My adult stepdaughter is in bankrupt administration for a $20,000 debt which has now increased to a possible $80,000 with discharge up to 2034, due to not disclosing her 45% of the legal title (Tenants in Common) asset in my home which my late husband bequeathed to us in his Will to ensure I and his two adult daughters, who I have a wonderful relationship with, receive an inheritance on my death or when I choose to sell and release my share to them. My share is 10%. I understand that she cannot yet exercise her legal title to my home as I have sole life occupancy and the right to use my home as I wish; to rent or to sell and use the proceeds to buy another and the Will states that both stepdaughters are to agree to my wishes.
Excerpt from Will:
4. I give all of the remainder of my share in the freehold property [address] aforesaid to my daughters [name] and [name] as shall survive me and if more than one in equal share subject to the following:
â€¢ I give to [my wife] for as long as she wishes the right for her only to occupy or rent out such property.
â€¢ If such property is rented out then [my wife] shall be entitled to all of the rental income for her own use and benefit.
â€¢ [My wife] shall pay all rates and outgoings and insurance and repairs and maintenance for such property from her own funds.
â€¢ [My wife] shall keep such property insured and in good repair and maintenance and on the ale of such property my wife or her estate shall be reimbursed all expenses for the rates and insurance and repair and maintenance plus CPI from the sale proceeds prior to the final distribution of the net proceeds of sale.
â€¢ [My wifeâ€™s] right of occupation and renting out such property is personal and exclusive to her only.
â€¢ If [my wife] wishes to sell the said property then my said daughters shall agree and all or part of my said daughters share of the net proceeds of sale shall if required by [my wife] be applied to the purchase of another property for the benefit of [my wife] on the same terms as stated in clause 4 of this my Will to be purchased by my said daughters and [my wife] as tenants in common in shares according to their respective contributions to the purchase for such property.
â€¢ It is my wish that [my wife] shall be allowed the full and exclusive use of my share of [property address] aforesaid or any other property as provided for herein and on the terms stated herein and I expressly direct that my said daughters shall at all time co-operate fully with [my wife] in all matters concerning such property.
My stepdaughter now advises me that she wishes to get out of bankruptcy by using her 45% share to get an Equity loan, thereby paying back the creditors and releasing her from Bankruptcy. I do not wish for my home to be mortgaged and my other stepdaughter and me to be guarantors for her in the event that she defaults on her loan and we are left to find the money, which we do not have, thereby being forced to sell my home to pay off her Equity loan.
QUESTION: Would an Equity loan (mortgage) not also allow me to sell and purchase another home with the proceeds of sale until she has paid out her Equity loan?
QUESTION: Can she force me to agree to her taking out an Equity loan for her 45% share on my home? Her bullying boyfriend advises that this can become a civil matter for the courts to dismiss the terms of her late fatherâ€™s Will. Surely this could not be the case and they could do this??
Her only other option is to remain in bankruptcy? I understand that the Trustee in bankruptcy takes the place of my stepdaughter by managing her 45% right (that comes into effect after my life occupancy ends) and can sell this to another buyer. If the Trustee does sell this share, that buyer then takes the place of my stepdaughter.
QUESTION: Would the buyer have exactly the same rights and responsibilities as my stepdaughter would have (as stated in her fatherâ€™s Will, had she not become bankrupt)?.
I also understand that there is a difference between realising the inheritance LEGALLY and realising it PHYSICALLY. That my stepdaughter (and therefore, the trustee) cannot realise the 45% share physically (i.e. they cannot sell the house and get 45% of the proceeds), even though they have already realised the shares legally (at distribution of the Will). What they have is a FUTURE RIGHT. They can sell this â€œfuture rightâ€ so that another buyer then has the future right, her 45% â€œshare in remainderâ€ (but who would be interested in buying it, due to the terms of the Will?) â€¦ and then, if the cost of this is higher than her debt, the bankruptcy will end, my stepdaughter's debt will be discharged and any extra proceeds (less costs for the trustee and expenses for the transfer) will be returned to my stepdaughter.
If/when I wish to sell my home, I understand that I will need to formally contact the Trustee (or another buyer?) to let them know.
QUESTION: Will I be able to use the proceeds of the sale to purchase another home?
I look forward to your welcome advice. Sorry about the long-winded message. Much gratitude.