Tenants In Common Query

Keep_pedalling

Jointly held property is either owned as joint tenants or tenants in common. In the former the surviving owner automatically owns the whole property on the death of the other owner, in the later each owns a portion of the house ( usually 50/50 with a married couple) and each owner can leave their portion to whoever they like.

If your parents own as JT they they can sever the tenancy to convert to TiC, but that is just the first step they also need to make new wills in order to prevent ownership passing to the surviving spouse under the laws of intestacy. Normally each both wills are drawn up to create an immediate post death interest trust (IPDIT) on the death of the first to die. This will put the legal ownership of the deceased spouses share into trust but the surviving spouse maintains beneficial ownership with the right to live there for life. The children won’t actually inherit until the second death. 

This nearly always seems to be spoken about as a method of reducing care costs but there is a more important reason a couple, especially a younger couple, might do this and that is to protect children’s inheritance in the event that the surviving spouse marries again and either fails to make a new will or makes one in favour of their new spouse. 

Keep_pedalling

This is a duplicate thread, please do not cross post on multiple boards it just causes confusion.

I have reported the thread and asked for them to be merged.

Keep_pedalling

Debbie9009 said:

If your father needs care 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.

Deliberate deprivation of assets does not apply to this sort of arrangement. 

Albermarle

Flugelhorn said:

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

So if their half of the property's value was used up in care fees, did they then have to move to a lower cost council care home? Maybe they did not, but it certainly could happen.

KxMx

You also have to be extremely decrepit before local authority will pay for residential care.
It's much cheaper for them to fund four care visits a day (the maximum) and pressure family to call in on top (real life example).

And even when they do finally pay for residential care, after being forced to by a Hospital, the person isn't safe nor can their family rest easy, because assessments will still be made as to whether they can be discharged into another setting such as sheltered housing. 
Sometimes this process goes quite far by a zealous social worker, even when the person in question has been a resident for years and is very far gone with dementia. 
Another real life example! 

Assets don't just enable choice about where, but also when. 

doodling

Hi,

p00hsticks said:

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. ...,,, 

The bit in bold is highly unlikely to happen.

The change from Joint Tenants to Tenants in Common is not a deprivation of assets but a clarification of who owns them (assuming the split of ownership was fair)  If councils tried to call that deprivation of assets then it would be in people's financial interest to divorce as soon as care became likely - I'm not sure that would be in the interests of the country as a whole given the amount of care provided for free between married couples.

Albermarle

OP,
Another thread on the same topic.
IHT And Tenants In Common — MoneySavingExpert Forum

MEM62

WSB said:

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.

If your father was unfortunate enough to need care, why would be deprive himself of the means to pay for it and make himself comfortable?  If the only reason for that is to increase your inheritance the I would argue that, from a number of viewpoints, that is not the right thing to do.  

WSB said:

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

There are several organisations that will claim they can arrange this for you.  However, before doing anything make sure you are familiar with the rules covering "deprivation of assets".   

WSB said:

user1977 said:

What advice did his friends get before they did it?

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".  

Ah!  His mates at the tennis club. That well-known source of financial advice that is almost as reliable as "the bloke down the pub".  Sorry, couldn't resist.  

MSE_ForumTeam5

Keep_pedalling said:

This is a duplicate thread, please do not cross post on multiple boards it just causes confusion.

I have reported the thread and asked for them to be merged.

We've merged the threads. As mentioned, posting the same thing in more than one place isn't permitted.

SDLT_Geek

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?

A good case could be made for a rule that people should not post on these threads what AI says. 

This forum is surely asking the community what they think.  If a poster wants the drivel that AI spits out, then they should ask AI!