Voluntary conveyances, often used by parents to transfer property to their children, can be fraught with danger.

By way of illustration, I have developed a case study.

In our scenario, Mrs. Smith is a 55-year-old widow with two children, John, 24 and Sharon, 22.

She owns a $450,000 house. John lives in Mrs. Smith's lower apartment, while Sharon lives in the main house with her. Mrs. Smith's house is in need of repairs.

John expresses an intention to marry in the near future, and he suggests that in addition to the repairs, the lower apartment be renovated to accommodate himself and his future wife.

The repairs and renovations will cost $120,000. Mrs. Smith, with just $10,000 in savings, visits her banker, who says the bank will advance the money if Mrs. Smith mortgages her property. Her children agree to guarantee the mortgage.

As an alternative to the guarantee her banker suggests that Mrs. Smith discuss with her lawyer the prospect of conveying interests in her property to her children, which would put them all in a position to mortgage the property to the bank.

Mrs. Smith expresses some concern that a voluntary conveyance might result in her losing control of her property.

So she reserves a life interest in the property, which she is told will enable her to stay there and maintain control over the property until her death.

Mrs. Smith and her children proceed with the voluntary conveyance and the mortgage. They agree to contribute equally to the mortgage instalments.

Five years later Mrs. Smith's relationship with her children has changed dramatically. John, married with two children, leaves them to live with another woman.

John's wife and children continue to occupy the lower apartment and can only afford to pay nominal rent.

John has become wholly unreliable in respect of his financial obligations. He has failed to properly maintain his children or to pay his agreed portion of the mortgage instalments.

Mrs. Smith is appalled by John's behaviour. Ideally, she would like to rent out the lower apartment at its market rate in order to assist with the mortgage payments. This is not, however, a viable option because she does not want to jeopardise her relationship with her grandchildren or her daughter-in-law.

Sharon, who shares the main house with Mrs. Smith and pays her portion of the mortgage instalments, has formed a relationship with a young man whom Mrs.

Smith knows to be on drugs.

Sharon's boyfriend has taken up residence in Mrs. Smith's home and she must tolerate both himself and his friends, who are also on drugs. Sharon insists that she is entitled to live in the main house with her boyfriend or whomever she likes, notwithstanding Mrs. Smith's life interest, since she also has an interest in the property and is contributing to the mortgage instalments.

She also says that she will no longer contribute to the mortgage instalments if she is forced to leave the property. If that happens, the bank will ultimately foreclose.

In desperation, Mrs. Smith goes back to her lawyer to ask if she can force her children to give her property back to her.

Her lawyer explains that this is not an option unless her children are prepared to sign off on a further deed conveying the property back.

He explains that the only way that Mrs. Smith can take back a measure of control over her life is to force a sale of the property, recoup her share of its equity and then either purchase another smaller property or rent elsewhere.

Mrs. Smith cannot bear the thought of parting with her home of more than 30 years, and she also has her grandchildren to consider.

She faces the tragic reality of having to continue to reside in a home with people whom she has come to detest and also having to continue to work beyond normal retirement age in order to ensure that the mortgage is satisfied.

In an effort to provide for her children, Mrs. Smith has sacrificed her long term happiness and quality of lifestyle. Even retaining a life interest in the property has had little or no practical impact on her situation.

The problems experienced by Mrs. Smith in this case study are far from unique.

The moral of the story is that parents or other property owners ought to make their own financial future and interests a priority however much they love and trust their children.

Attorney Scott Swainson is a member of the Property Department at Appleby Spurling & Kempe. Copies of Mr. Swainson's columns can be obtained on the Appleby Spurling & Kempe web site at www.ask.bm.

This column should not be used as a substitute for professional legal advice.

Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.