Parents claim repayment of loan after tragic loss

DAVID and Jenny wish to purchase their first home.

They talk to their bank about obtaining finance and are informed that they will need to source additional funds to proceed.

Jenny talks to her parents, who agree to advance her $200,000 to assist with the purchase.

At settlement, David and Jenny are registered on title as joint tenants on the advice of their conveyancer.

Jenny makes a will, stating that her parents are to be paid a legacy of $200,000 from her estate.

Tragically, David and Jenny are involved in a serious car accident and are killed instantly.

Several months later, Jenny’s parents take a copy of her will to a solicitor, seeking advice regarding the $200,000.

They inform their solicitor that David was six months younger than Jenny when they passed-away.

Unfortunately, the solicitor advises them that in circumstances where there is no evidence as to which joint tenant passed-away first, the youngest joint tenant is deemed to have survived the other.

This means that because David and Jenny owned the property jointly, the property passes to David’s estate and is dealt with under his will.

David’s will leaves everything to his parents, which includes the $200,000 equity in the house.

Jenny did not own any other substantial assets.

The solicitor also advises Jenny’s parents that even if Jenny had other assets, without evidence to the contrary, the $200,000 advance to her is presumed to be a gift because it was advanced to a child, and therefore is not repayable to them as a loan.

Finally, the solicitor advises that because they were never dependent upon Jenny, they are unable to make a family provision claim against her estate, which could have allowed the Court to designate half of the property as part of Jenny’s “notional” estate.

Proper estate planning could have protected the parties.

It is also important to document loans made to children by way of a loan agreement, signed by all parties.

If YOU would like a particular issue addressed, please email me at manny@tblaw.net.au or call me on (02) 66 487 487.

 

By Manny WOOD, Solicitors