Hypotheticals by Manny Wood. Published in the Coffs Coast Advocate on 8 October 2016.
Mike and Carol are both in their 60s and each have three children to previous marriages. They have been in a de facto relationship for the last 10 years and wish to update their wills to provide, primarily, for each other, but also to protect the interests of their children.
Mike and Carol each own a house. They have lived in Mike’s house for many years and have used Carol’s property to receive a rental income. They each have superannuation funds of around $100,000 and no other assets of any significant value.
Mike consults a solicitor and is advised that he is able to make a will, leaving his house to Carol for use during her lifetime. The solicitor advises him that the will can make provision for his executor to sell the property and purchase another one, if Carol wishes to relocate. The will can include a provision that if Carol wishes to do so, she can rent the property out and use the rental income.
Mike is advised that a mere “right to reside” in the property could be problematic, as it would terminate upon Carol vacating the property.
Mike is also advised that it is important to consider setting aside a fund that will allow the outgoings of the property to be paid, which would include rates, insurance and maintenance.
Given that Mike’s only other major asset is superannuation, he is advised that he can nominate his estate as a recipient of the funds and that some of these funds can be set aside to meet his property’s outgoings. For this to work effectively, Mike is advised to execute a binding death benefit nomination in favour of his estate.
This means that Mike’s executor can make sure that the property will remain insured and in good condition, ultimately for the benefit of Mike’s children.
Mike and his solicitor discuss the pros and cons of appointing various individuals as executors and Mike decides to appoint one of his children, whom he is confident, will respect Carol’s wishes.
