I had a client once, let’s call her Jane. She was in her later 30s. Her husband Jack had died. She came and saw me 7 years after Jack’s death. She had moved on and made a new life for herself. She had remarried to Steve. Her three children and Steve’s four children had formed a semi-Brady Bunch situation. All 9 of them were living happily in Jane and Jack’s 3 bedroom home. All was well. The kids were growing up though and they needed their own bedrooms. So Jane and Steve trotted off to the bank to refinance the mortgage on the home to pay for the extensions. And that is when things fell apart. You see Jack never had a Will.
Jane and Jack had never thought they needed a Will. At the end of the day it was only the two of them and their kids. They had always assumed that the other of them would legally be entitled to everything when they died. When Jane went to the bank to refinance the loan the bank looked at the Certificate of Title (which still had Jack on it) the Bank said that they wouldn’t lend anything more until Jane was the sole name on the Title. They told her this would be easy. She just needed to get the transfer to herself done. It was not going to be easy and this was a lesson Jane was going to learn the incredibly hard way.
When a person dies in WA without a Will their Estate is distributed according to the Administration Act. There is a detailed table in the Act that says exactly who gets what based on the make up of your family. The problem with the Administration Act is that it is not necessarily what people expect, and the repercussions can be long lasting.
Back to Jane and Jack. When Jack died the property he owned with Jane was owned jointly, but it was owned as tenants in common. That meant that Jack’s share of the property did not pass to Jane, but was subject to the Administration Act. At the time of Jack’s death he was married with three children. Pursuant to the Administration Act that meant that Jane was entitled to $50,000 and 1/3 of the balance. Their children were entitled to the other 2/3 of Jack’s share in the property. I explained to Jane that, in lieu of expensive Court action, this meant that 2/3 of Jack’s share of the property would belong to the children, held on trust and couldn’t be touched until they were 18 and able to decide whether or not to give their share to their mother. The children were aged between 9 and 14. 18 was a long way off.
So, after a lot of tears, that is roughly how the Title ended up, Jane with her original 1/2 and an extra 1/3 of a half, and a trust for the kids for the remaining 2/3 of a half. Unfortunately the bank wasn’t willing to lend on that basis and so they were stuck living in the little house. 7 teenagers, 3 bedrooms. Not an ideal situation for any parent, and certainly not the outcome Jack and Jane had ever imagined.
The saddening part about Jane’s story is this. With a simple Will it all could have been avoided. Had Jack made a Will giving his estate to his Wife, Jane could have changed the Title and Jane and Steve could have renovated the house to ensure their children had enough room to grow.
But Jane isn’t alone.
I had another client who I’ll call Sally. Her husband died leaving her and their 2 children, 18 year old twin daughters who I later coined “the evil twins”. Allow me to explain.
Sally’s husband didn’t have a Will, and the family home was in his sole name, always had been the 40 odd years they had owned it. You now know the split under the Administration Act. Sally approached her two daughters and asked whether they would transfer their share in their father’s estate to her. When she died, she would leave it to them. They said no. She asked if she could borrow the money off them. They said no. They wanted their share now.
Sally was forced to sell the house. With the $50,000 and 1/3 share she received she was unable to afford to buy a new home. Sally was unemployed, she had always been a housewife. Sally was, for the first time in her adult life, forced into renting and finding a job. Sally was 60.
These are two real client scenarios I am describing, this is not fiction, this is not urban legend. This is life and the law in WA. In my experience it is this situation, the mum and dad with kids, that seems to come up the most often and deliver the most unfortunate results, but it is not limited to this scenario.
So my advice? No matter what your family make up, whether you are single, blended or happily first time married, get a Will. It doesn’t have to be fancy or long winded. Ultimately the financial future of those you love may be in your hands. Take control.
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