Tennant in Common - Problems with Inheritance Tax?

Robert_Sterling

davelewis wrote:

If the home is owned as "Tenants in Common" then the whole property passes to the surviving partner. The deceased partner cannot leave it to anybody in the will because technically the property is owned by a trust of which the partners are the beneficiaries. After the death of the first person the remaining partner is the beneficiary and can leave it to somebody in a will.

N.B. A "Tenants in Common" property cannot be passed on in a will.

I think you have this the wrong way round. I am currently doing the Legal Practice Course and worked for the Land Registry for 6 years. In my experience;

Joint Tenancy - suvivorship - property cannot be passed on in a will.
Tenancy in Common - property can be passed on in a will - no suvivorship.

Please do let me know if i am wrong - if so i had better go back to the law books!!!

You are 100% correct.
I did mix it up in my post.
However I did get it right this week when I sent in my RX1 to the Land Registry after changing ownership from Joint Tenants to Tenants in Common.

Tiggs_2

elliebean wrote:

I can only think that the person at the Probate office misunderstood you

correct - i arrange this for clients all the time.

djohn2002uk

Margaret, don’t you remember the phrase “cradle to grave”? That was a promise made many years ago I know, but if times have changed and there is a growing elderly population, that shouldn’t be a reason for reneging on promises. If more money is needed, then the money paid in over these years should have been invested in the same way that ordinary people have to do it, along with some other form of extra taxation. We seem to be living in an affluent period now and have been for many years, yet the cry is always to pay less taxes. And each government avoids them because they are vote losers.
From Maggies day it was always, let’s cut taxes and give people more in their pocket (and I have personal experience of the way that con was perpetrated so that huge expense was removed from central government and shifted to county councils so that tax went down and poll tax/council tax went up) along with being encouraged to save. Well what was that for? So that it could be taken from you later.
But anyway, I did save, and worked hard and long to be able to do so, urged on first by Maggie and even after they started charging for care I was reassured by the opposition at the time opposing it and promising to remove it when they came to power. Well I’m still waiting.
And another result of my hard work and saving is that I can claim nothing whereas another labour promise was that if you saved it wouldn’t make any difference to any allowances/benefits. Another promise forgotten.
I don’t for one minute begrudge you your new boiler, in fact I think the Warm Front scheme is wonderful, although my one gripe about it is that it seems a tighter rein should be kept on the way it is administered, then more people might benefit. But I need a new boiler too, but can I get one free or even subsidised? Not on your nelly, because I saved instead of spending on foreign holidays and new cars etc.
I/we are in the fortunate position at the moment where we are both fit and well, but a lot of people are not so fortunate and I feel they should be looked after even if it means I have to pay a bit more tax, (there but for the grace of God go I)
Who knows what is around the corner, and although I have deprived myself and family of some of the luxuries in life over the years, I now find that someone else is waiting to deprive my family of the benefits I strove for.
We could go on and on as to where the money comes from, and Afghanistan and Iraq come to mind, but I’m feeling that this is deviating from the thread so I’ll stop here.

margaretclare

I am well aware of the phrase 'we will look after you from cradle to grave' and IMHO this is one of the most damaging phrase uttered by any politician desperate to get into power. If anyone really believe that this would happen then more fool them. This phrase has been damaging to one of our national characteristics - sturdy self-reliance and independence. I have never thought that anyone would look after me from 'cradle to grave', I wouldn't want them to.

I haven't got time to reply with a long diatribe now because we're away for the weekend and DH is wondering why I'm sitting here instead of getting showered and dressed and on the road.

Margaret

Tiggs_2

sloughflint wrote:

But on second death within a couple, if the whole value of a house has to be taken into account, £285k allowance wouldn't go far with current house prices.So without doing what OP has suggested, people would start paying IHT, wouldn't they?

yes - but in very small numbers at the moment. The average dead person is a little old lady with £10.22 in their pocket - not a married couple in a £500k house.

IHT doesnt raise huge amounts and doesnt tax lots of people - its just the media love to jump on it because its emotive.

If everyone affected just got on and did some planning the revenue raised would prob halve over night...........but instead they prefer to sign the Daily Express's BAN IHT campaign!

