The Law Handbook 2024

Chapter 9.2: Legal issues affecting older people 885 can be cared for at home). It is preferable that all such considerations and agreements be put in writing. If an older person is considering transferring part or all of their home to a family member – or selling their home and giving a family member the money so that they can care for them in the future – it is very important that the older person: • thinks carefully, especially about how it will affect all their relationships; • talks to all those involved; • gets independent, expert advice; • understands the tax and pension implications (e.g. how it will affect the older person’s pension); • understands how the agreement may affect the older person’s ability to choose or enter into an aged-care facility in the future; • protects their interests (e.g. by having a formal agreement in writing); • puts alternatives in place in case things go wrong. For more information about the types of scenarios older people should consider before entering into such an agreement, contact Seniors Rights Victoria (see ‘Contacts’ at the end of this chapter) to access the booklets, Care for your Assets , and Assets for Care: A Guide for Lawyers . The following section discusses some common circumstances where financial abuse can occur, and what older people can do when things go wrong. Purchasing a property with an adult child In this scenario, the older person agrees to sell the family home and put the money from the sale into purchasing a larger property, with room for the older person, their adult child, and their family. Often the arrangement is that the proceeds from the sale of the older person’s property form the bulk of the purchase funds, and the balance is provided by the adult child by way of a mortgage over the property for which the adult child is responsible. The older person may or may not be on the certificate of title of the purchased property. If the older person is on the title, they are usually also a party to the mortgage, even if the adult child is the only one who will be making the repayments. If the arrangement fails, and one or both parties wish to leave the property, it can be difficult for the older person to retrieve their contribution. Issues to consider include: • If the older person is not on the property’s title, it can be difficult for the older person to force the property to be sold, or to retrieve their investment if the arrangement ends. However, there are usually legal remedies for this situation; for example, the law of constructive trusts (see Muschinski v Dodds (1985) 160 CLR 583) and purchase price resulting trust (see Calvery v Green (1984) 155 CLR 242) may apply in such circumstances. • The older person may discover that any borrowings have increased over an agreed or understood limit, thus reducing the equity in the purchased property. • The older person may be on the property’s title but may also be a co-borrower on the mortgage, even though they have agreed that the child will pay the regular payments. If the adult child ceases to make the payments for any reason, the older parent may be required by the bank to pick up payment of the mortgage. Older people on Centrelink age pensions struggle to do this and, if they can’t meet the repayments, the property is then at risk of being sold by the bank. • The older person may be on the property’s title as a joint tenant, but they may have wanted to be a tenant in common in shares reflective of contributions so that, upon their death, their portion of ownership can be shared among all their children. (‘Joint tenants’ means that your share of the property automatically goes to the other title holders on your death and does not form part of your estate. Whereas, ‘tenants in common’ means that your share of the property will form part of your estate on your death, and will be dealt with in accordance with your will or – if you do not have a will – the laws of intestacy.) • The mortgage may be set up to allow for re-draws against the mortgage, and the older person is not always aware of this. This means that they may see the mortgage repayments are being made and feel everything is okay, but in fact money is being withdrawn from the mortgage, which could reduce the older person’s equity in the home. Always seek independent legal advice from a different lawyer to the one engaged by your adult child if you are considering purchasing a property with an adult child, or if you wish to leave such an arrangement.