Many Australians are co-owners of interests in land but do not appreciate the nature or effect of the co-ownership and do not fully research family trust estate planning. As a result, they are not aware of the consequences their co-ownership has on their death. Below are examples of the effect joint tenancies can have in ousting the Testator’s family maintenance (“TFM”) legislation.
De-identified case example:
“A is an unsophisticated client. A has three adult children B, C and D from a first relationship. A meets his second wife E. They decide to buy a house together. The house is registered as joint tenants by the conveyancer. A uses all of the assets he acquired during his first marriage to put towards the home including a substantial gift from A’s mother. A’s will makes provision for all of his children and his wife E in proportion to their needs and their financial contributions. A does not realise that the house will pass to E by survivorship. A does not have any substantial assets besides the house. A dies.”
S7(ae) of the FPA, in conjunction with r3 of the Family Provision Regulations 2013 (WA)(“FPR”), allows step-children to make a claim against the estates of their step-parents only if their step-parent received at least $517,000.00 from the stepchild’s parents’ estate. Firstly, the prescribed limit does not include assets which were received inter-vivos or by operation of the law of survivorship. This is a major deficiency with the legislation because most couples create joint tenancy interests (both deliberately and inadvertently). Secondly, a dependant will need to wait for their step parent to die before any claim can be made. This means that there is no immediate relief to their dependency. There may be no assets of the surviving step-parent remaining on their subsequent death. In the case of Pope and Ors v Christie; Re the Estate of Glendon Frederick Dobrich (1994) SCNSW BC9801327, a case involving a step-child and step-parent, Young J said at paragraph :
“There is also the factor that if one paid some regard to the Australian life tables, that a widow of forty-nine may very well live for another thirty-five years. This has two aspects to it. The first is that any hard cold cash that may flow to the plaintiff through this constructive trust is something that may not happen until 2033, yet she is at the moment in one of her most expensive periods of her life, having four children in early teenage or sub-teenage years.”
Craig Gregson LLM TEP
(Disclaimer: The material in this article is of a general nature and intended for information only. It is not intended to be comprehensive and does not constitute legal advice. Any person with a specific legal issue should consult a lawyer.)