Article of Interest on Wills & Estates

THE SIMPLE REQUEST 

Mary’s marriage broke down 8 years ago. She had two children to her marriage both of whom are adults and self sufficient.

Mary received the home in the property settlement with her first husband. Mary now owned the home absolutely and it was worth approximately $500,000.00.

Mary met Rod two years ago and they commenced living together in Mary’s home. Rod had his own home which he now rented out and he received income from that property. He also had an investment unit on the coast.

Rod was a handyman and made some minor improvements to Mary’s home and had paid for some building materials. Rod was also a keen gardener and improved the gardens.

Rod paid no accommodation costs for living at Mary’s home and Mary did not expect him to do so, though he did share the day-to-day expenses. Mary paid rates and insurances.

Mary and Rod had discussed what they would do with their respective estates when they died. It was agreed that neither would make direct financial provision for the other. Each would leave their estate to their children.

“When you die I don’t expect you to make provision for me” said Rod. “All I want is to be able to live in our home for the rest of my life.” - What a simple request.

Rod was happy in the home and Mary was conscious he had made improvements to the home. Mary could see the sense in his request.

Although Mary agreed to the simple request made by Rod, there was something about this request which made her uneasy. Rod was 55 years of age and very healthy. In the event Mary died before Rod it was feasible that Rod would live for another 30 years.

An analysis of the simple request produced the conclusion that the home could be tied up for 30 years and not available to Mary’s children. If Rod was to die first Rod’s children would immediately receive the benefit of his wealth.

If an unrestricted life estate is created in favour of Rod over Mary’s home, Rod could even sell the home, use the proceeds to buy a more suitable house, invest any residual money and use the investment during the course of his life.

Mary, have you really thought about the implications of meeting Rod’s simple request? You should obtain good advice from a Lawyer experienced in Estate Planning before committing your estate to Rod’s request.

More Articles of Interest on Wills and Estates.