Tiggs_2

sloughflint wrote:

Would the same people signing the Deed of Variation also need to sign the Discretionary Trust?

the people needed to give the OK to the DOV may not be the same as those acting as trustees of the DWT...or they may be, two different roles though.

if you get yourself a decent FA or solicitor all these points will be explained - and make sure they are. I would need AT LEAST 1hr with a client covering the implications of the DOV and more importantly the Will Trust going forward before i felt them ready to proceed.

Mrs_pbradley936

Yes you are right and as people begin to realise that Inheritance Tax is hitting more and more of us and not just “the rich” all because the nil rate band is not rising with house price inflation they will plan.

I know that because I was on a thread a week or two ago with Tiggs and I have finally got my husband to change the way our house is owned. Previously my husband had the attitude “The kids will have to make do with what is left, I am not going to pay the tax for them”. He had that attitude because when we took advice before someone tried to sell us some sort of policy we would have had to buy!

home_alone

Tiggs wrote:

yes - but in very small numbers at the moment. The average dead person is a little old lady with £10.22 in their pocket - not a married couple in a £500k house.

IHT doesnt raise huge amounts and doesnt tax lots of people - its just the media love to jump on it because its emotive.

If everyone affected just got on and did some planning the revenue raised would prob halve over night...........but instead they prefer to sign the Daily Express's BAN IHT campaign!

On last nights TV they said that 27 billion is raised through IHT a huge amount in my book.

Why people "jump on the ban IHT campaign" is more and more of them are being swept up in IHT even my kids are getting close to the mark and they live in average houses..

gary

elliebean_2

Just rereading this thread making sure I haven't missed anything.
Presumably the surviving spouse is borrowing the assets from the Trust ( deceased spouse's 50% share) completely for free in order to stay in his/her home?

That's right. In theory the Trustees could charge interest on assets borrowed from the Trust, but in practice it doesn't usually happen as that brings
other complications with it like the Trust having to pay income tax.

margaretclare

djohn2002uk wrote:

Margaret, don’t you remember the phrase “cradle to grave”? That was a promise made many years ago I know, but if times have changed and there is a growing elderly population, that shouldn’t be a reason for reneging on promises.

I do remember that 'promise' and I commented on it before we went away for the weekend. If anyone believes any politician's 'promise' then the bigger fools them.

In addition, it must be remembered that 'the elderly' who could no longer look after themselves at home were always taken care of at no cost to themselves, usually in a workhouse infirmary. In the 1950s these workhouse infirmaries had morphed into 'geriatric hospitals', had been repainted but otherwise little altered. I recall my grandfather's bro-in-law ended his days in one of these, the old-fashioned hospital-type bed like you see in old films, and the old men sitting in chairs beside their beds. Neither geriatric hospitals nor convalescent homes now exist, and yet they did, 50 years ago, at no cost to anyone. However, when someone makes the decision that all these places are uneconomic, that spending your last days sitting in rows between your beds is demeaning, and it's better to privatise the whole lot so that the older people have a nicely-furnished single en-suite room, it follows that the costs are going to escalate and the private owners want to make money out of it. Which politician(s) made those decisions - I wouldn't like to say, they were all as bad as one another.

If more money is needed, then the money paid in over these years should have been invested in the same way that ordinary people have to do it, along with some other form of extra taxation.

But that was never the plan. It was always envisaged that money paid in would be paying for the here-and-now, in other words when I was paying tax and NI between 1952 and 1995 it 'insured' me against unemployment, sickness and old age, but it really was paying for the people who were unemployed, ill or old in those same years!

But anyway, I did save, and worked hard and long to be able to do so, urged on first by Maggie and even after they started charging for care I was reassured by the opposition at the time opposing it and promising to remove it when they came to power. Well I’m still waiting.
And another result of my hard work and saving is that I can claim nothing whereas another labour promise was that if you saved it wouldn’t make any difference to any allowances/benefits. Another promise forgotten.

I don't understand what it is you'd like to happen.

