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Dying Without a Will - 2/3 of Investment Properties to Children

Discussion in 'Legal Issues' started by RPI, 29th Jul, 2016.

  1. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Hi All
    We have had the second estate come in this year where the male died without a will (intestacy) with investment properties and young children.

    In Queensland, under the Succession Act (https://www.legislation.qld.gov.au/legisltn/current/s/successiona81.pdf)

    If you die without a will your spouse gets-
    1. shared home and chattels;
    2. first $150,000 of the residue of the estate;
    3. if you have one issue (child) 1/2 of the balance of the residue shared equally with the child;
    4. if you have more than one issue (child) then 1/3 f the balance of the residue shared equally with the children

    This is one for the mortgage brokers, but I assume it is pretty hard for the remaining spouse to refinance an investment property when it is 2/3 owned by a 3 and 5 year old.

    Regardless it makes for a very messy situation for the surviving spouse.
     
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  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Hi RPI

    Interesting

    This would be the case if there are only children from the surviving spouse, but different if the deceased had a blended family.

    The legal owner of the property would presumably be the surviving spouse and the trustees of the children (who might be the surviving spouse). So if might be possible to get the loan.

    At least part of the rent would be taxed as adult rates in the hands of the trustee for the children (s102AG).

    Could the children threaten a family provision claim and the spouse make a settlement so the children get the lot? Not sure of the stamp duty implications in QLD but there should be no CGT implications with this.
     
  3. larrylarry

    larrylarry Well-Known Member

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    Very messy indeed. People don't like talking about drafting a Will bit it is necessary and important.
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    And cheaper than not doing one.
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Incidently if this happened in NSW the surviving spouse would get everything assuming only children are children of the couple
     
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  6. RPI

    RPI Property Lawyer, Town Planner Business Member

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    That would make things easier in the post estate stage but it is still more work and effort for the surviving spouse.
     
  7. RPI

    RPI Property Lawyer, Town Planner Business Member

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    I like the specific provisions for when you have more than one spouse.

    If one of our family law matters doesn't resolve soon that might be needed. We have an elderly gentleman (late 70's or 80's) who now has a rather disgruntled wife (soon to be ex) when she found out that he had been providing an apartment and living expenses for his mistress who is in her 20's (when they met> 6 years ago it was a more professional relationship).
     
  8. BennEznElle

    BennEznElle Well-Known Member

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    @Terry_w When you say if this happened in NSW, how is it determined which states laws apply? Is it based on the 'home' state of the deceased (i.e. where they ordinarily reside) or the state they die in?
     
  9. larrylarry

    larrylarry Well-Known Member

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    correct.
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It is generally the domicile of the deceased that determines jurisdiction. But this can be problematic.
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Under NSW law if this guy died without a will both would be considered spouses and share in the assets - equally if no children.
     
  12. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Same in Queensland
     
  13. RiMo

    RiMo Well-Known Member

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    What happens if one spouse dies and the couple doesn't have their own children but they have one child each from previous marriages, Terry? (ie. blended family)
     
  14. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    And no will?

    In NSW the assets of the deceased spouse would be split between the natural child and the surviving spouse
     
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  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    There is also something known as a post death testamentary trust where a trust can be set up after the death of a person with assets of the deceased moved into that trust and the income can be concessionaly taxed - but the beneficiaries must be those who would have received a benefit under the intestacy laws.

    Therefore there are different tax out comes depending on the states. In QLD children could get some of the income of the trust and be taxed as adults (getting the $20k threshold). But in NSW they wouldn't! All because of the different intestacy laws.