wills and tenants in common

Newly_retired

We were advised that this is the way to go for us, as we both have grown up children from our previous marriages, so we have become tenants-in-common, and made wills accordingly, as described already, thus safeguarding out children's right to inherit eventually and also the spouse's right to live there or sell and move on. Solicitor worded the wills appropriately.

localhero

margaretclare wrote:

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?

It depends what the Will says. If it's written properly it should state that the surviving spouse is able to move. If there is a surplus (ie the spouse downsizes) then it should also state whether they should receive the income from that or not.

Unfortunately not all Wills are written with precision and clarity and so it's wise to choose your Willwriter with care.

Pee

You need to speak to a professional. It sounds like you need a life interest trust to protect the right of the survivor to live there, as long as you are below the IHT threshold, and in which case you will need to hold as Tenants in Common. You can do that bit yourself, but make sure you do, not just think I'll get round to it or the wills won't work.

I suggest you express your concern to the professional as concern that your OH may at 88 be led astray by another man/woman entering into an unwise marriage and this is the reason you need to protect the children. I mean, trying to avoid care home fees is illegal, so you wouldn't want to do that.

margaretclare

Newly_retired wrote: »

We were advised that this is the way to go for us, as we both have grown up children from our previous marriages, so we have become tenants-in-common, and made wills accordingly, as described already, thus safeguarding out children's right to inherit eventually and also the spouse's right to live there or sell and move on. Solicitor worded the wills appropriately.

DH and I are in a similar position - I have one surviving daughter and he has a son and a daughter - but we have gone down the opposite route to yourself.

None of the 3 of them is in the least bit interested in 'inheriting eventually'. There may or may not be anything left for anyone to inherit, if there is, after the second of us goes, it gets turned into cash and divided among the 5 grandchildren.

Pee

margaretclare wrote: »

DH and I are in a similar position - I have one surviving daughter and he has a son and a daughter - but we have gone down the opposite route to yourself.

None of the 3 of them is in the least bit interested in 'inheriting eventually'. There may or may not be anything left for anyone to inherit, if there is, after the second of us goes, it gets turned into cash and divided among the 5 grandchildren.

With a life interest for the survivor and Trustees that you can trust to look after your interests? Brilliant. Saves any IHT issues for the children.

margaretclare

Pee wrote: »

With a life interest for the survivor and Trustees that you can trust to look after your interests? Brilliant. Saves any IHT issues for the children.

Although we're not poor we're nowhere near IHT level so there would not be any IHT issues anyway. Look at my signature and you'll see why.

Life interest for the survivor will not be necessary - as joint tenants, whoever survives inherits the house 100%.

Pee

So the house could be used for care fees, after the death of one of you or if you were both in care.

monkey_spank

Pee wrote:

It sounds like you need a life interest trust to protect the right of the survivor to live there, as long as you are below the IHT threshold

What would the effect be if the couple were above the nil rate band threshold then as you seem to be suggesting there could be IHT issues otherwise?

margaretclare

Pee wrote: »

So the house could be used for care fees, after the death of one of you or if you were both in care.

Well, the value of it certainly could be.

However, it's my understanding that it is still only a minority of people who will end their days in 'care'. Although the way some people talk, it is a foregone conclusion for everybody. Not so.

Therefore, I see no point in blighting my remaining days on this earth by agonising about something that may never happen. DH thinks likewise, only he has more reason than most to celebrate every day that dawns - he nearly died back in October and he was nowhere near being 'in care'! He's still recovering from what happened then and is determined to live life to the full.

LizzieS_2

A few years ago, the only way to avoid IHT and give the surviving spouse a guaranteed lifestyle choice was to use a discretionary trust via tenants in common - this effectively gave the estate (home and cash in bank etc) to the beneficiaries of the will (usually children), but gave the surviving spouse a right to borrow on the home/money. Not looked into it for some time so I don't know if the same still applies. If a discretionary trust was not used, then there was only 2 options:

1) The estate immediately passed to the children (or whoever in the will) upon the first death. The pitfalls of what those beneficiaries did with their own lives and/or wanted to do with the 'income' was part of the risk of that decision. Although any sale of a home would not necessarily be successful due to the beneficial rights of the party already living there.
2) The estate had a clause in giving the remianing spouse a right to remain - in this instance IHT was only prevented until the death of the other party, ie the other parties assets included 'both' estates.


The IHT were changed within the last couple of years to allow IHT limits to pass to the first surviving spouse. For example, if the first spouse had 250K and the second 250K, then the 2nd would be allowed 500K before IHT applied. These rules were made retropectively so some people could possibly benefit from them - OP look into if this applies to you.