Is there a problem when downsizing house after spouse death with tenant in common

SallySunshine

My O.H. and I own our home as tenants in common, we are updating our wills tomorrow.
One question I am puzzling with is, as our only daughter will be named as a tenant in common if one of us dies and therefore will own 50% of the property with the remaining spouse retaining a life interest.
So therefore I know the remaining spouse will definitely want to downsize from the large house and move to a smaller property nearer my daughter, Does the remaining spouse need the consent of my daughter to sell, and if the new property costs less what happens to that remainder?
another query, if the new property actually costs more and that cost is met by the surviving spouse does that impact on my daughter's half.

Yorkshireman99

SallySunshine wrote: »

My O.H. and I own our home as tenants in common, we are updating our wills tomorrow.
One question I am puzzling with is, as our only daughter will be named as a tenant in common if one of us dies and therefore will own 50% of the property with the remaining spouse retaining a life interest.
So therefore I know the remaining spouse will definitely want to downsize from the large house and move to a smaller property nearer my daughter, Does the remaining spouse need the consent of my daughter to sell, and if the new property costs less what happens to that remainder?
another query, if the new property actually costs more and that cost is met by the surviving spouse does that impact on my daughter's half.

That is something your solicitor should advise you on and suggest the alternatives.

Alter_ego

Yes the remaining spouse needs cooperation of the daughter to sell.

Tenants in common can be any percentage they agree on when buying a new house. But proceeds of big house will be 50/50.
Consider that daughter may nor want her 50% transferred to new house.

SallySunshine

Thanks for replies, one sobering thought, in the last year 2 of my acquaintances's daughters both aged in their middle 40's have suddenly passed away, same age as my daughter is now, so, if the unthinkable was to happen, either before or after she is named as tenant in common, should we add our her adult son who is our only grandson as a clause? She has a partner of 17years, but our grandsons natural father (not really in the frame) would then be his next of kin if anything happened to him.
The more I think about this the more complicated it seems to be!

jackyann

I think you should put the problem to the solicitor and ask what they suggest. It may be better to use a will to leave property than to use the 'tenants in common' system.
When your solicitor has advised you, take some time to think it over.

SallySunshine

Our daughter is fully aware of our thoughts and indeed it has prompted her to think of some of the scenarios I have outlined here that may affect her will.
IHT is our concern at the moment and the implications of resident nil band tax and unused nil band tax,
The trouble is what we sort out tomorrow could come into effect next week or in 20 years time, who knows!

Yorkshireman99

SallySunshine wrote: »

Our daughter is fully aware of our thoughts and indeed it has prompted her to think of some of the scenarios I have outlined here that may affect her will.
IHT is our concern at the moment and the implications of resident nil band tax and unused nil band tax,
The trouble is what we sort out tomorrow could come into effect next week or in 20 years time, who knows!

The other thing to remember is that will are not set in stone and should be professionally reviewed every five years. More often if circimstances change.

Keep_pedalling

SallySunshine wrote: »

Thanks for replies, one sobering thought, in the last year 2 of my acquaintances's daughters both aged in their middle 40's have suddenly passed away, same age as my daughter is now, so, if the unthinkable was to happen, either before or after she is named as tenant in common, should we add our her adult son who is our only grandson as a clause? She has a partner of 17years, but our grandsons natural father (not really in the frame) would then be his next of kin if anything happened to him.
The more I think about this the more complicated it seems to be!

Any solicitor worth his or her salt will go through all the what if scenarios with you.

Kynthia

If your daughter owns half the house, when one of you sells it she will need to agree the sale and half the proceeds will be hers. If then one of you wish you buy still using some of her funds she will need to be a joint owner again, possibly qualify for the mortgage if you aren't buying with cash, and if she owns another property you will need to pay higher rate stamp duty.

If she owns half your house and she wants to buy a property to live in, yet isn't selling a main residence within the correct timeframes, then she'll need to pay a much higher rate of stamp duty. If she owns half your property and then she passes away, who will be left it in her Will? Or what if she divorces or needs to claim benefits?

Definitely get advice.

getmore4less

The daughter does not become TIC in the sense they own 1/2 the house like normal TIC would.

The deceased share will be in an interest in possession trust, that's what the life interest does.

The terms of that trust should include maintenance responsibilities and what happens when the life tenant wants/needs to move.

It will be the trustees(which could be the daughter) that need consulting and should be the legal owners.

With the trust for IHT and CGT purposes the beneficial interest in the property lies with the life tenant.

The daughter(in her capacity as daughter) would have no legal or beneficial interest in the asset in the trust till second death or the trust releases them.

if that is not what you want you need to reconsider the life interest.

SallySunshine

Thanks getmoreforless,
That sounds more like what we hoped what making her a tenant in common would be like, nothing until the second death.
Not sure what you mean re CGT purpose?