Helping family with accommodation needs is a regular occurrence: a child entering the property market, an elderly parent downsizing to a granny flat.
Litigation as a result, also is a regular occurrence.
Helping a child by providing funds to help them enter the property market, comes with risk if the status of the funds is not made clear … are the funds a gift, a loan or for a share or ownership in the property? This type of risk can be minimised if the agreement is evidenced and set out in a well drafted document.
Planning for contingencies
Helping an elderly parent by allowing a granny flat to be built on your property using your parent’s funds (the granny flat funds), comes with the risk of you having to come up with funds urgently when “Mum” or “Dad” needs to be accommodated in an aged care facility. A written agreement should help clarify the status of the funds used to build the granny flat and may provide some clarity about the rights and obligations of the parties, but it is not the solution to the urgent need for cash. More important than a written agreement is some good planning, to make sure sufficient cash is readily available at short notice to meet your mother or father’s unexpected but necessary health care needs.
Being forced to sell your “family home” to repay the granny flat funds can be an unintended consequence of your good intentions.
If you are considering helping family with accommodation needs and you think you may benefit from my input, I’m available to be your sounding board. Please don’t hesitate to call or email me.