Advice needed please re Tenants in common

seven-day-weekend

When my husband and I bought our bungalow in 2015 when we were 65 and 66, we bought it as tenants-in-common, just so that our son could inherit  one half without waiting for both of us to die.  We both made wills leaving him our half in a trust, so that when the first one dies, their share is put in a trust to benefit our son, and then when the second one dies, the trust is wound up and he inherits the entire property. The surviving spouse has the right to live in the property for as long as they wish.

What I am unclear about is this.  Say, for example, one of us has died and then at some later date the surviving spouse has to go into care.  Let's assume the house has to be sold to pay the care bill.  Would our son be expected to sell his half, or would it not be counted in the means test?

At the moment I am 71, my husband is 72, our son is 41.  Neither myself nor my husband have any expectations that we would need care in the forseeable future.  Bungalow probably worth about £210k at today's prices.

Thanks in advance.

blue.peter

According to https://www.peabodysales.co.uk/blog/buy-sell/a-solicitors-guide-to-joint-ownership-of-property/

It is easier to sell when you own the property as tenants in common because the property is held on what is known as a "Trust of Sale" which means that when one of the parties decides to sell, then the property needs to be sold. The proceeds of the sale are split equally between the parties (unless a Trust Deed is in place).

I offer no warranty as to the accuracy of this (it's simply the first result I got from a Google search), but it looks plausible. If correct, it looks as if your son would have no choice but to sell his half. Obviously, he would then pocket half the proceeds.

Having said that, there might be something in your own documentation, completed when you bought the house, that modifies the general case. Unless you feel like sitting down and ploughing through that, your best option would be to consult a solicitor - preferably the one that acted for you when you bought the house.

p00hsticks

blue.peter said:

According to https://www.peabodysales.co.uk/blog/buy-sell/a-solicitors-guide-to-joint-ownership-of-property/

It is easier to sell when you own the property as tenants in common because the property is held on what is known as a "Trust of Sale" which means that when one of the parties decides to sell, then the property needs to be sold. The proceeds of the sale are split equally between the parties (unless a Trust Deed is in place).

If correct, it looks as if your son would have no choice but to sell his half. Obviously, he would then pocket half the proceeds.

Strictly speaking, he does have a choice if he can afford it - he could buy the other half off the surviving parent, raising a mortgage if necessary to do so.

Keep_pedalling

Your sons half would not be included in the assessment, but it would have to be sold at some point to pay your contributions. I’d find he really wants the house then he can buy your half out at market value. 

Probably more important for the situation you describe is that you both have LPAs in place, so that your son can act for you if you lose capacity.

blue.peter

p00hsticks said:

Strictly speaking, he does have a choice if he can afford it - he could buy the other half off the surviving parent, raising a mortgage if necessary to do so.

Yes, fair point. I meant to say exactly this myself, but got carried away and forgot. Thanks for picking it up.

seven-day-weekend

Thank you all for your comments, very helpful. We will advise him to buy the share if he wants to 

Martyn_H

I was recently in the same situation as the OP. I inherited my father's half of the estate years ago. When my mum went into a nursing home, she paid for the care out of her savings until they started running fairly low. (I think the council has to fund the placement in full once a person's savings reach £23250). She then had to get a loan from her council to pay for continuing care on condition that her flat was sold within 6 months. 

The council had to disregard the half share I had in the flat when it was sold.

Savvy_Sue

It may be worth looking closely at what the conditions of the trust say? You'd hope a solicitor would go through all the 'What if?' scenarios beforehand, because there's not just the survivor going into care. 

I'm no expert, but on the Deaths, Funerals and Probate board there's often talk of these things. Another scenario might be that the survivor of you wants to move or downsize, but half the value of the bungalow might not be enough to enable them to do that. 

Just having the right to live there until death isn't necessarily enough ... 

icedms

I used to run groups for older people and each month we would have a guest speaker. At one time we had someone come along to talk about future planning. When discussing tenants in common, he asked the group what they they thought half a house was worth. People responded by telling him what half their house was worth. 
He told the group half a house is worth nothing, without the other half. He said he knew people who had negotiated huge reductions on deferred payments for care when the LA had been faced with the owner of the other half planning to retain ownership with no plans to sell.
I'm not a financial adviser and when future planning your finances related to care and assets its always advisable to talk to an accredited financial adviser with experience of later life issues. 

Brie

Assuming you or your OH makes it into your 90s and your son is in his 60s he could prevent the house being sold by moving in to it.  In that situation all that could be done is a lien put on it so that when he finally sells (when he's in his 90s perhaps) the council could reclaim what is owed for your care.  

Keep_pedalling

icedms said:

I used to run groups for older people and each month we would have a guest speaker. At one time we had someone come along to talk about future planning. When discussing tenants in common, he asked the group what they they thought half a house was worth. People responded by telling him what half their house was worth. 
He told the group half a house is worth nothing, without the other half. He said he knew people who had negotiated huge reductions on deferred payments for care when the LA had been faced with the owner of the other half planning to retain ownership with no plans to sell.
I'm not a financial adviser and when future planning your finances related to care and assets its always advisable to talk to an accredited financial adviser with experience of later life issues. 

Sounds like a seller of dodgy trusts, peddling BS.