Modern relationships are anything but simple. Many people marry and remarry later in life, creating blended families with differing financial circumstances and legacies. You might have a carefully crafted estate plan to protect both your partner and your children. But one often-overlooked trap is how retirement village contracts are structured—especially when a couple makes unequal financial contributions.
Village contracts require couples to enter as joint tenants. That might sound fine, but if one partner contributes more and passes away first, the entire interest—and repayment—automatically passes to the survivor. That might not be what you intended.
Take Harry and Sally as an example.
Sally is contributing $900,000 from the sale of her home. Harry is contributing $100,000. They want to live in a retirement village together—but they also want to make sure Sally’s children don’t miss out.
Here are three common options—each with its pros and cons:
Option 1: Both Harry and Sally on the Lease (Joint Tenants)
Advantages:
- Both Harry and Sally have a right to reside in the unit.
- Operators often prefer this—it’s the most straightforward legal structure.
Disadvantages:
- The lease is held as joint tenants. If Sally passes away first, her share passes automatically to Harry—even if she contributed nine times as much.
- While Sally and Harry could sign a private agreement about the split, it won’t bind the operator. Sally’s estate would need to rely on Harry doing the right thing—or take legal action.
Option 2: Only Sally on the Lease
Advantages:
- Sally retains full legal and financial control over the investment.
- Harry can still live in the unit with the operator’s consent (usually given).
- If Sally passes away, Harry may be offered the right of first refusal to purchase the unit.
Disadvantages:
- The lease ends when Sally leaves or dies.
- Harry would need to find the funds to re-enter—and may have to pay a new entry fee.
Option 3: Have neither Harry or Sally on the lease…(yes, you read correctly…)
Advantages:
- A third party (e.g. Sally’s child or the trustee of a family trust) can contribute funds and be contractually and legally entitled to repayment from the operator.
- Both Harry and Sally can live in the unit for as long as they wish.
- Sally’s contribution is protected, and Harry’s housing is secure.
Disadvantages:
- If Sally dies first, the contributor (e.g. the trust) may bear the risk of Harry not maintaining the unit or paying levies. Clear agreements should be in place.
- This option is less commonly used and not all operators are familiar with it. It may require negotiation.
Our recommendation?
We like the idea of Option 3 if the operator is willing to consider it. It offers the best combination of fairness, protection, and flexibility. If that’s not possible, Option 2 provides strong protection for Sally’s estate, while still allowing Harry to reside in the unit with appropriate planning.
We recently approached an operator on behalf of a couple just like Harry and Sally. Although the operator had not used this approach before, they were open to considering it—and we were able to work with them to explain the concept…we even provided a clause so they could see how it worked in practice.
The takeaway?
Don’t let a one-size-fits-all contract undo your carefully considered estate planning. With the right advice, you can design a retirement village arrangement that respects your relationship and protects your legacy.
Would you like help tailoring this advice to your situation? Let’s talk.