Terminal Ilness

My husband has stage 4 cancer and fortunately is relatively well at the moment. He has his 'affairs in order'. One investment property (in his name) will be left to his two adult and independent sons from a first marriage and his share in the other two IPs (in joint names) will pass to me. They are all essentially debt free.
I am unsure what is best to do about these two jointly owned investment properties. Should we sell now or leave things as they are and deal with them through the will? Perhaps tax implications will determine the best approach. I want to reduce external issues as much as possible as it is a difficult time. I have lost interest in them and the thought of managing them alone is unappealing. I would appreciate your insights.

 

sorry to hear.

You should get specific legal advice on this as many issues. Are the properties owned as joint tenants or tenants in common, if JT you may want to consider severing the joint tenancy.

There will be different tax implications between selling now, the estate selling or the beneficiary selling.

See also my threads:
Tax Tip 132: Terminal Illness – tax aspects to Consider Tax Tips 132: Terminal Illness – tax aspects to Consider

Legal Tip 133: Terminal Illness – Legal Aspects to Consider Legal Tip 133: Terminal Illness – Legal Aspects to Consider

 

Yes - Legal, financial and tax advice would all be wise now.

eg CGT losses can be used now. Super death benefits ?, tax impacts. You dont want a deceased to leave $$$ from super to adult kids BUT may be able to claim a death benefit NOW (yes !!) and bypass the issue.

I have seen people save tens or hundreds of thousands by getting the 3 sources of advice asap. Ideally all in the same room It may seem tacky to some but hey if it saves taxes why not !!

And even getting information together of costbase etc for the beneficiaries will help.

One thing many forget to ask lawyers now which I just went through a few weeks back. Ask the lawyer for probate guidance now. They may suggest changing some bank accounts and assets to make life easier in the days following death (and save court fees). Banks have a habit of freezing accounts which may be avoided.

 

Thank you both sincerely for your responses identifying issues to consider. Terry the legal tips documents are a great resource for readers. Much to review.

 

Any reasons why you would end the joint tenancy? Wouldn't the 50/50 ownership just automatically pass to the surviving party so they would own it 100% automatically?

 

Would banks freeze accounts that are held jointly by husband and wife?

 

Plenty of reasons depending on the circumstances. the main one being
- to get 50% into a testamentary discretionary trust with its special taxation benefits and asset protection benefits

 

Generally not.

 

This ^^

And outside the scope of the will so less chance of a challenge.
Marg

 

Another reason is if blended family. JT assets cannot be left via the will.

 

ANY assets owned by the deceased or with a surviving spouse can be frozen sometimes until probate but not always. eg Bank accounts, super incl reversion pensions etc. Its not as bad as it sounds since in most instances you have to tell them first + Joint assets often transfer to the survivor etc. But the relevant institution will have a process for that.

My father in law recently found his deceased wife's super pension suspended pending a cert of death and they insisted on verificaation of his new account etc before it was completed. Took almost 4 weeks. The bank suspended a joint account (until he opened a account in his name) and he needed to sell shares in her name (after changing the bank account for share proceeds so it went to the new account).

Lots of fiddling about

 

I know a family where Mum and Dad told all their kids that a specific property (JT) would be left in their wills. Mum dies before the changes were made to ensure that occurred so it remained as a joint asset. Then dad changed his will (he owned the asset) so that it was gifted to a specific son before death (with encouragement !) He then died.

Court action resulted (NSW). Family argued Dad lacked competency and his revised will invalid. His own Doctor agreed he was losing competency and why he had been admitted to aged care within days of his death. Transfer was torn up. So now it was dealt with in the will. Dad never sought advice and Dad used a DIY will kit.... Son was one of the witnesses and the place of making the will was a hospital address. No medical sign-off concerning competency.

Joint tenancy is as strong as the surviving spouse will sometimes. There are also common provisions in wills which affect how assets may transfer if two spouses die in a close interval.

Always seek legal advice.

 

Keep in mind that joint tenancies can be challenged by a few methods so assets held as JT may not be completely safe from attack on death.

But assets held as JT need to be considered in a will because at some point there will just be 1 owner:

Legal Tip 176: The Need to Consider Assets Owned as a Joint Tenant in your Will Legal Tip 176: The Need to Consider Assets Owned as a Joint Tenant in your Will