Which kind of tenancy for inherited house?

ouraggie

My sister and I inherited my dad’s house back in 2014. His partner will reside there till she dies or goes into a home, as stipulated in dad’s will. We have only recently got around to changing the title deeds from my dad’s name and have discovered that the house was never registered at the Land Registry. We are sorting the first registration now and we need to agree on either joint tenancy or tenancy in common. 

I want us to be JT, which would also avoid probate when she or I die. I intend to leave my 50%/100% of the house to her/her children when i go. She knows this fact (but I suspect she fears I may promise that but then leave it to my partner or to a cats home. Or in theory I guess I could acquire it all, sell it and go on a world cruise with the proceeds).

My sister wants a TIC so she can leave her half to her husband/5 adult kids when she dies. I have explained to her that under a JT they will still eventually get it, though only when I die ( I’m 2 years older than her). I have also explained to her that under a TIC I would lose half a house (to her husband) if she dies first. 

The property is worth approx £150k. It could be another 10 years before we can sell the house, due to the resident partner. Neither I nor my sister are currently in a position to buy the other out.

Any other considerations we may have overlooked? Or other options? 

Keep_pedalling

If you go with a JT and you sister dies first that could cause 3 major issues. 

1. She cannot be sure that her husband and children will eventually get their inheritance as you could leave it all to the cats home, go bankrupt or use it all up in care costs. 

2. Her husband / children get the inheritance when you die but it is subject to unnecessary IHT as none of it can take advantage of spousal exemption. Also If her share of the house exceeds £325k IHT would need to be paid on her death, and even if that is not the case it would lower the amount of transferable NRB her husbands estate would gain again possible adding an IHT bill on his death.

None of this is worth it just to avoid probate, when it won’t even do if you have other investments, such as a S&S ISA, that also require probate.

theoretica

If you register the property as Joint Tenants, either of you can change it to Tenants in Common, without the permission of the other.  This shows the system is written to avoid anyone, like your sister, unwillingly being a joint tenant.  Seems simplest to sell the property - when you can - and then the problem goes away.

getmore4less

Did dad own all the house or just part?

You have not inherited anything if there is a life interest for the partner.

That share is in an IPDI trust

You register as legal owners as trustees of the trust.

If partner was a part owner you can't do this the other owner should be doing this as they are the sole legal owner

Trustees should be TIC with the other owner.
(Probate not needed when they die).

If it's the whole property then you can both register as legal owners and it does not matter if joint or TIC for probate required on first death.

On second death the remaindermen of the trust inherit their beneficial share in the trust and the other beneficial share(if there is one) passes by their will.


Life interest may have IHT issues if they were not married/civil partner.
(Depending on the size of the partners estate.)


Summary your premise you need to be joint tenants to avoid probate is wrong so you need to review without that.
You are trustees.

You also need to review what happens if one of you dies while the property is still in the trust.

Marcon

ouraggie said:

My sister wants a TIC so she can leave her half to her husband/5 adult kids when she dies. I have explained to her that under a JT they will still eventually get it, though only when I die ( I’m 2 years older than her). I have also explained to her that under a TIC I would lose half a house (to her husband) if she dies first. 

You seem to be doing a lot of 'explaining' when she's already decided what she would like to do - and very sensible of her in this uncertain world. You wouldn't be losing half a house to her husband if she dies first - you don't own that half now, so by definition you can't lose it on her death.

Useful info: https://www.thegazette.co.uk/wills-and-probate/content/103797

getmore4less

Marcon said:

ouraggie said:

My sister wants a TIC so she can leave her half to her husband/5 adult kids when she dies. I have explained to her that under a JT they will still eventually get it, though only when I die ( I’m 2 years older than her). I have also explained to her that under a TIC I would lose half a house (to her husband) if she dies first. 

You seem to be doing a lot of 'explaining' when she's already decided what she would like to do - and very sensible of her in this uncertain world. You wouldn't be losing half a house to her husband if she dies first - you don't own that half now, so by definition you can't lose it on her death.

Useful info: https://www.thegazette.co.uk/wills-and-probate/content/103797

It depends on the terms of the will how the trust was set up what happens when a remainderman passes before the life tenant.