Why do I need a Will if I purchase a house?

There are a few reasons that you need to revisit your Will if you are purchasing a house. If you are purchasing a house with somebody else then the main reasons that you need to revisit your Estate Plan are -

• If you purchase as tenants in common then you need to consider the mortgage and other barriers to gifting your half of the house.

• If you purchase as joint tenants, what do you want to happen after you die? Do you want the joint tenant’s new spouse to get it?

• If you purchase as joint tenants and you die at the same time, do you realise the younger person’s Estate will get the house?

If you purchase as tenants in common

If you purchase as tenants in common then you need to make sure that your Estate Plan is actually workable. I have seen many Estates where the house was purchased as tenants in common but they didn’t put in place a proper Estate Plan. In one case there was a house with no mortgage, owned as tenants in common, and the spouse was to get a life interest in the half of the house. The problem was that at the time that the first spouse died the other spouse had also been in the same car accident, they were off work for many months and money quickly became a problem. Because there was no money to pay things like the spouse’s funeral the Estate was, technically, insolvent. There was no provision in the Will for what would happen in this situation so it meant that at law the house had to be sold to satisfy the debts of the Estate.

Fortunately in that matter the spouse was able to settle the matter with the widows children but I have been involved in other matters where an agreement could not be reached and litigation ensued, all because of a well meaning clause that might have worked if the assets and liabilities were different. You need to make sure that your beautifully drafted clause is actually relevant to your situation, or else the drafting skill of the person who prepared the document is simply irrelevant.

I have seen other matters where the Executor and the life tenant cannot get along, and there was insufficient provision made in the Will about things like proper maintenance of the house (that is when can the Executor kick out the life tenant because they are not looking after the house). I have also seen clauses that attempt to make it the surviving spouse’s responsibility to pay the mortgage when they only have a life interest, which is actually unworkable the bank won’t allow it. Your plans need to match your actual circumstances.

If you purchase as joint tenants

If you are planning to purchase as joint tenants then you are probably going to tell me ‘it is alright, I trust my spouse’. That is fine, I believe you. What I want to know is, do you trust everybody else in their life?

• Do you trust your spouse’s future spouse?  

  • What if you die in the next five years, your spouse remarries, and then the new spouse takes them to the Family Court?

  • What if you die in the next five years, your spouse remarries, then your spouse dies before their new younger spouse.  Do you trust that younger spouse not to challenge the Will and take the property?

• Do you trust your spouse’s future business endeavours?

  • What if the business goes bust?

  • What if they go into business with someone who cannot be trusted?

• What if they get injured and - 

  • Lose their job?

  • A relative moves in to look after them, and then claims against their estate?

  • Take out a loan from a predatory lender?

Honestly this list doesn’t even cover half of the things that might go wrong. I know that you trust your spouse. I am asking you to have an honest conversation with your spouse about whether you trust everyone else. Could you put in place an agreement that will act as an asset protection strategy in the event that one of you dies? The easiest time to do that is now, while you are purchasing.

Have questions?

If you think you might need an Estate Plan while you are purchasing your property then you should definitely speak to Teresa Sharpe, our licensed conveyancer, about getting your Estate Plan taken care of while you are also purchasing. Click on the button below with her name to get her mobile number to call her about your matter, or if it is currently 11pm at night and you don’t want to call her then use the booking form to book in a phone call with her for a more suitable time.