Taking Ownership of House Prior to Activation of a 'Will'

Empharand on 01/12/2020 - 00:44

Hi everyone,

This is going to be a strange request and to be honest I don't even know if it's even possible. I may come across as inept with this next request but please hear me out.

My parents Will grants me their house once they pass (Which will destroy me as they are the only family I have left on this planet).
Is there a way to release their house into my name prior to the activation of a Will (with their agreement, which they are usually content with). I wouldn't even have a clue on where to start if something like that were even possible, can someone point me down the right path of what that would even be called, who I'd need to approach etc

The purpose of this request and such an 'Agreement' would be so I could use the equity to purchase a house of my own and so they can continue living in their house. This is of course without knowing if such a thing is possible.
Their house is roughly worth 550k which is 100% paid off

I know everything above sounds stupid, but this isn't a joke. If what I'm wondering isn't possible that's fine I just wasn't sure if it were and what I'd need to do if I wanted to pursue something like that.

(and no I'm not going to kill my parents to make that happen - Please don't make that suggestion)

Please keep your negative and silly comments to yourself.

Thank you in advance.

Financial

Comments

  • garetz on 01/12/2020 - 00:50
    +2

    They can transfer ownership of the house, you just need to pay stamp duty on its value. However you will then need to start paying land tax on the house while they live in it, you will also lose all tax deductibility you would have had if you inherited it and sold it yourself.

  • TheBird on 01/12/2020 - 00:57
    +1

    It's possible. They can gift it to you. Talk with a lawyer on how to do it.

    I believe you'll have to pay stamp duty if you want it now, which you wouldn't if it's part of the will. Your state may be different.

    You're probably better off talking with a bank about how to use the equity in their property and save yourself the stamp duty. I'm sure it's a fairly common thing.

  • canyoudoitcheaper on 01/12/2020 - 00:59
    +4

    So by "activation of the will", you mean their death, right? And by "Agreement", you mean that you would like them to gift you their house to use as equity for your own home purchase? But they are still alive so where would they live? Unless you mean to use their house as additional security over your mortgage?

    I think you need to discuss this in detail with your parents. If they are happy to do this, then they should speak to a lawyer and a financial adviser to get the paperwork done right (and make a new Will). I also hope you don't have any competitive siblings because they would absolutely flip their sh*t

  • TheMindsetTraveller on 01/12/2020 - 01:01
    +10

    Many issues to think of, best to speak to an accountant.

    However off the top of my head

    1. It would seem the transfer of house to you would appear as a "gift" under Centrelink purposes, which may affect their entitlements - if they are on one, or may apply for one in the next five years.

    2. Stamp duty may be payable upon transfer

    3. Instead of the transfer/gift - you could ask you parents to put up their home as 'surety' whilst you go buy your home. If you default, your house is likely sold first and then theirs could be if you can't refinance or meet your debt obligations.

    4. Wills can be changed, so what is bequeathed to you today - your parents for whatever reasons eg dislike your partner ha ha, might change their mind in the future and leave everything to the dog charity.

    5. Transfering their home into your name posess its own sets of risk. Lets say the homes are now in your name, you marry someone, you divorce and have a property settlement which means the selling of the home (that your parents may live in) as part of the settlement. Let's say one day, you got reckless and put the house on 'red' and lost - leaving your parents potentially homeless or applying for government houses.

    So many different outcomes, can't reply anymore as its 1am here :o

  • morse on 01/12/2020 - 05:09
    +2

    They could but it wouldn’t be wise. A few reasons:
    - it may affect their pension if they are or will get one as it would be considered a gift or a sale
    - whilst in their name it won’t be counted as an asset if it’s their primary residence when determining their pension so it makes sense to keep it in their name
    - if their circumstances change and one or both of them need to go into residential aged care, it may be in their interest to sell the property and use the funds for a deposit which will reduce their fees. These deposits are around $300-400k. I don’t want this to happen for your parents, but it did happen to one of mine (when they never imagined it would, and at a younger age than expected) and countless others so it needs to be factored in.
    - if you stuff up and don’t meet repayments on your house, their house will be repossessed and your parents homeless.

    The reason banks require people to save a deposit and/or take out mortgage insurance is that many people think they can service a mortgage but then can’t. It helps to demonstrate that they can save money and service a mortgage or if not it’s covered by insurance. Using your parents house to avoid this places the risk on your parents.

    Is there a reason why you can’t go down the traditional route and save a deposit and/or use mortgage insurance and demonstrate adequate income to service a loan? How old are you? Is there a reason you can’t keep renting until you can service a mortgage? or are you just wanting to get ahead?

    Please don’t risk your parent’s livelihood and wellbeing. It sounds like you love them very much, so best to do everything you can to protect their interests.

  • SBOB on 01/12/2020 - 06:30
    +4

    Its not your house, it's your parents. Regardless of what's in a current will, it's irrelevant.

    So ask them if they can assist you with a house purchase is the best you'll get out of the current situation.

    Or, let them live their lives and tell them to spend their money or use their assets as they want. If they want to sell or remortgage their house for a round the world holiday, leaving this planet with $0 remaining assets when they die, then so be it.

  • Adredocto on 01/12/2020 - 07:13
    +4

    Just get them to go guarantor on your mortgage. They agree to put up a portion of their home equity and in the case that you can't service the mortgage the bank would take possession of your new place plus the set aside portion of your parents home.

    First home buyers often have parents as guarantor to avoid mortgage insurance.

    Parents continue as home owners and you get financial support.

    • unco on 01/12/2020 - 08:45
      +1

      This is the route you should be going rather than transferring ownership to yourself.
      I was lucky enough for my parents to do this for me and after 2 years I built enough equity to remove them as guarantors so they could have peace of mind that their place was safe again.

  • whooah1979 on 01/12/2020 - 07:39
    +1

    You want them to sign over the property now so that you can speculate for some gains. Have you thought about the risk you put them in if you were to lose your job, not being able to service the mortgage and the bank sells it before your parents pass?

    Why can't you save for a deposit on your current income? Is this the reason?

    https://www.ozbargain.com.au/node/488524

    I'm starting to feel that the property is going to kill me financially with the work required and may not turnover a profit if I go to sell say 2-3 years down the track.

  • [Deactivated] on 01/12/2020 - 08:07
    +5

    Which other planet do you have family?

  • Candour on 01/12/2020 - 08:35

    if you wish to do the honourable thing, then contact an estate lawyer and draft something properly to protect all interests.

  • Seraphin7 on 01/12/2020 - 10:13

    It is very straight forward. In practical terms it is simply the sale of the house from them to you (even if no cash is changing hands). I would engage the services of a conveyancer for this purpose. They will simply arrange for the title of the house to be formally transferred to you. You will need to pay the stamp duty on the full market value of the property (again, even if no cash is changing hands) and off you go.

    Whether or not this may cause other issues down the road you you and/or parents needs to be considered, but is beyond the scope of your question.

  • pegaxs on 01/12/2020 - 12:09

    Why can I see this in 6 months time on Today/Tonight or ACA with two wailing elderly parents (Joseph & Mary) crying about how their son stole their house and sold it from under them and now they have to "live on the streets" (™© ACA/TT)…

    If you are the only living relative and heir to their expansive fortune, what does it matter if you take possession of it now or when they are dead? It's not like you are going to be fighting with siblings or aunties and uncles over it.

  • ihbh on 03/12/2020 - 08:07

    If everything happens according to what you propose, please make sure you have a proper will in place leaving your assets to your parents.

    Your will might be activated before theirs and you don't want them to be on the streets and say your de facto getting everything.

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