Some families come to private arrangements regarding the care and accommodation of their loved ones. When these arrangements work well, it can be an great way for a family to support each other and pool resources. Family agreements are often informal and many are entered into without professional advice. If not entered into carefully, these agreements can lead to devastating family disputes and potentially serious financial, taxation and legal consequences in some cases.
These types of agreements can take many forms including combinations of:
Co-ownership arrangements (such as family members buying a house together for everyone to live in)
“Granny Flat” Interests
RNG Lawyers strongly recommends that each party to a family agreement obtain independent financial, accounting and financial advice before entering into a family agreement. We also strongly recommend that the agreement be documented to prevent disputes in the future.
Before you enter into any agreement with family members, we recommend that you consider the following matters in consultation with your professional advisors as a starting point:
What are the expected care requirements?
Will there be respite and carer’s leave/holidays?
Will the carer receive remuneration and/or reimbursement?
What accommodation is provided? Will there be modifications?
Who is responsible for maintenance and improvements?
Who is responsible for the payment of costs (rates, outgoings, insurance etc)?
Will there be a mortgage or another form of encumbrance secured over the accommodation?
Will I have ongoing fees or rent to pay?
What are the financial considerations of the proposed arrangement, including any stamp duty or taxation consequences such as Land Tax and Capital Gains Tax?
Is the agreement flexible enough for my needs?
Do I retain sufficient control over my care and accommodation?
What are the risks (and what will be my back up plan if it does not work out)?
What would happen if…
(a) There is a new relationship or a relationship breakdown?
(b) A party is made bankrupt?
(c) A party wishes to terminate the arrangement?
(d) You are required to move out of the accommodation (including into Aged Care)?
(e) There is an untimely death or disablement (particularly of the carer or the proprietor of the accommodation)?
Is the proposal consistent with my estate planning objectives? Do I need to change my estate planning?
No two families are the same and the priorities will be different for different families. If you are contemplating entering into such an agreement, please contact Stephanie Rendell and the RNG Lawyers Wills and Estates team for further advice.
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