A Will Incorporating a Right of Residence or Life Estate

A Will Incorporating a Right of Residence or Life Estate.

 What are Rights of Residence and Life Estates?

• A right of residence is created when you include a clause in your will that gives a specific person the right to live in one of your properties for a specified period, such as the rest of their life or until they remarry or until they reach a specified age or for as long as they are caring for certain specified people such as your children.

• You can specify that the person given the right of residence must pay council rates, water rates, insurance premiums, Strata levies if applicable and maintenance costs. Alternatively you may leave a fund to be held by your executor to pay those things for as long as the person actually lives in the property.

• A right of residence clause can include an arrangement whereby the property can be sold and a new smaller property, home unit or retirement Village unit purchased in its place in case the resident wants to downsize.

• A right of residence clause will usually state that when the person having the right to live in the property dies or ceases to live in the property, then the property must be sold and the proceeds of sale distributed however you choose to specify.

• A life estate is where you leave the whole or part of your estate (such as a property, a sum of money, some investments or shareholdings) in the hands of your executor to give the benefit to a specified person (called the life tenant) for as long as that person lives, and then transfer the assets to other specified persons (called the remaindermen).

 What are the Components of a Right of Residence or Life Estate?

• They are simply created by including the relevant clauses in your will. If you change your mind about creating rights of residence or life estates before you die then you simply have to revoke your will by destroying it or making a new one.

Why Would I Want My Will to Create a Right of Residence or Life Estate?

• You may want to create a right of residence in your will if you have a spouse that you want to provide a home for after you die but ultimately want the property or the proceeds of its sale to go to your children.

• You may want to create a right of residence in your will if you have a second spouse or partner but your children are from a previous relationship and you want to make sure that the second spouse or partner has somewhere to live after you die but make sure that your property goes to your children.

• You might want to create a right of residence in your will if you want to provide a home for a particular person after you die but only if they live in it otherwise it is to go to someone else.

• You might want to create a right of residence in your will if you want to provide a home for a particular person but don’t agree to them letting it out to tenants.

• You could find a right of residence useful if you want a particular person to have a home for the rest of their life but avoid create a capital gains tax liability or a land tax liability.

• You might want to create a life estate in your will if you wish to leave particular assets to a certain beneficiary so that they can enjoy that asset and the income from it, on the condition that when they die the assets (or what’s left of them) are to pass to other specified beneficiaries.

• You may want to create a life estate in your will if you want certain beneficiary to enjoy certain assets with specified conditions, such as giving the beneficiary the right to spend the income but not the capital in the asset.