Ownership, wills, Property (relationships) Act

[Keys]

Scenario.

The owners of an investment property are Jack Smith and John Smith.

They are brothers and John Smith is older. John's wife, Jane, has a caveat on the property to protect her rights to the property under the Property (relationships) Act.

John Smith passes away.

Without looking at the title (I've written to my solicitor with this question), would anyone care to venture opinions on the possible outcomes of this?

I can see two.

1) John Smith's share in the property is divided as per his will. Jane Smith can claim her equity.
2) The property fully moves to Jack Smith and Jane Smith gets nothing.

Obviously, there will be heated discussion within both families on what should be done.

[gavinc]

I think 1.
It is not Relationship property as it is not the family home hence the caveat to secure Janes interest in the property.
Edit
Whoops - just read again - Jane's caveat is to protect her rights under the property relationship act - So I don't know the answer.

[BigBadWolf]

We will need more information, as it will depend on when exactly the property was purchased in relation to John and Janes relationship, and whether or not Jane contributed towards its upkeep in either time or money (were expenses paid from John and Janes joint bank account?).
Possibly Jane has no rights to the property, and she will get to pay all of Jacks costs in getting the caveat removed, as well as any other financial costs incurred by the restrictions she may have wrongfully placed on the property.

[Keys]

John and Jane were married many years before the property was purchased.

[Meehole]

I say 1.
Unless it can be proved that Johns interest in the property was purchased using funds that had NEVER been introduced into the relationship and the ongoing costs over the years came from an entirely separate account.
Did John use income from the property for the benefit of both him and Jane?
As a female I can honestly say that a judge will look in Janes favour and say she is entitled to a half share because that is just the way things are in NZ, especially within the Court system.
It will be up to Jane as she has put the caveat on the property to prove her case.
This is my opinion based on a similar scenario that has been ongoing for nearly 6 years.

[DazRaz]

Keys, I think it really depends whether the property is jointly owned or tenants in common.

[Meehole]

It doesn't matter in either case, jointly owned then under PRA Johns half will go to his wife and if its tenants in common then Johns half interest will go to his wife.
She is woman and she will win. She was already smart enough to have a caveat put on the property.

[Rosco]

What does his Will say?

- If John has left the half share to his wife in his Will, then that is where it will go.
- If John has left the half share to his brother in his Will, then that is where it will go.
- The Will might give the half share to other parties such as a Trust or children, or a charity.

The brothers could have an exit agreement, whereby if John dies, Jack has to buy out the other half at market value. Further, a life insurance policy could be owned by Jack over John, so that he gets the life insurance money to pay out John's estate.

If you are managing the property you have two options
- Keep all the rental income in a Trust account and don't pay out until you are sure
- Pay out half to Jack and half to the Estate of John. His Estate would then look after this until the Will etc is sorted. - I would think this is the normal option

Ross

[Winston001]

With all due respect this is not difficult.

Jane has caveated the title on the basis that she has an interest in it as matrimonial (relationship) property. The only person who can make a final determination is a Family Court judge.

The caveat comes before death and thus Jane's claim stops the operation of joint title going to the survivor upon death.

Imagine a finance co caveat for a loan to John. Same result.

[Cpt707]

Ross....Setting up a "Tenants-in-Common" with my daughter, who is single with 3 children from previous relationships, for purchase of a residential property, would this present any future problems..? Would appreciate your thoughts...

[mrsaneperson]

John and Jane were married many years before the property was purchased.

But were they still married when he died?
If they weren't then John could give his 1/4 share of the full property to whomever he deemed.Jane would effectively receive her 1/4 share of the full property under the caveat entitlement.

[Nice]

Executor of the will (or someone) needs to have the Caveat proved in court. Its not to do with the Family Court, it is done in a real court. Raising it in court will get it proven or removed, end of story. Predicting the outcome is dependent upon so much detail that isn't included here, but a really interesting question !

[ronniegal]

Apologies for just tagging on to the thread, but my question also relates to the PRA. Husband and wife are equal shareholders in company they created whilst married. They both have wills stating everything they individually own goes to the other spouse on death. Thought that was sufficient, but solicitor is suggesting a relationship property agreement to put shares in joint names, ie. joint ownership. If the company share distribution is changed now to joint ownership, imputations could be lost, so the agreement would cover this. Your views would be appreciated.

[Keys]

I hadn't thought about this thread for a while. The subject matter is still in limbo.