Intestacy, unmarried and minor child

SVaz

Unmarried couple,  one young child, no wills. Man has 2 other children under 16. 
Mortgaged property held as Tenants in common 50/50.
Life cover would pay off well over half the mortgage as they both have death in service cover that their partner is beneficiary to. 
If one of them died then their parents would have to apply for administration rather than the partner.  

This pertains to my Daughter and her partner and if she was to die - I’m trying to find out what would happen. 

I’m encouraging them to make wills / get married! 

Under intestacy , my young Grandson would then inherit half the house so presumably I could give his Dad a life interest in it BUT, could I use a Deed of variation to give him 2/3rds ownership?  It would be fairer because there are 3 children to consider when it comes to eventually inheriting the house.    Can a minor even own property or would I be a trustee for him?  

What I don’t know is whether there are tax ( or other practical) implications to this scenario, other than he could marry later and his new wife gets it. 

I’m assuming her pension death payment ( £150k ish) would be outside her estate as it would go to her partner?  Half the house is worth around £180k so under the IHT limit. 

Blended families are so complicated!

RAS

As a starting point, only those who will be disadvantaged by a deed of variation can do one. And it cannot be done by a minor or on behalf of a minor.

If the beneficiaries are under age, then normally their other parent would administer on their behalf, not a grandparent.

A lot here depends on who is the nominee for any death in service payment. 

Spendless

What happens if your Daughter's partner dies? He's the one with 3 biological kids. How would that leave your daughter re the property? 

SVaz

An unmarried partner cannot administer the estate, so in my DD’s case it would be me and my Wife,  we would of course allow him to use her teachers pension as he saw fit and he is named beneficiary for her death in service payout. 

So a deed of variation wouldn’t be possible.
I do think it would be detrimental for my Grandson to be a half owner of the house, even if he gifted it to his Dad at 18 it could potentially cause problems in the future re CGT / mortgages / Uni fees etc. 

I think they need to become joint owners rather than TiC as a starter. 

My Daughter would indeed be stuffed re the house if her partner died,  especially with his parents administering his estate! 

  She would effectively be paying off the mortgage with his life insurance without having full ownership given that the 3 kids would own half the house.  

pjs493

Depending on what sort of death in service rules are in place for the pension, if your daughter hasn’t named her partner as the beneficiary, the default would be for her biological child to receive it. The child would also likely receive a pension until they finish formal education or reach a particular age eg 23. Conversely, if her partner died his three biological children would share his estate. It will be worth them both checking to ensure they’ve named a beneficiary, otherwise the pension can decide based on the rules it has (eg in an Armed Forces pension the death in service benefit would default to the child(ren) if there is no spouse. 

My husband died while serving in the military and as his spouse his death in service lump sum came to me. I receive a pension for life and our children receive their own pensions until they finish formal education. If we were unmarried and my husband didn’t have a will, under the rules of intestacy everything would have been split evenly between our children and his sibling or one of his parents would have had to apply for letters of administration. I would have been completely cut out except any jointly held assets such as our joint bank accounts. This would have left me in an incredibly difficult situation because I imagine his family would have wanted to keep everything in trust for our children and cut me out completely. 

I’d encourage your daughter to make a Will asap so that her wishes are known, especially if she has no plans to marry her partner. 

SVaz

They do plan to marry but who knows when!
He is named as the beneficiary on her Teacher’s pension death payout of 3x her salary of £50k ,  which would pay off approx 2/3rds of the current mortgage. 

The house is worth £350k ish so marriage at some point is definitely necessary. 

A friend losing his 35 year old Son recently has made me think about how messy this could all be. 

Spendless

SVaz said:

An unmarried partner cannot administer the estate, so in my DD’s case it would be me and my Wife,  we would of course allow him to use her teachers pension as he saw fit and he is named beneficiary for her death in service payout. 

So a deed of variation wouldn’t be possible.
I do think it would be detrimental for my Grandson to be a half owner of the house, even if he gifted it to his Dad at 18 it could potentially cause problems in the future re CGT / mortgages / Uni fees etc. 

I think they need to become joint owners rather than TiC as a starter. 

My Daughter would indeed be stuffed re the house if her partner died,  especially with his parents administering his estate! 

  She would effectively be paying off the mortgage with his life insurance without having full ownership given that the 3 kids would own half the house.  

That was what I was thinking, but wasn't sure if I'd not grasped something. Is there a reason why the house ownership was set up as TIC in the first place rather than JT? I appreciate the issues that come with blended families and wishing to leave something to children of previous relationships who may otherwise lose out, but in this case it's making your daughter vulnerable.

A friend losing his 35 year old Son recently has made me think about how messy this could all be. 

I think you speak to daughter and partner about how this could affect either of them if something was to happen. They either need wills, to put their relationship on a legal footing (marriage/civil partners) or at least change the house to JT so either would automatically own the other half of the house. 

kuratowski

Also, encourage the couple to make lasting powers of attorney.  This can be done by themselves (no need for a solicitor). It will make life a lot easier if one of them became incapacitated for whatever reason.

doodling

Hi,

SVaz said:

An unmarried partner cannot administer the estate, so in my DD’s case it would be me and my Wife,  we would of course allow him to use her teachers pension as he saw fit and he is named beneficiary for her death in service payout. 

So a deed of variation wouldn’t be possible.
I do think it would be detrimental for my Grandson to be a half owner of the house, even if he gifted it to his Dad at 18 it could potentially cause problems in the future re CGT / mortgages / Uni fees etc. 

I think they need to become joint owners rather than TiC as a starter. 

My Daughter would indeed be stuffed re the house if her partner died,  especially with his parents administering his estate! 

  She would effectively be paying off the mortgage with his life insurance without having full ownership given that the 3 kids would own half the house.  

That is not quite right.  If her partner died then his half of the house would go to the three children.  The partners best next move would be to get the house sold with her receiving half the proceeds after repayment of the mortgage and the rest being split equally between the three children.  She then has her share of the proceeds plus her deceased partner's death in service benefits to buy somewhere else.

It is worth checking who the beneficiary of the life cover is - if it is the remaining partner rather than the deceased's estate then they also have that to put towards the new house rather than using it to pay off the mortgage on the existing one (I.e. the partner gets the whole benefit and the children don't see any benefit at all).

Of course all that is rather unfair to the children who only get 1/6 of a house minus 1/6 of a mortgage each whilst the remaining partner potentially gets half house minus half mortgage plus death in service plus (maybe) value of life insurance.  The partners child benefits from that but the other two don't.

SVaz

They didn’t have our Grandson when they bought the house, I think that’s why they went TiC. 

RAS

TIC is often used for blended families.

Parent A leaves their portion to their biological children with life interest to survivor. 
Parent B leaves their portion to their biological children with life interest to survivor.

If there's no will, the children still inherit but the problem is the survivor's not protect by the life interest trust.

OK it also means any shared children could get twice as much as those from first families, but it ensures that all the children get something, as long as it's not eaten away by care fees.

That wouldn't happen with a joint tenancy if the surviving parent remarried and failed to make a will, or disinherited the children from the previous marriage.