What is a Deed of Family Agreement?
Sometimes there may be issues inside a family, especially financial ones, that need to be resolved. Any agreement reached can be recorded in a legal document called a Deed of Family Agreement.A common example is where an elderly family member is unable to look after themselves at home any longer. It may be appropriate for them to move into an aged care facility to have all their healthcare needs met. However, their financial situation may not allow them to be able to afford the high Refundable Accommodation Deposit (“the RAD”) required by such facilities often between $500,000.00 to $1,000,000.00. In such circumstances, other family members can lend the money required to pay all or some of the RAD and have the arrangement set out in a Deed of Family Agreement. Alternatively, the Deed may cover other situations such as the sale of an elderly parent’s home to fund the move to the aged care facility and how the children will manage that parent’s financial affairs in the future. It should be noted that while the elderly family member is alive the RAD can be refunded if that person leaves the facility. However, upon their death the RAD will have to be paid to the deceased’s person’s estate. A Deed of Family Agreement will protect the position of any person who has lent money to apply towards the RAD rather than it being distributed according to the Will as such money will be a debt of the estate which must be paid first.
May 2019