Lifetime Mortgage and Inheritance

The_Queen_of_Stops

My parents took out a lifetime mortgage on their property in 2007. When my mother passed away seven years ago she left half the property to my youngest stepsister though I’m not sure that the lenders were informed of the fact. My father passed away earlier this week and it appears he died intestate as we have yet to discover a will although he did leave a letter full of various wishes. I’m unsure as to whether my mother’s will would actually be valid if the lenders had not been informed.

silvercar

The will would be valid, irrespective of whether a lender was informed.

Whether the property was owned as joint tenants or tenants in common may be significant. Presumably joint tenants if your mother was able to leave her half to your stepsister.

Your father’s estate will be distributed according the rules if he didn’t leave a will. A letter of wishes doesn’t have any legal standing AFAIK.

I would think your stepsister inherits half the property after allowing for the mortgage on the property. Though I’m unsure if that would be half the outstanding mortgage at the time of your mother’s death. With interest accruing your father’s half may have less equity as the interest accrued since your mother’s death would all be off his half.

silvercar

I will move this to the deaths, funerals & probate board, welcome to the MSE forum, @The_Queen_of_Stops sorry it is in sad circumstances.

The_Queen_of_Stops

Thanks. The whole thing is a total mess. Reading through the information with the Lender, it states that should someone else be added as a tenant they would need to have financial checks. As far as I can work out from the Land Registry that does not seem to have been updated except to remove my late mother so whether that complicates matters I’m unsure. I’m concerned that my stepsister may miss out as AFAIK intestacy rules apparently exclude stepchildren of the deceased from the division of the estate.

Savvy_Sue

If your mother's will was written by a solicitor, it's worth checking if your dad wrote one at the same time (although if the practice has changed hands / gone out of business that may be difficult).

And although you're right about the Intestacy, you can still consider a Deed of Variation if other beneficiaries wish your stepsister to not lose out. 

RAS

It costs £7 to download the basic details of the house tenancy. It is important to know if it was listed as a joint tenancy or as tenants in common at the first  death so more delving may be needed. 

If it was TIC, you also need to read the will carefully as this may have left mother's half to the step sister
and protected your father's right to live there until a specified point (IPDI trust).

Firstly, it is not unknown for wills to be written on the basis that the property is TIC and the tenancy never to have been severed. In which case the survivor inherits everything.

If it was TIC and an IPDI trust set up in the will, removing mother's name was wrong as that portion of the estate passed to the IPDI trustees not to the father.

That's before you even start looking at the life mortgage situation.

silvercar

The_Queen_of_Stops said:

Thanks. The whole thing is a total mess. Reading through the information with the Lender, it states that should someone else be added as a tenant they would need to have financial checks. As far as I can work out from the Land Registry that does not seem to have been updated except to remove my late mother so whether that complicates matters I’m unsure. I’m concerned that my stepsister may miss out as AFAIK intestacy rules apparently exclude stepchildren of the deceased from the division of the estate.

The lender can’t make stipulations that override the law. Bottom line is that a will takes priority.

If the property was held as tenants in common then your stepsister inherited half, but the value of that half would be diminished by the outstanding mortgage. If your father didn’t leave a will, then laws of inheritance will dictate who inherits his half, less the outstanding mortgage (which may now be of a higher amount than 4 years ago). The beneficiaries could, under a deed of variation, change who inherits your father’s estate if they were minded to.

if the property was held  as joint tenants, your father became sole owner 4 years ago and his heirs now inherit, subject to the mortgage beiing cleared either by sale or by using other assets to repay the mortgage.

Keep_pedalling

If it turns out that the house was owned as joint tenants then, providing the beneficiaries of your father’s intestate estate agree, then a deed of variation would be an option to avoid your step sister missing out.

if they were TiC the house should not have been place in your father’s sole ownership. Did her will state that your father had a right to remain in the home? 

silvercar

Keep_pedalling said:

If it turns out that the house was owned as joint tenants then, providing the beneficiaries of your father’s intestate estate agree, then a deed of variation would be an option to avoid your step sister missing out.

if they were TiC the house should not have been place in your father’s sole ownership. Did her will state that your father had a right to remain in the home? 

It may be that the parents decided jointly that the stepsister inherit the mother’s half and the father’s share go elsewhere. Rather than an intention that the stepsister inherit it all. Blended families create complications and we don’t know who was the natural child of which parent. 

What happens with a lifetime mortgage in these cases? Is the total outstanding mortgage taken off each half equally or is half the outstanding amount at first death taken off that inheritor’s half, with all the subsequent interest plus half the outstanding amount at first death taken off the the second death’s inheritors?