I have been pretty fortunate. With a sick husband between 1976 and 1992 I could have been a lot worse off. I'm jolly glad I paid full NI contributions and paid into the NHS pension scheme. Looking back, I could have done a lot better....but I have all I need, so what is there to whinge about? I worked darned hard and the 'reward' was redundancy from an NHS job coincidental with widowhood when I still had a mortgage to pay. If anyone should feel badly-done to, I should - but I don't. It was hard for a few years but I got over it and I moved on. I don't keep harking back to this politician or that, what he or she said or did.

I don’t for one minute begrudge you your new boiler, in fact I think the Warm Front scheme is wonderful, although my one gripe about it is that it seems a tighter rein should be kept on the way it is administered, then more people might benefit. But I need a new boiler too, but can I get one free or even subsidised? Not on your nelly, because I saved instead of spending on foreign holidays and new cars etc.

Foreign holidays and new cars? You must be kidding! Yes, I had new cars when I needed a car for work, at first on subsidised loans from work and then on high-interest. Foreign holidays? The first one I ever had was a day trip to Calais in February 1998, and I've had more foreign holidays in the following years than I ever did while I was working. The car that we have now is 'M' reg, it will last until it falls over - it's good for another year and then we'll reassess.

I/we are in the fortunate position at the moment where we are both fit and well, but a lot of people are not so fortunate and I feel they should be looked after even if it means I have to pay a bit more tax, (there but for the grace of God go I)

I am quite willing that 'those who are not so fortunate' should be looked after - that's the price of living in a civilised society. I'm not too keen on paying any more tax. The whole point of this particular thread, however, is that people are trying to minimise the tax they may have to pay in the future, and there are legitimate ways to do this. What I WOULD object to, though, is the idea that all older people who are sitting on a valuable asset - a house - should object to realising the value of that asset to pay for any care they may need, because they think I should pay more tax to fund their care! If you have a house and you can't live in it any longer for whatever reason, then it becomes simply another asset, bricks and mortar, it's no longer of any use to you. As has been pointed out already in this thread, no one can be forced to sell their house, it simply means that a charge is placed against it, a bit like another mortgage, which will be paid off eventually when the person dies.

Who knows what is around the corner, and although I have deprived myself and family of some of the luxuries in life over the years, I now find that someone else is waiting to deprive my family of the benefits I strove for.

And who is waiting to do that? What 'benefits' did you strive for that someone else wants to deprive you of? I don't understand this argument.

We visited some of DH's family yesterday. His son is doing well, recently bought an executive-style 5-bed home, 2 daughters have gone to private school since age 4. His stepdaughter - yes, you're right no one knows what's round the corner. Her 3rd husband was diagnosed with MS 4 days after their wedding 5 years ago. She's a highly-qualified nurse practitioner, a bit like I used to be, she works and he doesn't. None of them, not his family nor mine, need anything at all from us, with the possible exception of my homeless granddaughter who was unemployed for 6 months and only just started a new job - I wish there was more help for the like of her, because I admire her so much for her feistiness, her lack of self-pity and her unwillingness to be defeated.

No one knows what's around the corner...well, that certainly applied to my younger daughter. She didn't expect to die suddenly, without warning, just 6 weeks after she'd started her 'dream job' working for the County Council, doing what she wanted to do, involved with the countryside which she loved so passionately. Her widower has benefited from all her hard work and saving, her pension fund etc, her mortgage now paid off - but guess what? He'd a darned sight sooner have had her with him, to grow old together, than to 'benefit' from decisions and choices that she made, but alone!

We could go on and on as to where the money comes from, and Afghanistan and Iraq come to mind, but I’m feeling that this is deviating from the thread so I’ll stop here.

Well, I could agree with you on much that the money goes on which is wasted and foreign wars on people who haven't threatened us are all part of it. I guess we will never agree. And I don't feel bad about the WarmFront grant. As I said, we were perfectly prepared to pay for it ourselves the same as we paid for the new roof earlier this year. It just happens that we've been offered it on a plate as it were, and I'm not going to turn it down. Because there was no help at all for me at the time when I needed in most, in the spring of 1992, so I don't feel guilty about it now.

Margaret