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  • Informal granny flat arrangements were once common in an earlier less sophisticated era.
  • Today, a parent and child co-habiting with the intermixing of financial and proprietary interests is fraught with difficulties.
  • Careful instructions need to be taken to protect the parent’s security of tenure, retrieval of investment, pension entitlements and integrity of testamentary intentions.

Succession issues, equitable trusts, security of tenure, reduced pension entitlements and liability for capital gains tax – these are some of the threads of the web that can unexpectedly ensnare family members in a granny flat arrangement.

The recent decisions in Daunt v Daunt [2015] VSCA 58 and Hayes v Hayes [2015] QSC 88 are but recent examples of modern granny flat cases in Australia going back at least to Malsbury v Malsbury [1982] 1 NSWLR 226.

In this article the elderly financier or transferor will be referred to as the ‘parent’ and the homeowner as the ‘child’.

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