IHT, NRB, RNRB, Unmarried & Property Title "Owned Equally Between Them Or The Survivor Of".

TojoRalph

We are belatedly doing some estate planning, which will ultimately require professional help in the form of a Solicitor. However in the interim, I want to try and understand the subject matter a little better before being seeking professional advice. As a result I am reading up. So the situation is as follows. We have been living as a couple a very long time, our property is in joint names with the title deeds stating, "owned equally between them and the survivor of them" and monies are disproportionately in my name. With wills not yet drafted and in the absence of a marriage or civil partnership, I am trying to understand the implications of one of us dying as things are. First off, with the clause in the title deeds stating "survivor of", I understand that clause trumps anything that a will might say? Thus with the property not passing to a wife/husband/child, Etc, the £175K RNRB would not apply? Therefore the only IHT allowance available would be the £325K?

However, as I understand it, were we married or civil partners with mirror wills naming each other as sole beneficiaries, on the death of either party, all monies and the property would pass to the surviving party, that party would inherit the others IHT and RNRB allowance and that surviving party would then at the time of their death, have a £650 (2 x £325) IHT allowance and a £350 (2 x £175K) RNRB allowance? That's assuming we do not do Trust Wills, which I suspect we would do. If that is correct then I fully appreciate the IHT benefit of being married/civil partners. Thanks.

Jeremy535897

From a tax point of view, it would make sense to marry or enter into a civil partnership. If A leaves £325,000 to B, and they are not married or in a civil partnership, when B dies there is only one nil rate band of £325,000 to pass on to children. There are also problems with the RNRB. It is reported that this is why Ken Dodd married on his deathbed.

Andy_L

TojoRalph said:

We are belatedly doing some estate planning, which will ultimately require professional help in the form of a Solicitor. However in the interim, I want to try and understand the subject matter a little better before being seeking professional advice. As a result I am reading up. So the situation is as follows. We have been living as a couple a very long time, our property is in joint names with the title deeds stating, "owned equally between them and the survivor of them" and monies are disproportionately in my name. With wills not yet drafted and in the absence of a marriage or civil partnership, I am trying to understand the implications of one of us dying as things are. First off, with the clause in the title deeds stating "survivor of", I understand that clause trumps anything that a will might say? Thus with the property not passing to a wife/husband/child, Etc, the £175K RNRB would not apply? Therefore the only IHT allowance available would be the £325K?

However, as I understand it, were we married or civil partners with mirror wills naming each other as sole beneficiaries, on the death of either party, all monies and the property would pass to the surviving party, that party would inherit the others IHT and RNRB allowance and that surviving party would then at the time of their death, have a £650 (2 x £325) IHT allowance and a £350 (2 x £175K) RNRB allowance? That's assuming we do not do Trust Wills, which I suspect we would do. If that is correct then I fully appreciate the IHT benefit of being married/civil partners. Thanks.

If you have any assists other than the house then they will not pass to your partner. They will follow the rules of intestacy so: children, then parents, then siblings, then (i think) grandparents, aunts/uncles and finally the tax man (or, IIRC, Prince Charles, Duke of Cornwall, if you live in Cornwall.

TojoRalph

Jeremy535897 said:

From a tax point of view, it would make sense to marry or enter into a civil partnership. If A leaves £325,000 to B, and they are not married or in a civil partnership, when B dies there is only one nil rate band of £325,000 to pass on to children. There are also problems with the RNRB. It is reported that this is why Ken Dodd married on his deathbed.

Yes, that's how it appears to me too. However even if we go the civil partner route, we like the idea of a will trust to ring fence the deceased parties share for the benefit of children. As I understand things, if we did that, even as civil partners, from an estate valuation perspective, it would not be an assumed straight split of combined wealth, rather it would be based on what monies were in what names at time of death. So some additional moving around of funds would be required to ensure an even split on death of either. Thanks.

TojoRalph

Andy_L said:

TojoRalph said:

We are belatedly doing some estate planning, which will ultimately require professional help in the form of a Solicitor. However in the interim, I want to try and understand the subject matter a little better before being seeking professional advice. As a result I am reading up. So the situation is as follows. We have been living as a couple a very long time, our property is in joint names with the title deeds stating, "owned equally between them and the survivor of them" and monies are disproportionately in my name. With wills not yet drafted and in the absence of a marriage or civil partnership, I am trying to understand the implications of one of us dying as things are. First off, with the clause in the title deeds stating "survivor of", I understand that clause trumps anything that a will might say? Thus with the property not passing to a wife/husband/child, Etc, the £175K RNRB would not apply? Therefore the only IHT allowance available would be the £325K?

However, as I understand it, were we married or civil partners with mirror wills naming each other as sole beneficiaries, on the death of either party, all monies and the property would pass to the surviving party, that party would inherit the others IHT and RNRB allowance and that surviving party would then at the time of their death, have a £650 (2 x £325) IHT allowance and a £350 (2 x £175K) RNRB allowance? That's assuming we do not do Trust Wills, which I suspect we would do. If that is correct then I fully appreciate the IHT benefit of being married/civil partners. Thanks.

If you have any assists other than the house then they will not pass to your partner. They will follow the rules of intestacy so: children, then parents, then siblings, then (i think) grandparents, aunts/uncles and finally the tax man (or, IIRC, Prince Charles, Duke of Cornwall, if you live in Cornwall.

Understood and being unmarried the property share would not get the benefit of the RNRB allowance. So the estate value would start with half the value of the property. Based on current values, if either parties share passed to spouse, child, Etc, the £175K RNRB allowance would make a big difference to the IHT value. Thanks.

Jeremy535897

TojoRalph said:

Jeremy535897 said:

From a tax point of view, it would make sense to marry or enter into a civil partnership. If A leaves £325,000 to B, and they are not married or in a civil partnership, when B dies there is only one nil rate band of £325,000 to pass on to children. There are also problems with the RNRB. It is reported that this is why Ken Dodd married on his deathbed.

Yes, that's how it appears to me too. However even if we go the civil partner route, we like the idea of a will trust to ring fence the deceased parties share for the benefit of children. As I understand things, if we did that, even as civil partners, from an estate valuation perspective, it would not be an assumed straight split of combined wealth, rather it would be based on what monies were in what names at time of death. So some additional moving around of funds would be required to ensure an even split on death of either. Thanks.

Yes, and only by doing the civil partner route will you be able to move assets between yourselves without inheritance tax and/or capital gains tax consequences regarding the transfers themselves (possibly also stamp duty).

Mojisola

TojoRalph said:

our property is in joint names with the title deeds stating, "owned equally between them and the survivor of them" and monies are disproportionately in my name. With wills not yet drafted and in the absence of a marriage or civil partnership, I am trying to understand the implications of one of us dying as things are. First off, with the clause in the title deeds stating "survivor of", I understand that clause trumps anything that a will might say?

It sounds as if you are joint owners which means that you both own all the property and, after the death of the first partner, the other owns the whole house.

If you want to leave a share of the house to someone other than the joint owner, you will have to become 'tenants in common'.

If your house is not registered with the Land Registry, it's worth doing now rather than leaving it for executors to deal with.