Where there is a will ...

Robert_Sterling_3

Ownership of property by couples can be in one of two forms.
I think that only one "legal person" can actually own the property.
I think also that in the case of two people owning the same property the property is owned by a Trust which itself a "legal person" and the two people concerned are the joint beneficiaries of that trust in one way or another.
All that is by the by and it is not a matter of fact but only my personal understanding or misunderstanding of the law on this sub subject.

I now come to the nub of this message.

Should you choose to own your property with your partner as Joint Tenants or as Tenants in Common or as JTs or TICs for short.

If you are in danger of paying Inheritance Tax it might be better to own the property as TICs.

Owning as TICs makes it easier to exploit your two separate Nil Rate Band of £263,000 for Inheritance Tax purposes thus shielding, at present, over half a million from the tax man.

If you only use one Nil Rate Band tax allowance it may cost you an additional £100,000 in Inheritance Tax.

On the other hand if you are not married to your partner.

Then perhaps you should consider being Joint Tenants.
This means that the whole value of the property following the death of one partner automatically belongs to the surviving partner.  Hence there is no inheritance to pay on the value of the half of the house which belonged in a sense to the deceased partner.
At present whereas a wife or husband can leave all their money tax free to their spouse this concession is not, as yet, available in the case of partners.


This is a simplification of the law.
The amount at stake is about £100,000 of Inheritance tax.
If it costs you a shilling or two to get it sorted perhaps it is money well spent.

If you think this has got nothing to do with you let me tell you that 40 years ago, when I bought a large 4 bedroom house for £5000,  I thought it had nothing to do with me.  It does now though.

To TIC or not to TIC that is my question

gus

TIC for a married couple is advisable.

Be careful if you are looking to use both nil rate bands, by giving one half of a property to children on the death of the first spouse.

Although you may think your children are wonderful, all sorts of things can happen that may threaten the use of the family home by the surviving spouse.

e.g. son marries - it all goes pear shaped - messy divorce - Mum forced to vacate house so it can be sold.

Robert_Sterling_3

My current plan is:-

TIC the house.
Leave everything to each other in will
Survivor has two years in which they can vary the will
Survivor decides what to do and varies the will.
Nobody can object as the will does not name any other beneficiaries
Survivor can transfer up to the Nil Rate Band at the time tax free to whoever e.g. Children /Grandchildren etc

Many wills , ours included, have a paragraph along the lines of :--

Everything to my wife if she survives me by X months where X can be one or more than one.
This is to avoid the partner ending up with all the assets and only one Nil Rate Band.

[MOVE]This thread could save someone £100,000 !!![/Move]

klondyke

Survivor has two years in which they can vary the will

True as law stands at the moment, but They are constantly threatening to abolish this, so maybe best not to rely on it if you intend living a long time.

Robert_Sterling_3

I think to transfer from Joint Tenancy to Tenants in Common does not cost anything. One person merely has to say to the other person that their joint ownerhsip is now Tenants in Common. It does not even require the agreement of the other party.

Who do they have to say it to.
Who else, if anyone, do they need to tell.
Isn't there something written down somewhere alread saying you are Joint Tenants and does that not need altering.

Robert_Sterling_3

Cheers.

I will now save £100,000 at no cost rather than at a relatvely small cost.