While television shows like The Brady Bunch and Modern Family make entertaining viewing, the reality is that once-harmonious blended families can soon turn into warring parties if a parent or step parent forgets to update their will.
Ken Waddington a Partner at Garland Waddington Solicitors, Maroochydore, reminds us that many Australians wills were often out of date and failed to reflect current family circumstances.
Public Trustee data, cited in the âHaving the Last Wordâ report1 by The University of Queensland, showed that complexity of the family relationship was a trigger in 62 percent of disputes over estates.
New spouses or partners, separation or divorce and the addition of step families were all listed as factors likely to lead to a will challenge.
Close to 6 percent of families in Australia include step children, and determining who gets what under a will is often based on the extent to which children are seen to be children of both parties.
Factors such as the length and timing of the relationship, the age of the step children at the time, and the degree of active parenting all come into play when will-makers decide how to apportion their estate.
âOne of the major grey areas in the past has been whether a step child of a de facto relationship could make a claim against the estate of their step parent,â Mr Waddington said.
Changes to the Queensland Succession Act, made in June this year, have now made it clear that the meaning of âstep childâ includes the child of a party to a de facto relationship.
âThis means that a step child to a de facto relationship is eligible to make a claim against the estate of their step parent â but only if their step parent and biological parent were in a relationship at the time of their death.â
Mr Waddington indicated that estate matters could become complicated if parties in a de facto relationship with step children or joint children had failed to revise their wills, dying with out of date wills listing ex-partners or biological children as sole beneficiaries.
âFor example, in certain circumstances, adult children from a previous relationship could claim against the estate of their step parent, regardless of whether or not they had been a part of the new blended family or had a close relationship with the step parent.â
âJust another reason why itâs so important for people to update their wills to provide clear direction on how they want to provide for their partner, step children and biological children from current and past relationships,â he said.
For more information in relation to a family law matter or to obtain professional advice, visit www.garlandwaddington.com.au
Â It is very easy to understand why when asked to go guarantor by a member of your family or a close friend (âthe borrowerâ) who wants to buy a home, that you would be willing to go guarantor.
But there are risks that you should be aware of if the borrower is unable to meet loan payments because of unforeseen circumstances or relationship break downs, as these factors may impact on your own financial commitments or opportunities you may wish to take up in the future.
One of the most common types of guarantee security for home loans is a security guarantee which means that instead of giving the person you are going guarantor for money to put towards the deposit, you give the equity the use of that has accrued in your property.Â The loan to the borrower is secured using both the property being purchased and your own property.
The purpose is often to reduce the amount being borrowed to less than 80% of the proposed purchase price so that the borrower can avoid paying lenders mortgage insurance.Â This will assist the borrower greatly, but there are no direct financial rewards for you.Â It is very important to realise there is a lot of responsibility attached to becoming a guarantor.Â For example, if the borrower is unable to afford the repayments, you will be responsible for paying off the remaining amount of the loan, or have to sell the property you used as security to repay the debt.
If you as guarantor want to sell your property in the future you may not be able to rely on all the equity in your property to secure a new property as an amount equivalent to the amount secured under the existing property as the guaranteed amount would need to be secured against the new property.
IfÂ you want to sell the property outright and for example go travelling (and not invest in a new property straight away) an amount equivalent to the amount secured under the existing property would probably have to be held in a term deposit for the term of the borrowerâs debt, or until the borrowerâs property is sold.
Other points to consider when going guarantor are:
- If the borrower defaults and you are required to make the repayments, but are not in a position to do so, it will affect your credit rating;
- Even if you are not making repayments on the borrowerâs loan, when applying for credit, a financier will most likely include the maximum potentially guaranteed amount when considering your application, and this may affect your chances of obtaining the credit.
We very strongly recommend that you seek independent advice before becoming a guarantor.Â There could be other options worth pursuing which may assist the borrower but reduce your responsibility or liability.
For more information, contact Lyn Colautti, Paralegal, (07) 5443 4866 or email@example.com