Tenants In Common Query

WSB

Hi,

My 74 year old Father has been speaking to some of his friends recently who were telling him that they have set up something called "Tenants In Common" with their children to help prevent (or mitigate) the use of property to pay for future possible care home costs.

Have told him I'd look into for him.
Hence this query.

Is this something that can be used in the manner he suggests and if so, how can you go about setting up.

Also, any advantages/disadvantages.

Many Thanks

WSB

Hi,

My 74 year old Father has been speaking to some of his friends recently who were telling him that they have set up something called "Tenants In Common" with their children to help prevent (or mitigate) the use of property to pay for future possible care home costs.

Have told him I'd look into for him.
Hence this query.

Is this something that can be used in the manner he suggests and if so, how can you go about setting up.

Also, any advantages/disadvantages.

Many Thanks

user1977

What advice did his friends get before they did it?

WSB

user1977 said:

What advice did his friends get before they did it?

Not sure. My Dad doesn't seem to know much about other than his mates at tennis club have all done it and that it's called "tenants in common".  He knew nothing about it other than that and has basically tasked me to look into it.

user1977

i_like_cats said:

It isn’t likely to work.  Here’s what AI said when I asked about it:

“You are correct that giving 50% of a property to your children while holding the property as tenants in common is unlikely to effectively avoid UK inheritance tax (IHT) under current rules.

That wasn't the question though - the OP is talking about care home fees.

And I think the first question is (even if the cunning plan worked) whether dad/OP would want him to be placed wherever the council puts him, rather than spend his own money on somewhere better?

Debbie9009

If your father needs card in the future then this may be considered deprivation of assets and he could be treated as still having the whole house, so it may not avoid that.

Assuming it isn’t treated as deprivation of assets then when his funds run out he will be placed where ever the local authorities see fit which may mean he ends up in a home neither of you are happy with, how would that make you feel ? I’m not trying to criticise you here, I genuinely think this is something you need to think about.

I have this issue with my parents they own the house as tenants in common, meaning whoever goes first their half of the house goes to my sibling and I with a condition the surviving parent can live in the house for as long as they want.  My sibling and I have already discussed this and agreed that if our half of the house is needed for care home fees then that’s what we will do with it, meaning my parents have achieved nothing by doing this, we just wouldn’t be happy with either parent in an awful care home.  One possible problem with this is if the house is sold to release money for care home fees, and at that timeone of us is on benefits at that time benefits would stop and we would have to live on that money, which would leave us feeling guilty.

elsien

I’d be careful about ChatGPT answers. They do have a bad habit of making things up at time so shouldn’t be relied on for anything important. 

comeandgo

I could think of nothing worse.  What it means is for you to benefit from your parents wealth you will put them in a position they need to rely on what is available at the bottom of the home care list, and it really can be dire.  To have the ability to choose your own care home and pay your own way is priceless.

Savvy_Sue

It can be a useful stratagem if both parents are alive: 'their' half of the house can be left to children, with safeguards to ensure that the surviving spouse cannot be forced out of the house, AND with provision to downsize / move elsewhere. 

But if you only have one person living in the house, it is far far better to ensure that they can continue to pay their own way for the rest of their life, whether that's in a gold standard care home; living at home with 24/7 carers; living at home with regular carers or paid for support and sensible adaptations, or moving somewhere like sheltered housing. 

Debbie9009's comment about benefits is also a potential problem, as is marriage breakdown - if any of those who are benefitting from this arrangement end up divorcing, this 'half a house' share is part of their assets. 

@WSB, I hope your dad has made a will which reflects his wishes, and that he has also set up Lasting Power of Attorney so that if he is no longer able to make decisions or carry them out, then you / your siblings / a trusted friend or relative can do this on his behalf. I'd also encourage him to consider whether the home is suitable for him both now and in the longer term, and to look at how it could be made suitable if that's where he wants to stay. But he should keep the means of choice within his control!

p00hsticks

Does your father live with any one else and do they also own the house ?
If not then the question is really irrelevant.

The idea behind this thinking is that when one of the people owning the property dies, rather than leaving the property to the surviving partner, it is left to (usually) the children, with a trust being set up to give the partner a lifetime interest to continue living there. 

The main reason for doing things this way is usually to ensure that any children from a previous marriage will inherit something, if the surviving spouse remarries or draws up a new will omitting them....

it could also potentially remove half the home from being considered for care home costs for the surviving spouse, although if the local authority believe that this is th reason for making this change they will consider it deprivation if assets and base their financial calculations on it not having happened. ...,,, 

Flugelhorn

user1977 said:

i_like_cats said:

It isn’t likely to work.  Here’s what AI said when I asked about it:

“You are correct that giving 50% of a property to your children while holding the property as tenants in common is unlikely to effectively avoid UK inheritance tax (IHT) under current rules.

That wasn't the question though - the OP is talking about care home fees.

And I think the first question is (even if the cunning plan worked) whether dad/OP would want him to be placed wherever the council puts him, rather than spend his own money on somewhere better?

Some relatives I knew did this and when one half of a couple died, and the other needed long term care, only half of the value of property was used for care fees - the other half going to the 2 children