House in Wifes Name - Are we covered

indy2005

Hi,

Our house is in my wifes name and has been for several years as I needed to refinance my half of the equity.

Although I pay the lions share of the mortgage, my name is not on the deeds, although the house is willed to me.

My concern is that you cant 'will' something which effectively belongs to the bank which has no connection to me legally in terms of the mortgage and deeds.

My wife thinks (should the worst happen, heaven forbid it wont) that the mortgage company will just sit tight waiting for the life insurance to pay out. I think it becomes the banks property...and I have no entitlement to be willed it.

Any advice appreciated.

Regards

i

bryanb

Forgive me, but you don't have half of the equity.
Leaving that aside, the house or what remains of any sale by the lender can be willed to you.
Who's life insurance do you refer to?

indy2005

Hi,

Hi not sure what you mean I don't have half the equity. I don't anymore...!

My wife and I have various life insurance policies, some through work benefits, others taken out privately - as we have children. If something should happen to me (touch wood it won't), my life insurance pays out and the house is already in my wifes name and so she can clear the mortgage and carry on.

The other way round, as I am not listed on the mortgage, I have visions of the house somehow being repossessed as I am not listed on the mortgage/deeds. Although my wife has written a will, most husband and wives share a joint mortgage, but that is not the case for us at the present moment - so am unsure of the legal position. i.e. do we need to do anything else other than a will, or contact the mortgage lender to determine the situation?

Having children, we just want to make sure we both have our house in order (parden the pun)...and don't want to risk losing an only asset because of something we haven't considered.

For example, even if the lender sells it and gives us the remaining equity...we are all still left homeless. i.e. what is really required is to somehow take over the house, pay off the mortgage with any policies...not to have the children kicked out and then be given some money as left over from some repossession and auction off of the property by the lender. Can you tell I am a pessimist?

Regards

i

Senior_Paper_Monitor

The 'bank' (mortgage lender) do not actually 'own' the house - it appears that your wife does 'solely'. The bank have a 'first charge' and that is a different thing.

Anyone with a first charge (or any charge) can, if you are in default of any associated agreement, use the charge to force the sale of the asset, with funds resulting being used to settle the charge(s) on the property.

You are correct that in the event of your wife's death the hosue would not naturally 'come to you' (this is normally achieved by hsuband and wife being on a joint tenancy) but would go to her estate for distribution under her will (or laws of intestacy).

From what I am guessing (in that you are trying to protect family assets from your personal financiual situation) you may not actually want her to leave the property to you, but to your children with your retaining a lifetime benefit. This should be dealt with within a properly structred will/trust.

Similarly, your various insurance options should be structured correctly in terms of ownership and supporting trusts to ensure that your wishes are met and children's interests best protected.

An IFA, experienced broker, professional will writer or solicitor will advise (I would recommend the first two generally as they generally understand insurances better).


As to the in

CLAPTON

It is absolutely OK for your wife to leave you the house in her will.
Obviously the mortgage will have to be paid off but if she has sufficient life insurance then that should not be a problem
There really isn't a problem here.

Senior_Paper_Monitor

Clapton is totally correct - ASSUMING that there aren't some debts waiting to be levied against the property once owned by the OP (which may be the case if you presume to interpret the OP and his reasons for the initial transfer to the wife).

If there are any issues of that nature, careful consideration should be given to the structure of the inheritance (and any insurance funds).

bryanb

indy2005 wrote: »

Hi,

Hi not sure what you mean I don't have half the equity. I don't anymore...

i

Sorry, I misread "Needed to refinance," thought you said "Need to........"

jamesd

You're somewhat correct in that your wife is not required to will the house to you if she doesn't want to. Her estate will own it after her death. The sort of thing that can happen sometimes is the wife having a later will that leaves it in trust for the children, skipping the spouse.

Your wife owns the property, not the bank. The bank would either wait for insurance to pay out or arrange to have a mortgage with you. Most likely the mortgage if that's what you wanted. The bank can't really force a sale if there's sufficient insurance. They could perhaps do it without insurance if they didn't think you were an acceptable mortgage candidate. You can address that by getting yourself added to the mortgage as well as the deed. You'd still have an affordability check to pass after her death, or her after yours, but this at least means that they would expect you to just carry on paying.

Do you have debts or other trouble that causes you to want to avoid having joint agreements (mortgage, bank accounts etc.) with your wife? That sort of thing could produce a different best solution from the standard ones. I'll assume not for the rest of this reply.

Normally what you'd do is have a joint mortgage and joint ownership of the property registered with the Land Registry - "joint tenants". This way you'd automatically get the property on her death, as she does on yours. First step in changing to this arrangement is a phone call to your mortgage lender to discuss the situation and what their requirements and processes are. Because of their charge and money at risk they will want to be involved, so start with them first. A will doesn't matter in this case, she can't will away the house to anyone else, you will get it. This is the option that provides the greatest protection for you and it's the one that should normally be used. It also provides the smoothest transition whichever of you dies first.

An alternative scheme, also registered with the Land Registry, is "tenants in common". In this one you can specify the percentage interest that each person owns so it's a split ownership. A will is necessary in this case. The will contents matter, if her portion is left to say children instead of you then whoever else gets it could try to force a sale, not really likely if it's children but a child who marries and then divorces would find that their interest in the house would be part of their marital assets to be split in their divorce and that could potentially lead to a forced sale.

Tenants in common was often used for inheritance tax planning before allowances could be transferred between spouses. Still is be if the estate is large enough to exceed both allowances, in which case the will could establish a discretionary trust for the benefit of the children, with a life interest in the property for the surviving spouse that ensures they can continue to live there.

indy2005

Hi,

I am 2 years past a bankruptcy, and drew out my half of the equity to clear some debts, my wife then received the house under the agreement that I could take some equity out. I then went bankrupt anyway.

So now, my fear is not being a good mortgage candidate, and not able to get a mortgage - what would happen in the worst case.

Thanks for taking the time to reply. Advice appreciated.

Regards

i

jamesd

The insurance would solve the problem regardless of your own credit rating, so it's good to have that in place.

Probably not a good idea to go for join mortgage or other joint accounts until the bankruptcy is gone from your credit reports. The joint accounts would get your record linked to hers as a financial associate and cut her chance of getting credit. So long as the will is in place your situation at the moment is OK.

You might want to ask again over in the Bankruptcy & Living With It section because the people there have more experience of the bankruptcy side of the issue.

If you did still want to do it, have a chat with the mortgage lender and see what they suggest. You're right that you're not a good mortgage candidate but there's no harm in finding out their view, which will be shaped by how you've actually been doing with the payments and knowing that the problems that led to the bankruptcy have been resolved by it. I doubt that they would accept joint property ownership without joint mortgage, though.

For them, adding you is making a second person jointly liable for the mortgage, so it's increasing the protection that they get. Doesn't mean that they will accept it, just that it's not a one-sided benefit.

C_Mababejive

Have you ever considered what could happen if your relationship ends?