Will my Home Pass to my Children Upon my Death?
A common question which arises when a person who has real property assets (interests in land or fixtures) is writing their will, is whether upon their death they are able to leave their interests to their children. In simple terms, the answer depends on whether the property is owned solely or co-owned, and in the case of the latter whether the property is co-owned as joint tenants or as tenants in common.
Unsurprisingly, upon the death of a sole owner who has a valid will, legal title to real property will pass to the executor who must deal with it as provided in that will. Testamentary wishes have a high probability of being respected, subject to any family provision claims.
Where a sole tenant passes without a valid will, the rules of ‘intestacy’ apply, and the interest will pass in accordance with the statutory hierarchy of beneficiaries.
Co-Ownership – Joint Tenancy.
Where a real property asset is owned with another person as ‘joint tenants’, the surviving joint tenant automatically acquires the sole title on the death of the first joint tenant. This should not be viewed as a passing of interest, but rather as the extinguishment of the deceased’s interest.
This means that a joint tenant cannot leave their share of the property to someone else in their will, as it will pass automatically to the surviving joint tenant.
Co-Ownership – Tenancy in Common.
Unlike joint tenancies, where a property is owned as tenants in common, each co-owner has the right to deal with their share in the property in their will. Generally, an inheritance will pass according to their wishes if expressed in a valid will.
If the deceased wishes to minimise disturbance to their surviving tenants in common, they should provide in their will a right of residence for life for them and ask that any sale of the property be postponed until an agreed event (such as their death or remarriage).
If there is no valid will, or none providing for a right of residence, the remaining co-tenant and the beneficiary must reach some agreement as to how to deal with the property, such as one party buying out the other’s interest, or selling the property and dividing the funds.
Family Provision Claims.
In most Australian states, under statute, certain persons (most frequently children of the deceased) who have been omitted from a will or who feel as though they have been inadequately provided for may apply to the court for an order to adjust the distribution of the estate.
In NSW, in certain circumstances assets transferred or disposed of by the deceased for less than full market value (including as above), may be deemed ‘notional estate’ and subject to family provision orders.
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