Joint ownership, what happens when one half dies?

Nicki

kunekune wrote: »

The second issue, and I keep banging on about this in this forum (without thanks, I will point out, LOL) the legal title is not always the end of the matter. If her father is a joint tenant at law, he may have more rights than that in equity. Sometimes, especially if one person has contributed more than half of the initial price or has made more than half of the payments, they will claim - and are likely to be successful with this claim - that they have a 'beneficial' interest of more than half.

My advice would be to make sure, at minimum expense, that everyone's entitlements are clear right now. That has two elements (at least: please don't construe this as detailed legal advice). First, if there tenancy can't be severed, at least get it in writing what the 'real' shares are. Provided this isn't in dispute, it won't be difficult: it involves a declaration of trust. Second, your wife really ought to make a will. Hey, I know ... I don't have one, lots of people who should know better don't have one, but at least we don't have a house ... but it is one of your most important protections. For both of you. Just make sure that if it is done before the wedding that it is clear that it has been done 'in contemplation of marriage'. Otherwise it will become invalid, I think.

Unless land law has changed beyond all recognition since I did my law degree, without my noticing, I'm not very sure what you are trying to say here!

If there is a joint tenancy, then as Margaretclare and I have already advised wife and FIL both own 100% of the property (irrespective of who paid what) and when one dies, title passes to the other in full. No mithering around about who paid what prior to both parties deaths affects that unless notice is served in writing before the death severing the joint tenancy.

It's always possible to sever a joint tenancy, at any time. And its never possible to convert a tenancy in common into a joint tenancy. When you sever the joint tenancy, you elect the shares. If there's a dispute, then you look to see who has paid what (both directly, but also by contributing to household expenses, which is what you may be referring to).

It's also possible (and I think this is where you are getting confused) to have a constructive trust, where two people buy property but its put only in one name, but both pay towards the purchase or renovation of the property. Here the party not in the deeds does acquire an interest in the equity (as you say irrespective of what the legal title says)

Also once you are married, all marital assets are up for negotiation in the event of divorce, especially if children are involved. The strict rules of who paid for what are not so relevant then.

However, some of your advice is sound(ish). OP your wife needs to:

1. sever the joint tenancy
2. decide with her father what the shares should be
3. if you are going to pay some of the mortgage decide what share of her share belongs to you
4. make a will disposing of her share to you
5. take legal advice about all of this to ensure she does it properly and not on the basis of advice on an internet forum!
6. perhaps consider buying her father out if the only reason he is involved was to keep mortgage company happy and if they will accept you as a replacement. If he hasn't in fact paid anything on the house, no real money needs to pass hands here.

Imp

The Future Mrs Imp here.

Thank you all for your advice (except the anti-freeze ), although I currently have no plans to die yet!

My father is on the paperwork for the mortgage just so that I could get one (mortgage repayments on a 2 bed property being less than the rent for a room in a shared house). Over the years he has lent me a little money to cover broken boilers etc, but never ever paid any mortgage. We've agreed that the loans come to around 10% of the property. I guess we should get this all in writing and see a solicitor when we're married.

aardvaak

Please delete.

kunekune

Nice dissection, Nicki, if a little patronising, LOL. Uncertainty is only because my land law was not learned in this jurisdiction and I am not comfortable with matrimonial property. I'm fairly solid on equity and trusts. But as a academic rather than as a practitioner.

The 'can you sever the tenancy' comment is not about whether it is possible in theory, but we only have OP's word about this. People do occasionally get it wrong, so any suggestions have to be premised on it really being a joint tenancy.

If we're being picky, I would say you can't just 'have' a constructive trust: the whole point of it is that it is imposed by the court to prevent an unconscionability. Of course, if there are actual financial contributions it's unnecessary, as there will be a presumed resulting trust anyway (we are looking at the future mrs imp and her dad, not mr and mrs imp).

The essence of my advice is that if the beneficial shares in the flat held with dad are different from those set out in the legal title (and it sounds as though they might be), it is far far better to use an express trust rather than assume it can be put right retrospectively.

Nicki

kunekune wrote: »

If we're being picky, I would say you can't just 'have' a constructive trust: the whole point of it is that it is imposed by the court to prevent an unconscionability. Of course, if there are actual financial contributions it's unnecessary, as there will be a presumed resulting trust anyway (we are looking at the future mrs imp and her dad, not mr and mrs imp).

Sorry, no intention to be patronising! Just felt that the way that your post was worded didn't in fact reflect the correct legal position under UK law.

I am of course aware that constructive trusts are a strategem used by the court to achieve an equitable result. You are being picky about my grammar, but I hope my advice was in any event clear.

Aardvark - you have now deleted your post, but if you acquired property on the death of a joint tenant, it is correct to say that this did not form part of the deceased's estate in any way.

chappers

Imp wrote: »

The Future Mrs Imp here.

Thank you all for your advice (except the anti-freeze ), although I currently have no plans to die yet!

My father is on the paperwork for the mortgage just so that I could get one (mortgage repayments on a 2 bed property being less than the rent for a room in a shared house). Over the years he has lent me a little money to cover broken boilers etc, but never ever paid any mortgage. We've agreed that the loans come to around 10% of the property. I guess we should get this all in writing and see a solicitor when we're married.

In that case I refer you to my anti freeze post #6

Use imps savings to pay your father off and provided you can both take on a mortgage(use your fiances savings as deposit) transfer the equity to yourselves either jointly or as tennants in common ,if you want and uneven share between you.But as your original question was about inheritance tax then just transfer the equity from your fatther to your fiance.Done
probaly not best to talk about divorce before your even married.

Hope you have a long and happy life together but I don't hold out much hope in one evening you have got married, been poisoned by your husband ,you have died your father has died, been divorced and probably spent a small fortune on solicitors fees if we are all to be believed:p

Imp

Thank you for all the replies. I think I am beginning to understand where to go from here. From what I have seen, it is definitely better to get things like this sorted out before anything happens, rather than trying to sort a mess out afterwards and risk lining solicitors' pockets.

The tax question is not really an inheritance tax issue. We are concerned about capital gains tax owed by the future father in law if the flat is sold. My other half lives there, so any gains are exempt from capital gains tax, but in the event of the flat being sold or the father in law being removed from the deeds, would he be liable for inheritance tax as he does not live in the flat?

margaretclare

aardvaak wrote: »

Margaret

I agree with your comments above if as you say both own 100%.
What happens as far as Inheritance Tax is concerned - is there no tax to pay on becoming sole owner?

Don't know. I'm not an expert on IHT. You need to talk to someone who is.

I only know as far as my own situation is concerned - we're joint tenants, but nowhere near IHT level.

Margaret