Property Transfer before death

So my father is talking about handing over his assets before he dies to prevent some "lost children" coming in after his death to take the properties. I would assume doing a transfer would still need to pay Stamp Duty (NSW), is this correct or is there some way around that?

 

transferring the property early has it's risks as well ( in some dysfunctional families )

has he researched options in moving the property into a trust structure ( if i had any family left the legal papers would be flying already .. like paper darts )

( my extended family seemingly litigated over everything , so i resorted to simply out-living them )

 

Yes duty would be payable if transferred before death, but not if passed via the will.
Transferring before death won't necessarily mean his lost children cannot attack the asset, in NSW there are clawback laws under the sucession act - generally for 3 years before the death.

Also the recipient of the asset could 'lose it'.

He needs to consider the other aspects too such as lending, social security act, family law etc etc and alternative strategies.

 

Since a will can be contested ( and any assets chewed up during the legal battle), is there any other strategies that you can recommend looking into?

Right now he has not spoken to anyone, i keep telling him to either go and see a solicitor and get some advice or just sell it and enjoy his days but he is not that kind of person. My inlaw said they previously passed assets to each other by paying $1 but i cant see how the government would people to do that these days as they wouldn't be getting their cut.

I dont know much about Trusts, is there an easy to understand guide somewhere online?

I didnt know about the Clawback law, i better mention that to him, he is mid/late 60s so i would hope he has at least another 10 years in him but there is no guarantee, i would hate to hand over stampduty and then have it taken back.

 

Yes he should seek legal advice.

The gifting strategy before death is probably the safest, depending how long before it is. By safest, mean it will get the assets to where he wants them - but this could even be unsafe as they could then be attacked by creditors etc of the recipient.

Other strategies are gift and borrow back, installment contracts - he could sell it to the recipent who would pay the price in installments with the debt forgiven at death perhaps.

It is possible to transfer assets for $1 or nil, but duty would be at market values as would CGT.

I have written a lot about trusts and estate planning strategies on the propertychat forum. see

Index of Legal Tips Terryw's legal Tips Index

Index of Strategies Terryw's Structuring Strategies

 

So 2 years on from the original post, Dad is still talking about Handing everything over early but taking no action. He is living on a cash in hand rent from one of these places ( @ about 40% of what it could be rented for) as the other one is now too run down to rent out, plus nothing is insured at all ( not the houses or cars). He has borrowed over $150K from my brother to keep "living" since 2010 and just digging a deeper hole for himself.
I had a chat with him the other day and told him to either sell them all or take up my offer to go get legal advice so we can see what other strategies we can use to help him .

Since he is sitting on 3 properties ( one is just land) he is not entitled to the pension, but i was told the other day if he did sell them all, he only has to wait X amount of years before he can apply for the pension t after he gives away/sells the assets....The issue is, i can't see this "Rule" online anywhere, perhaps I'm googling the wrong thing or perhaps its doesn't exist in NSW? Would suit dad well if that's a legit option but it sounds like a bit of a BS to me.....anyone got any more info here?

 

The 5 year rule is from the Social Security Act commonwealth law

SOCIAL SECURITY ACT 1991 - SECT 1126AB Disposals of assets in 5 year period--individuals

 

Ah, so its a 5-year rule, so if he was to Dispose of his assets (whatever way a solicitor suggests to him), after 5 years he can apply for a pension?

 

His best source of guidance is a solicitor. Seek legal advice as they may be loads of options. He is mismanaging his own affairs in fear of something that may be irrational. I had a client who had a old property like that and it ended up burning dwn. Now she gets $0 rent, pays outgoing and its subject to land tax. She wont sell and its worth $1m++++ (maybe $1.5m+) and she cries poor. Its illogical. She will die unhappy and living a tough life when she didnt need to.

Gifting (lookup Centrelink Gifting - google) of assets means for 5 years they continue to count for the assets test even if he no longer holds them. Deeming may also assume they would have eaerned a base level of income and the income test will count that deemed income

 

How many lost children you think your father has?

 

3 i know by name, and i am sure there is others

 

I believe they can do a reverse mortgage on the property these days but everything needs to be paid back after death.

I'm in a similar position with my parents, my other sibling and partner are waiting to pounce. My Grandparents done a 50%, 25%, 25% will between 3 siblings and there wasn't a thing they could do as the 50% sibling looked after them and supported them for a long time.

 

Let your dad know that Financial wealth is not just about accumulation it is also about protection and estate planning!