The defacto, the dad, the will and the reverse mortgage...

This is juicy, so had to share it...

Got a mate, voicing his concerns and it's complicated.
My mate has a dad, who has been divorced twice. The dad is now in a defacto relationship, for some 7 years.
The dad has written a will leaving the house to the 3 kids (one is my mate, none of them have much money, 2 are middle age renters), the defacto getting zero (she's a nice women, has a job, owns an investment property).

But, to settle the 2nd divorce, my mates dad set up a reverse mortgage, to pay out the 2nd wife.
Fast forward to today. My mates "defacto step mum" is now hassling my mate, about what happens to her when the dad dies. Where will she live?

So my mates concern is, will he be stuck in court for years, with the prospect of a legal challenge on the will?

I would have thought my mate - should do nothing. As the bank will step in, take possession of the house, boot out the defacto, and sell up, if any proceeds left over, they pay to the estate.

But none of this seems fair.
I would have thought a fair approach would be, the dad, rewrites his will, splits it 4 ways, and communicates to all parties. But, not my family, not my battle and old school blokes don't score well on communication.

What a mess.

Anybody else have this experience?

What sort of outcome would the court take?

 

Two separate things, right? The bank holds the mortgage, and on death the loan would have to be repaid, the property sold if required. Whats remaining goes to the estate.

the de facto can still contest the will and claim from the estate. Lawyers please correct me but decisions are based on degree of dependency, not necessarily fairness?

who is the executor?

 

Defactp gets zero? This doesn't sound right. Look I'm not a lawyer but your mate should get to know one.

Also those reverse mortgages are based on low LVR from my understanding. So I imagine there would be some funds left over after the bank takes it bite. Everyone should be happy.

 

This pretty much sums up every family.

 

My guess is that the defacto would get the bulk of the remaining estate given the 7+ years of relationship. (ie same as having a wife) if she contests the will. The kids are adult and not dependents.

 

Kids get nothing if defacto wife of 7 years is still alive and living in the house.
Good luck to your mate - he is basically stuffed with his 2 other siblings.
Better yet don't even think about getting any inheritance from it as it would probably be SFA left after the old man dies with his medical bills.

 

what is so unfair about it?
Bank gets paid out first as they have a mortgage for their debt.
She should start planning for her future.

She might have a claim left on the estate after the debt is satisfied, but so do the kids.

 

Your mate's dad could include a "right of residence" clause in his will.....
This could allow the defacto to retain a roof over her head until her time, then the estate would be dispersed to the 3 children.
https://www.google.com/url?sa=t&sou...FjAJegQIHhAB&usg=AOvVaw3W_7QSYhNjbm929kIfQflU
Not used very often, but used by a mates grandfather and a residence I mowed up until recently (until the defacto passed).

 

They all have a right to claim. I’m not sure why people are saying de facto would get it and kids would get nothing. Father should set up will so she gets a life interest in the property or should split evenly to try and keep everyone happy. That’s assuming her name isn’t on the property. If it’s on the property as joint tenants kids are stuffed.

 

Not in NSW.

 

but if there is a mortgage and there arent enough other assets in the estate to repay the mortgage....

 

Possibly enough in superanuation or life insurance to clear the mortgage.....
As usual there isn't enough detail supplied/available, so we are all left to theorize

 

The dad should see a lawyer who specialises in estate planning ASAP. He needs to set up the will properly so there is little chance for it to get contested and make sure he has chosen the right executor. If it gets contested, not only can the lawyers fees eat into the estate, but think about the time it would take to get things resolved.

 

Really? Doesn’t it not go through the will if it’s joint tenants? That happened with my mother, she got everything when her husband died, adult kids got nothing.

 

At least the de facto has a job and an investment property. So if the house is sold she's got some income & assets (hopefully).
What does the dad have besides a mortgaged property?

 

JT provides a right of survivorship so this is why the jointly owned property went to your mum without reference to the will or need for probate. TIC needs to be handled under the terms of the will which should be professionally drafted to prevent extraneous claims.

In NSW, unlike some other jurisdictions, provision must be made for dependents (the de-facto).

Reverse mortgages are stacked in favour of the mortgagee so the longer this continues, the less will be left for distributions to anyone who may have a claim.

 

Look at all the seagulls fighting for the chip?
Mine! Mine! Mine!

best seek solicitor, and get some solid advices.
People are emotionally charged when it comes to money they think they deserved. Entitlement or not.

 

Under NSW there is something called 'notional estate' under the family provision sections of the succession act. Joint tenancy, super, discretionary trust et assets can be attacked.

 

Oh, I thought only assets that went through the will could be attacked. His kids should have gotten a better lawyer. Interesting!

 

I'd suggest that the Dad re-do's his will and asks lots of questions so that the money goes where he wishes it to go. For all we know, he may not want the kids to have anything, or he may not want the defacto to get anything. Get plenty of advice & set it up to adhere, as strongly as possible to HIS wishes.