Dilemma: Buy property now from parent or wait for will?

My mum (let's call her Mary) has one other sister. Their mother is now in her 90's so has limited time left (but she is 100% 'all there' and active).

Mary lives with her mother (just the two of them) and is her live in carer. Her sister rarely visits (even though she lives 20mins away) and when she does, she always has something else to do like getting her nails done so doesn't stay long.

Currently the mother's will is set up so that Mary can live there until the day she dies, or decides to move out and then the property is split between the two sisters. The mum doesn't want this anymore and just wants to give the property to Mary in her will as she has been there for her mum her entire life (lived and cared for) and the sister hardly says boo. She has no other assets - just this house (in NSW).

No matter how good the will is, it can always be contested by the sister. Is it best that the property be bought from the mother before she dies and an agreement be put in place for her piece of mind that the mother can stay there as long as she wishes? The house is probably worth around $800k. Is there a way to gift the property to Mary or sell it to her for a nominal/token amount ($1/$100/$1,000??) Would stamp duty be payable on the full $800k? No CGT as is PPOR.

The other complication - when Mary's mum does pass away, she wants to give the property to me (her only offspring) for my family. We would knock down the house (place is really bad - a knockdown/rebuild) and build a house for us and a new self contained flat for Mary to live in. That way we get a nice place we would never have been able to afford before, Mary gets a new place, etc. I'd want to pay the sister something so she's not getting nothing (say $50k). Can't afford much, plus the current will means she gets nothing until my mum moves out - which may be 40yrs away.

Does anyone have any great ideas of how to do this? Is buying it before the mother dies the best way, and how can the title pass to me without paying stamp duty twice (eg. do I buy it)? :confused:

Thanks for your help.
 
If your mother was to buy half the house, and if it could then be held as "joint tenants", then when your mother's mother passes away, the house automatically goes to your mother.

I won't touch on the implications of leaving your mother's sister out of the will, because that is a whole other can of worms, but buying half and holding it together as "joint tenants" could be one possibility.

Stamp duty would be payable on the half that your mother buys at market rates, even if it is sold for less than it is worth.
 
One other thing to be aware of...

Wills are designed to deal with the disposal/transfer of assets, not to control their ongoing use from beyond the grave. It rang alarm bells for me that you've described the will as "set up so that Mary can live there until the day she dies, or decides to move out and then the property is split between the two sisters."

Mary and her mother need to be quite clear on what happens to ownership of the property once her mother passes on. Your comment reads as if ownership only passes to the two sisters once Mary passes away or moves out. Who owns the property during the interim period? If ownership passes to the two sisters straight away, then Mary's sister has a right to dispose of her share of that asset (and receive a fair market value for it) at any point in time, not just when it suits Mary to move out. She may very well be able to force the sale of the property out from underneath Mary.

Either way, I think there's some angst in store for Mary and her sister.
 
There are some other issues to consider too.

If Mary's mum changes her will now, there could be questions of capacity. So you would need to speak to a lawyer about this and probably get 2 or 3 doctor reports stating she does have capacity and understands fully what she is doing - maybe two lots of independent legal advice too.

Ideally it would be good to set up a discretionary trust in the will. This would make it more flexible and tax effective.
 
Another point, it may be wise to have the property transferred now to you. But, stamp duty would be payable on full market value - maybe this could be reduced by knocking the house down before transfer. Whereas if it goes to you in the will the should be no stamp duty.

If you do it now it will be harder for the sister to make a claim - though she still probably could do so.
 
You should speak with a lawyer about these issues and then they can attest to your mum's capacity to change her will and exercise of free will. If something in her will states something to the effect of "I leave my house solely to my daughter ABC who has taken care of me for the last 20 years" then any challenge is not going to be as successful. IS there anything else (even if of small value) she can leave to the other sister? So that it proves that your mum had considered but chosen not to give, her anything of significant value?

In any event, a Lawyer will know what the best thing to do is.
 
My mum (let's call her Mary) has one other sister. Their mother is now in her 90's so has limited time left (but she is 100% 'all there' and active).

Mary lives with her mother (just the two of them) and is her live in carer. Her sister rarely visits (even though she lives 20mins away) and when she does, she always has something else to do like getting her nails done so doesn't stay long.

Currently the mother's will is set up so that Mary can live there until the day she dies, or decides to move out and then the property is split between the two sisters. The mum doesn't want this anymore and just wants to give the property to Mary in her will as she has been there for her mum her entire life (lived and cared for) and the sister hardly says boo. She has no other assets - just this house (in NSW).

No matter how good the will is, it can always be contested by the sister. Is it best that the property be bought from the mother before she dies and an agreement be put in place for her piece of mind that the mother can stay there as long as she wishes? The house is probably worth around $800k. Is there a way to gift the property to Mary or sell it to her for a nominal/token amount ($1/$100/$1,000??) Would stamp duty be payable on the full $800k? No CGT as is PPOR.

The other complication - when Mary's mum does pass away, she wants to give the property to me (her only offspring) for my family. We would knock down the house (place is really bad - a knockdown/rebuild) and build a house for us and a new self contained flat for Mary to live in. That way we get a nice place we would never have been able to afford before, Mary gets a new place, etc. I'd want to pay the sister something so she's not getting nothing (say $50k). Can't afford much, plus the current will means she gets nothing until my mum moves out - which may be 40yrs away.

