Estate Planning

At the time of writing, we were having the Covid-19 Easter long weekend of self-isolation.

In our many years in Epping assisting individuals and families with their estate planning, we have found that most people think of doing a will and nothing else.  We now live in a complex interconnected world, when you see a lawyer consider a more comprehensive estate plan.

Consider if you should have a will, an enduring power of attorney and appoint an enduring guardian, a person you trust to help you with health and living arrangements if you are not well enough to do it yourself.

Presumption of advancement

What about the presumption of advancement?

There is an established doctrine referred to as the ‘presumption of advancement’ in our case law which applies in certain relationships.  For example, where there has been a transfer of money or property from parents to their children, the presumption is that it was a gift.

It is illuminating to consider the facts of a family law case. For example, in Vadisanis & Vadisanis and Anor [2014] FamCAFC 97, Mrs. Vadisanis had advanced money to her son which was used to buy property.  Years later, well after proceedings in the Family Court had commenced between her son and his wife, Mrs. Vadisanis claimed repayment of $451,397.63.

She was granted leave to intervene in the Family Court proceedings between her son and his wife to claim that money she advanced to them were loans and should be repaid.  Mrs. Vadisanis had to rebut the presumption of advancement that applied in the transfer of money from parents to their children.  As gifts to her son, the money would remain in the matrimonial pool for division between her son and his wife in the Family Court.

People with substantial growth in the value of their real estate holdings often advance money to their children to assist with a deposit on their real estate purchase.  Sometimes parents advance cash from savings or an inheritance and sometimes drawdown money secured against the family home.  Instead of a verbal agreement or unspoken understanding with your children, ensure you document and structure your estate plan in writing with the assistance of a solicitor.  Well drafted documents could save you the stress of going through costly court proceedings.

In managing your estate in these circumstances, you and your child could have a loan agreement or an agreement for a second mortgage secured by the property your child is buying.  In case your child goes through bankruptcy or divorce, the money advanced is protected by your written agreement and remains part of your estate to be dealt with under your will.

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