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Our Dad passed away but we don't want to follow his Will - Deed of Family Arrangements

signing a will

It is typical for parents to have Wills drafted leaving their assets to their children in equal shares following their passing.

It is often the case that these children agree to change the terms of their parent’s Will so that one sibling receives a particular asset in its entirely and pays the other sibling an agreed sum of money to do so. An increasingly common scenario is when one sibling wishes to purchase from another his or her share of a house that was gifted to them equally in a parent’s will.

In circumstances where there are not enough funds in the estate to allow one sibling to receive the house and the other sibling the equivalent value in cash (and assuming the power to change the distribution of assets in this way is given to the Executor named in the Will), a Deed of Family Arrangement (‘DOFA’) should be entered into.  

What is a Deed of Family Arrangement?

A DOFA is a legal document that alters the distribution in a Will. In the above scenario, the DOFA would be signed by the Executor and both siblings and act to formalise the agreement to the altered distribution of the estate assets. 

How does a Deed of Family Arrangement work?

It is crucial that all parties entering into a DOFA are aged 18 or over and have legal capacity.  A properly drafted DOFA should be prepared by a solicitor for the parties to sign once they have all obtained legal advice as to the consequences to them of signing the DOFA.

What details should a Deed of Family Arrangement contain?

  1. The parties to the agreement (in this case, the executor and both siblings)
  2. The property being purchased by one sibling
  3. The agreed price the purchasing sibling will pay the other sibling and when that amount will be paid
  4. Who is responsible for the payment of legal and other transfer fees, duties and taxes. For example, will these expenses come from the estate or be paid by one or both of the siblings? 

Once signed, the property transfer takes place and the DOFA is usually stamped by RevenueSA before any payable Stamp Duty is paid.

What to consider before entering into a Deed of Family Arrangement

Anyone considering entering into a DOFA should obtain legal advice in a timely manner as to their rights under the estate and how those rights will be altered once the DOFA is entered into. Failure to do so could result in unexpected capital gains tax and stamp duty consequences.

Contact Andersons Solicitors' Wills and Estates team to obtain legal advice on DOFA's. 

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Get in touch with today's blog writer :
Megan Horsell 

Associate in Wills and Estates  and  Commercial Law and Business Law

Please note, this Blog is posted in Adelaide, South Australia by Andersons Solicitors. It relates to South Australian legislation. Andersons Solicitors is a medium sized law firm servicing metropolitan Adelaide and regional South Australia across all areas of law for individuals and businesses.