RIGHT TO RESIDE
The following information is provided as an explanation of how a right to reside clause in a will is utilised.
It does not relate to any specific individual case simply as an overview of the workings of same.
A right to reside requires specific drafting for the individual requirements for both the will maker and the beneficiary/life tenant. This is because the beneficiary/life tenant could need different protection for different periods of time.
Giving a parent a ‘right to reside’ in the home would likely be for the rest of their life, or, until they are no longer able to continue living there. (Have to go into residential care etc.)
Giving a spouse a ‘right to reside’ may include a restriction such as a certain period/number of years, or until the surviving spouse remarries or co-habits etc.
Giving an adult child a ‘right to reside’ may have a time limit such as when they finish college or university studies, or a specific time frame, such as until they are 25 for example.
You cannot give a ‘minor child’ (under 18) a right to reside as a guardian is appointed to oversee their upbringing.
A right to reside is not part of a simple will.
The clause specifies the rights and obligations of the life tenant and what is to happen to the property on the death of the beneficiary/life tenant, or at the end of the period of the right to reside if a specific period is required.
There are also powers for the executors/trustees to assist the beneficiary/life tenant if they are unable to perform their obligations in relation to the property.
The clause is for the protection of the executors and the beneficiary/life tenant and is to ensure that the will maker’s wishes in relation to giving the right are followed.
On the death of the life tenant, or, at the end of the specified period, the will maker specifies what is to happen to the property; does it form part of the residue of the estate and go to the residuary beneficiaries?
Alternatively, is the property to be transferred to a specific beneficiary? Is it transferred subject to any mortgages that may be over the property? Are the executors to pay out the mortgagor and the beneficiary take the property free of a mortgage?
Often the instructions are that on the death of the beneficiary/life tenant, the residual beneficiaries under the Will, usually the children, are to take the house equally as part of the residue.
Alternatively, the house may be gifted to another beneficiary.
For further information contact our team on (08) 9368 1337
Information provided by Willcraft Estate Planning Pty Ltd, An Incorporated Legal Practice.