adequate provision provided in the will of the deceased, a person residing in the property at the time of the passing of the owner will be required to vacate the property unless alternate arrangements are made.
It is best not to leave these arrangements up in the air to be decided following the death of the property owner.
A will can include a life estate or right of occupation in favour of a person to allow them to continue residing in your home following your death. Ensuring that the appropriate provision is documented in your will to achieve this is important.
Life Estate or Right of Occupation?
A life estate is a registerable interest provided to an occupant for the duration of their life. This means that the beneficiary of the life estate has a right to possession of the property and all income derived from it during their life time.
However, a life estate can be disadvantageous as it prevents a beneficiary from being able to sell the property in the event they need to move, the property becomes to difficult to maintain or their personal circumstances prevent the proper maintenance of the property.
A right of occupation however provides a person with the right to occupy property for a stated period of time. The period of time could be for the life of the person or until some other event arising such as re-marriage. The period of time can be defined to allow the beneficiary to remain in the property for a certain length of time.
Further, a right of occupation enables provision to be included in the terms of the will the ability for the property to be sold to enable the beneficiary to obtain alternate accommodation whilst still protecting preserving the equity in the newly purchased property for the benefit of the estate.
It is important to consider that by permitting a person to remain in your property following your death for any extended period of time prevents that asset from being realised for the benefit of your estate and beneficiaries. This can lead to discontentment between family members and beneficiaries.
When providing for a right of occupation to a spouse, child or other close family member it is important to consider their future needs and also the future needs of your other beneficiaries of your estate to minimize the likelihood of a challenge to your will.
Co-owners of Property
Another scenario is that you are the registered owner of a property with another person. If the property is owned by you and the other person as tenants in common, your share of the property will be subject to the terms of your will.
It is therefore advisable to consider providing in your will that the executor of your estate is to permit the surviving co-owner to continue to reside in the property unhindered during their time of occupation of the property and adequately set out what is to occur in relation to the payment of expenses in respect of the property.
When dealing with real estate in your will, which is often the major asset of the estate, it is important to consider any potential claims upon your estate by eligible beneficiaries.
Please download our free Estate Planning eGuide for further information which may assist you. Alternatively, please visit our Estate Division and contact them on 9525 8688 for a free preliminary consultation or email firstname.lastname@example.org