Tenants in Common – What to do when one tenant dies?

Daz84

Hopefully a simple ‘tenants in common’ query…

In 2020 my parents became ‘tenants in common’ on the property they owned and lived in together. It was a straight forward ‘tenants in common’ agreement – documented by a solicitor, which states they each own 50% of the property, and upon their deaths their 50% ownership should transfer to myself and my siblings (i.e. not each other).

My mother died earlier this year but my farther still lives, and will continue to live, in the property. We have no plans to sell it until after his death.

I’m looking for advice on what, if anything, I need to do now following my mother’s death?

Many thanks in advance.

RAS

You need to read the will.

It may says something about your father having the right to live in the house, with conditions? Those could be until death, might include the right to down size etc. You siblings and your father need to know what they are.

If so, that creates an immediate post death interest trust.

Your dad has 2 years from the date of your mum's death to register the IPDI trust with the HMRC. 

If it doesn't come back here as there's load of complications re first time buyer status, capital gains tax, benefits that you need to understand.

SkyeD

My parents' house was purchased as tenants in common.  My dad died in September 2022 - his 50% share was held "in trust" for my sibling and I, with a beneficial right for my mum to live there until she died.  My mum (with dementia) went into a care home in December 2022, and sadly died in June 2023.

At that point (i.e. after June 2023), my sibling and I applied for probate for both mum and dad because probate for both was/is required in order to sell the property.  My sibling and I were joint executors of our parents' wills.

You don't necessarily need to do anything right now, but you (or whoever is named as Executor in wills, if they had them) will have to apply for probate for both of your parents once your dad passes.

Hope that helps.

Keep_pedalling

SkyeD said:

My parents' house was purchased as tenants in common.  My dad died in September 2022 - his 50% share was held "in trust" for my sibling and I, with a beneficial right for my mum to live there until she died.  My mum (with dementia) went into a care home in December 2022, and sadly died in June 2023.

At that point (i.e. after June 2023), my sibling and I applied for probate for both mum and dad because probate for both was/is required in order to sell the property.  My sibling and I were joint executors of our parents' wills.

You don't necessarily need to do anything right now, but you (or whoever is named as Executor in wills, if they had them) will have to apply for probate for both of your parents once your dad passes.

Hope that helps.

This would be the normal way to do it. If Daz84 mother’s will does not do this and leaves her share directly to the children the the best option would be for all the siblings to create a deed of variation to create an immediate post death interest trust.

The advantages of this are that it provides greater security for the surviving spouse as it prevents issues that may happen of any of the children run into financial problems, get divorced or pre-decease their father. It also avoids a potential capital gains tax liability for the children when the house is eventually sold.  

Daz84

RAS said:

You need to read the will.

It may says something about your father having the right to live in the house, with conditions? Those could be until death, might include the right to down size etc. You siblings and your father need to know what they are.

If so, that creates an immediate post death interest trust.

Your dad has 2 years from the date of your mum's death to register the IPDI trust with the HMRC. 

If it doesn't come back here as there's load of complications re first time buyer status, capital gains tax, benefits that you need to understand.

Thank you for the advice. I believe the will states that my father has the right to continue living in the house until his death, but I will check and report back.

Daz84

SkyeD said:

My parents' house was purchased as tenants in common.  My dad died in September 2022 - his 50% share was held "in trust" for my sibling and I, with a beneficial right for my mum to live there until she died.  My mum (with dementia) went into a care home in December 2022, and sadly died in June 2023.

At that point (i.e. after June 2023), my sibling and I applied for probate for both mum and dad because probate for both was/is required in order to sell the property.  My sibling and I were joint executors of our parents' wills.

You don't necessarily need to do anything right now, but you (or whoever is named as Executor in wills, if they had them) will have to apply for probate for both of your parents once your dad passes.

Hope that helps.

Thank you for the advice. So when your dad died and his 50% share was held "in trust" for yourself and your sibling, (with a beneficial right for your mum to live there until she died) did you or your mum have to do anything, e.g. register a IPDI trust with the HMRC?

SkyeD

No, we didn't have to do anything at all.

RAS

SkyeD said:

No, we didn't have to do anything at all.

Your mum would have needed to register with the HMRC if she had survived 2 years, or her attorneys.

Daz84

SkyeD said:

No, we didn't have to do anything at all.

Possibly because both your parents died less than a year apart?
Sorry, just trying to understand when there's a need to register a IPDI trust with the HMRC and when there's no need to do anything.

SkyeD

Yes, we didn't have to do anything because they died 9 months apart.  The sad thing, I guess, is that we knew that mum wouldn't last too much longer after dad died.  It wasn't an absolute certainty, but it was highly probable, and actually came true.
I can't comment on what @RAS has said because I don't know those ins and outs of 'after 2 years'  (Wasn't applicable to me given that their deaths were so close, so I didn't need to find out.)

Daz84

RAS said:

You need to read the will.

It may says something about your father having the right to live in the house, with conditions? Those could be until death, might include the right to down size etc. You siblings and your father need to know what they are.

If so, that creates an immediate post death interest trust.

Your dad has 2 years from the date of your mum's death to register the IPDI trust with the HMRC. 

If it doesn't come back here as there's load of complications re first time buyer status, capital gains tax, benefits that you need to understand.

I've reviewed my mother's will, and as expected it appears a straight forward 'tenants in common' agreement, stating that the life tenant shall remain my farther and that the trust period is the time between my mother's death and the death of the life tenant (my farther).

So I assume that means my farther needs to register the immediate post death interest (IPDI) trust with HMRC now that my mother has died? 
Is that something normally done by himself, or is it best he get's his solicitors (the same who wrote the wills) to do so?