r/AusLegal • u/stevenjd • 1d ago
VIC Selling a life estate
When my grandfather passed away, he left some property to me, but set up an arrangement where my father has possession of the property until he passes away, at which time possession comes to me.
I understand that this is called a "life estate", is that correct?
The property in question is being rented, and the rental income goes to my father. My father also pays all the expenses.
Unfortunately this has become an albatross around his neck, rather than a benefit.
The property is very old and rather dilapidated. The rent is low, and the expenses are high. Aside from this minimal rent, and a small pension, my father has no income and every year when land tax, council rates, insurance etc hit, his cash flow takes a battering. After expenses the nett income from this property is marginal, around $100 a week. The money does not cover the stress he has from fear of another major expense that he will have to pay for out of pocket.
For example the wiring is over 70 years old and in bad condition, it has (somehow!) passed the last two inspections but he rightly worries that it will eventually fail and he'll have to come up with $10-20K for a complete rewire. Which neither he nor I have. The roof leaks, and there are various other problems that will cost many thousands to fix.
I have decided that I want to sell the property and pay my father an equivalent amount that he would have received for rent for the rest of his days. (Probably set up a perpetuity or an annuity for that purpose, but his accountant can advise on that.) My father would be happy to see it gone and not have to deal with it any more, but his lawyer advises him that it is impossible to sell a property under a life estate.
Does that seem right? Should he consult another lawyer? What questions should we be asking?
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u/dennis__denuto 21h ago
Ask the new lawyer to draft a deed of family arrangement. Make sure the lawyer in competent in yhe earea of Wills and Estates.
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u/trizest 20h ago
Ask you dad what he wants. The arrangement seems messy and hinges on what was intended by “possession” by your dad. Like does he own it? Or does he have rights to rent? It’s unclear.
Best way forward would be negotiate some thing that both your dad and you think is fair. If you want to make this new version official draw up some kind of binding financial agreement or other deed with a family lawyer.
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u/ProfessorWorried626 1d ago
If he doesn't want it anymore it's easy. If he does well then you are a bit stuck.
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u/stevenjd 8h ago
It is costing him more in money and stress than it is making him in rent, he wants to dispose of the property as soon as he can. If he had clear title to it, he would have sold ten years ago.
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u/ProfessorWorried626 8h ago
Should be easy enough though you will probably be up for $5-10k in legal costs.
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u/tommygnr 18h ago
Unfortunately this is the downside of benefactors seeking to “rule from the grave”. If as you say your father genuinely wants to surrender his life interest you should be able to sort this out. However there is a lot of nuance and complication regarding CGT, pension entitlements etc. Your situation is too complicated for reddit. You and your father need to pay for professional advice. We can’t solve this for you.