wills and tenants in common

margaretclare

sanfly wrote: »

Thanks for the all the replies, to clarify, the reason we are thinking of doing it is that my father had to go into care with Alzheimer's, where he spent 2 years before he passed on, at the time my mother had a trust will written leaving everything to me and my sister in trust. When our time comes we do not believe we will be liable for IHT, but would like to protect half the bungalow, I understand the comments re getting advice from a professional, its getting the right professional that's the problem, already been burnt once before by a professional financial adviser, once bitten as they say, I suppose an option is to just copy my mums will and change the names,that's if the trust type will is the way to go??

While your Dad was in residential care and your Mum remained living in the bungalow, provided she was over 60, the bungalow would not have been threatened and therefore needed no protection.

In what way were you 'burnt' by a professional IFA?

When you go to professionals for advice and action, this is when it's so important to have thought it all through beforehand and have decided exactly what it is you're hoping to achieve. From what you write I am not sure you have done so, only that you think it might be a good idea to follow on with what your parents did. What was right for them may not be right for you. We all have to make our own choices and decisions in this world.

sanfly

margaretclare wrote: »

While your Dad was in residential care and your Mum remained living in the bungalow, provided she was over 60, the bungalow would not have been threatened and therefore needed no protection.

In what way were you 'burnt' by a professional IFA?

To clarify my mother was advised by her solicitor to go to "tenants in common" and have a new a trust will written so that if she passed on before my father 50% of the property was in mine and my sisters name and could not be sold until the passing of my father.

Took professional advice re a pension several years ago and was advised to transfer a frozen final salary scheme to a private company, for which the advisor eventually took a £4k fee, was the worrse thing we ever did, will not bore you with the detail, tried the ombudsman route and got nowhere, therefore very wary of professional advice.

EdInvestor

margaretclare wrote: »

Also, to me it seems somewhat bizarre to leave half a bungalow to 'the children' (how many?)

You can't chop a property up into halves, quarters, eighths etc.

This is preceisely why the idea works, if the aim is to avoid the property's sale to pay care costs. You cannot sell half a house if the owner of the other half does not agree.Hence the value of the asset is nil and there is no contribution to the cost of care.

EdInvestor

sanfly wrote: »

... tried the ombudsman route and got nowhere...

Surprised to hear that, cases like this are almost always found to be misselling and the new pension gets a top-up in compensation.

sloughflint

margaretclare wrote: »

While your Dad was in residential care and your Mum remained living in the bungalow, provided she was over 60, the bungalow would not have been threatened and therefore needed no protection.

Whilst what you say here is true, the bungalow would not have been protected if the mother had died first and ownership had been as joint tenants.

What sanfly described (and does sound to me like a life interest will) safeguards the whole property should the person not in care die first or for a situation where the surviving spouse needed care after losing their spouse.

sanfly wrote: »

its getting the right professional thats the problem, already been burnt once before by a professional financial adviser, once bitten as they say,

I totally understand where you are coming from. That is exactly how I feel about solicitors working in this field. It is so difficult to know if they are up to the mark. The fact that they claim to specialise in Wills and Probate is not enough in my experience.
That was why I suggested STEP because they are guaranteed to be suitably qualified.

You may be interested in this post for a cheaper alternative:
http://forums.moneysavingexpert.com/showpost.html?p=19489283&postcount=10

margaretclare

EdInvestor wrote: »

This is precisely why the idea works, if the aim is to avoid the property's sale to pay care costs. You cannot sell half a house if the owner of the other half does not agree. Hence the value of the asset is nil and there is no contribution to the cost of care.

Yes, but ultimately, a house either has to be lived in, or the value of it realised i.e. turned into cash. With half belonging to one person and half to another, or half to one person and the second half divided into quarters, what happens if one person wants to realise his/her share and the other people don't - say one person wants to live in the house but the others want their share as cash? Or the right given to a surviving spouse to live there during his/her lifetime and the others are wanting their share?

This is why it seems a bizarre idea to me. Maybe I have seen more than most, of the difficulties that can go on within families, or maybe it's just the way my mind works. I am just glad that no one else has got their eyes on half, or a quarter, of the value of this property, not until both of us is no longer here. We discussed it with them at the time we did equity release in 2003, and none was in the slightest bit interested. But people can change, as I know only too well.

sloughflint

You are talking about a situation where the share of the property is passed directly to the beneficiaries after the first death.

That is not what happens with what is being discussed in this thread.

margaretclare wrote: »

I am just glad that no one else has got their eyes on half, or a quarter, of the value of this property, not until both of us is no longer here.

As I said in post two: the gift is postponed until after the second death.

Here is another explanation taken from the net:

Ownership of the property is converted into joint tenants in common, so that each owner can leave their share of the house in trust for their chosen beneficiaries after the second death, while at the same time providing for the remaining spouse to live in the house for the rest of their life.

EdInvestor

margaretclare wrote: »

With half belonging to one person and half to another, or half to one person and the second half divided into quarters, what happens if one person wants to realise his/her share and the other people don't - say one person wants to live in the house but the others want their share as cash? Or the right given to a surviving spouse to live there during his/her lifetime and the others are wanting their share?

This is the point of the gift in trust: the others will not legally receive their share until the second spouse dies.The trust safeguards the second spouse's rights - leaving the property directly would not do this. Normally the second spouse is the trustee and thus effectively controls the whole property.

margaretclare

OK. Another possibility:

Following the first death, the survivor may not want to live in the house until his/her death. Memories too painful, the place too big and difficult to manage on one's own...

Normally the second spouse is the trustee and thus effectively controls the whole property.

Does this allow for the survivor - the trustee - to sell up and move to somewhere perhaps more convenient and easy-care? The survivor (trustee) can only sell the whole property, not half of it. What happens in that case to the other half, the half that's left to one or more others?

sloughflint

margaretclare wrote: »

Does this allow for the survivor - the trustee - to sell up and move to somewhere perhaps more convenient and easy-care?

Yes.It is flexible enough so that the surviving spouse can move or downsize.

margaretclare wrote: »

What happens in that case to the other half, the half that's left to one or more others?

The surviving spouse I believe is entitled to the interest from the surplus capital after downsizing.

For people wishing for their house to eventually pass to their children, this course of action is far safer for the surviving spouse than gifting a share directly to them after first death.

Not only does it avoid the pitfalls OP outlined in post 1, but it also avoids possible CGT issues for the children when the property is eventually sold after the loss of their second parent.