WHAT IS THE DIFFERENCE BETWEEN RIGHT TO OCCUPY AND LIFE INTEREST?

Right to Occupy

A Right to Occupy a property gives a person the right to stay in the property in accordance with any conditions set out in the Will. For example, a condition may include keeping the property properly maintained. A right to occupy allows the person to continue to reside at the property, but does not give the person the right to sell, rent or any other use for their gain.A right to occupy will cease once the person no longer occupies the property. This can either be by leaving the residence or if they pass away.

Life Interest

A Life Interest provides the person with the right to stay in the property but also gives them the right to sell or lease the property for their own benefit. This is a way of giving the person the right to use the property after your death without giving them actual ownership of the property.

If the person has a life interest in a property, they are able to vacate the premises without the life interest being revoked. A life interest can also have limitations in accordance with the Will. A life interest and also provide terms such as keeping that life interest but the property be sold to purchase another property.

If you are provided with a life interest, you are responsible for maintaining the property and for all outgoings. But then you can also be entitled for any income generated from the property (if any). When the person that has the life interest passes away the life interest ceases and the property can be dealt with in accordance with the deceased person, who provided the life interest’s, Will. If the person receiving the life interest decides not to retain the life interest provided to them, there may be capital gains tax implications, this should be discussed with your accountant.

If you have come across any of these matters of require assistance in relation to an estate, please contact our office on 9707 1155.