WA Can Inheritance be Paid in Instalments?

[Worried Daughter]

Hi, my mother built a house 5 years ago and put up $200k and my nana put in the other $200k and the 4x2 house was split down the middle so they each have their own self contained "units". The house is in my mother's name only and there is no mortgage.

The house would be valued at about $400k and the arrangement was that when my nana passed away, she would leave her investment to be split $100k to my mum and the other $100k to her other daughter. My mum and her sister then had a discussion that the sister would receive her inheritance entitlement as rent instalments that my mum would receive by renting my nanas side of the house out. This was a verbal agreement only and given that my Aunty is in her early 60's I have raised the issue with my mum that my Aunty wouldn't receive her full inheritance in her life time and then her children would be entitled to the remainder of the $100k still owing as beneficiaries to my aunt's deceased estate.

Could they then force my mum to sell her house to pay the remaining balance? Is there any way of legally setting up an agreement that my Aunty agrees to saying that the balance of the inheritance gets paid from my mums estate when she passes and that while she is living they can only receive the inheritance in instalments?

I doubt this but I can't come up with any other solutions other than my mum taking out a $100k mortgage to pay out my Aunty but my mum is nearly ready to retire and is not prepared to do this.

Can anyone help with this predicament? Many thanks in advance for any suggestions!

 

[Tracy B]

Hi Worried Daughter,

First, your mother and your aunt should have the instalments arrangement recorded in writing.

Second, your aunt can leave her share to her children through a will, stating clearly in the will that their shares will be received in [monthly] instalments of $X until the remainder of the $Y amount has been paid off.

I believe it may be possible if it is clearly expressed in the will. Basically, your aunt can leave anything (belonging to her) in any way she wishes, as long as it is clearly expressed in a valid will. Talk with a wills and probate specialist about this though.

 

[Worried Daughter]

Hi Worried Daughter,

First, your mother and your aunt should have the instalments arrangement recorded in writing.

Second, your aunt can leave her share to her children through a will, stating clearly in the will that their shares will be received in [monthly] instalments of $X until the remainder of the $Y amount has been paid off.

I believe it may be possible if it is clearly expressed in the will. Basically, your aunt can leave anything (belonging to her) in any way she wishes, as long as it is clearly expressed in a valid will. Talk with a wills and probate specialist about this though.

Thanks Tracy for your response. I had another thought last night that I also need clarification on and was wondering if you could help? Just because my nana put money into the house being built, if the title deeds are in my mothers name only, can my nana even legally leave her "interest" in the form of $100k to my aunt seeing as though the house is my mothers?

 

[Tracy B]

Hi Worried Daughter,

It is a tricky area and you're best to speak with a property lawyer about this. This is because, although your mother legally owns the property, your nana, by contributing to the purchase price, may have a resulting trust in her favour. This means, your nana gave money on trust to your mother and your mother purchased the property on trust for herself and your nana as beneficiaries in the property.

However, as this was money given by a mother to her child (parent/child relationship), there is a presumption of advancement that overrides the presumption of resulting trust. This means that given that particular parent/child relationship, the law presumes, in this case, that the money given by your nana was in fact a gift and the property bought with this money was meant to be beneficially owned by your mother only.

You can rebut these presumptions by introducing evidence to the contrary. Example: a written agreement between your nana and mother stating that 50% of the property is your nana's beneficially.

You're best to speak with a property lawyer because the position of these presumptions may have changed, or there may be carve outs, exceptions or rebuttals to the presumption of advancement.

 

[Worried Daughter]

Thanks so much for taking the time to answer Tracy