Joint Family Homes Act 1964
“THE POOR MAN’S TRUST”
Most often when a person goes to their lawyer looking to have their family home protected from creditors, they are most often advised to transfer their home to a trust structure. This can be a long and costly process and can have the added disadvantage of the homeowner losing ownership and control over their home.
However, although not as well known to the public at large, the Joint Family Homes Act 1964 can give similar protection. Specifically, once a Joint Family Home Application has been registered against the property under the Joint Family Homes Act 1964, the value of the home up to $103,000.00 is then protected from creditors as a family asset.
The Joint Family Homes Act also has other advantages. If just one spouse owns the home, the registration of the home as a Joint Family Home will transfer the property to both spouses as joint tenants. This registration sidesteps the more complex process of spouses requiring Property Sharing Deeds to reach the same result.
To settle a property as a Joint Family Home, five conditions must be satisfied:
- Settlement must be made by the owner of the land.
- The Owner must be able to pay all his or her debts other than debts charged against the property.
- Neither spouse must be the owner or a joint owner of any other Joint Family Home.
- The spouses must within six months of the date of application reside and have their home in a dwellinghouse erected on the land.
- The dwellinghouse and land must be or must within six months of the date of application be used as a home for the spouses of the household.
There are, however, limits to the benefits provided by the Joint Family Homes Act. Most obviously, the protected sum is limited to the relatively small sum of $103,000.00 and does not compare favourably to the full protection offered by a trust structure. Secondly, if the application is not advertised and the owner is adjudicated bankrupt within two years of the date the property was registered as a Joint Family Home, settlement is void against their Assignee. Thirdly, the registration provides no protection from debts charged against the land such as mortgages, although Trusts have this same disadvantage.
However, despite these disadvantages, the Joint Family Homes Act can provide a fast, cheap and real protection over your family home and should not be overlooked by homeowners seeking to protect their family home from creditors.