Does anyone have any great ideas of how to do this? Is buying it before the mother dies the best way, and how can the title pass to me without paying stamp duty twice (eg. do I buy it)? :confused:

Thanks for your help.
What about the following:

1- Get a Bank valuation of the property. Let's say it values at $800k
2- Purchase the property for let's say $400,000. Use the equity in it as deposit. It should be easy to get this loan (plenty of security for the Bank)
3- Pay Stamp Duty on $800k. It should be about $32k
4- Grant a lease to your grandmother for life for $1 pa
5- Instruct your grandmother to execute a "deed of gift" to you for $400k.
6- Pay the loan in full or create an offset account against the Bank loan and deposit there the $400k (you never know when you will need access to some cash :cool:

In that way you should have no issues with wills been contested and solicitors billing hours :cool:. You are securing a $800k asset for $32k. No a bad deal and everyone is happy :). Well, almost everyone :rolleyes:
 
Some fantastic advice. Thanks so much guys. We've spoken to a solicitor and he never mentioned some of those things (particularly the ones from wylie and agent007)

The solicitor did talk about getting a doctor to say she is of sound mind, and also write a letter (factual and not emotional) stating why not give part of the house to the other sister - that way if it's contested the judge can understand exactly why she did it. But the trouble is, no matter how good a will is, it can ALWAYS be contested. The puchasing options look pretty good to me. Thanks so much :):):)
 
Some fantastic advice. Thanks so much guys. We've spoken to a solicitor and he never mentioned some of those things (particularly the ones from wylie and agent007)

The solicitor did talk about getting a doctor to say she is of sound mind, and also write a letter (factual and not emotional) stating why not give part of the house to the other sister - that way if it's contested the judge can understand exactly why she did it. But the trouble is, no matter how good a will is, it can ALWAYS be contested. The puchasing options look pretty good to me. Thanks so much :):):)

Forgot to add point #7

7- Since you mother is still alive, she may require to protect her interest too. All she needs to do is to add a 1st or 2nd mortgage (depending on the option you chose to follow), to the title of the house you bought. You can work out the amount between yourselves.
 
Forgot to add point #7

7- Since you mother is still alive, she may require to protect her interest too. All she needs to do is to add a 1st or 2nd mortgage (depending on the option you chose to follow), to the title of the house you bought. You can work out the amount between yourselves.

Another point,
8- Syba, make sure you have a good will in place yourself just in case you kick the backed before your grandma does :eek: and hence point #7 to protect your mom.
 
Thanks. I think I'll be going down the track of wylie - my mum buy half the house as joint tenants and then doing something else myself down the line. Will cost more in the long run, but there won't be as much %^&% hitting the fan if my mum just buys half the house she'll be eventually entitled to than if I bought it out.

My grandmother wouldn't need a 1st/2nd mortgage if we did it that way would we as she would already be on the title?
 
Hi, some sound comments by Agent007.

"Buying" [as in transfer of ownership even if no cash changes hands] is much cleaner as it's a fait accompli.

My father made a will & then 10 years later, he's 80 & began to think he's too old to bother with the paperwork & stuff so we just talked about it & said why not just transfer the properties to the children.

You incur a lot of fees [we had a huge rebate but still paid $25K]

The sibling/family thing doesn't go away. Now 8 of us have some valuable property & 8 different opinions on what to do!

KY
 
If it is able to be done by "buying" half (either you or your mother) with your grandmother as the other half, held as joint tenants, then it means there is nothing in the estate (unless there are other assets). Of course, your grandmother must be protected from any possible future falling out, which could leave her homeless :eek:.

Nothing in the estate means nothing to contest. Is there a reason why your mother's sister will be left out of the will? Will that cause a lot of angst?

Solicitor advised us that estates can be contested if one child has not been provided for, even if there are very good reasons for leaving things unevenly.

In our situation, nobody believes this brother deserves a red cent, but the courts will still look at whether or not he has been provided for. He deserves a slapping, and nothing more. Even though he has caused so much heartache and is full of hate, I am glad he is going to be provided for, even if it is just because he won't come to us looking for money (well, that's the plan anyway).

It's going to be fun and games when Dad goes.....
 
Pushka

I am afraid that wills can be challenged on many grounds.
eg. SUCCESSION ACT 2006 - SECT 57
http://www.austlii.edu.au/au/legis/nsw/consol_act/sa2006138/s57.html

Which is why you get a lawyer involved. This reference lists who can challenge a will but there are no grounds listed. It would be interesting to know that it seems even the milkman can make a claim, how many are actually successful. If the will seems well prepared (by a lawyer), covers most eventualities, and made of someone's own free will, there would have to be compelling evidence for a judge to over ride someone's last wishes.
 
One thing the courts consider is where a person is supporting someone else and then dies without leaving them adequate provisions. This is not limited to spouses or children but could be a non related person who was being supported.
 
If you went with the Joint Tenants option, It'd get messy if your mother died before your grandmother.

You'd be back at square one. The grandmother would re-acquire the whole of the property.. so when she eventually dies, (assuming there is no change to her will) this would be split between her two daughters.. your aunt would get one half and your mother's half would be split between yourself and your siblings (if any) your mother's partner, (if any)... etc.

Hope everything turns out ok. Family squabbles are annoying.
 
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