IHT And Tenants In Common

drlabman · 30 November 2024 at 7:49PM

As a layman, I do find the legal-speak confusing.

I realise the change to tenants in common was done separately to the will i.e. to the land registry.

So I guess the simple question is: does the wording I've posted achieve what we wanted i.e. on the death of the first spouse her/his share of the property (50%) passes to the children (adults) - 25% each? And it allows the right of occupation to the surviving spouse?

Does the wording create an IPDI? And if it does, the surviving spouse retains the £1m IHT threshold, yes?

DRS1 · 30 November 2024 at 8:27PM

drlabman said:

As a layman, I do find the legal-speak confusing.

I realise the change to tenants in common was done separately to the will i.e. to the land registry.

So I guess the simple question is: does the wording I've posted achieve what we wanted i.e. on the death of the first spouse her/his share of the property (50%) passes to the children (adults) - 25% each? No see below And it allows the right of occupation to the surviving spouse? Yes

Does the wording create an IPDI? And if it does, the surviving spouse retains the £1m IHT threshold, yes? Yes

What it does is create a life interest trust on the first death (as everyone but me correctly said at the outset). So the surviving spouse has a life interest in 50% the house for as long as they survive and when they die that 50% is split between the sons.

From an IHT point of view the whole value of the house stays in the surviving spouse's estate 50% because it is owned outright and 50% because they have a life interest in it.

As mentioned above it stops the surviving spouse unilaterally changing who gets that 50% share of the house (eg if they remarry)

drlabman · 30 November 2024 at 9:12PM

DRS1 said:

drlabman said:

As a layman, I do find the legal-speak confusing.

I realise the change to tenants in common was done separately to the will i.e. to the land registry.

So I guess the simple question is: does the wording I've posted achieve what we wanted i.e. on the death of the first spouse her/his share of the property (50%) passes to the children (adults) - 25% each? No see below And it allows the right of occupation to the surviving spouse? Yes

Does the wording create an IPDI? And if it does, the surviving spouse retains the £1m IHT threshold, yes? Yes

What it does is create a life interest trust on the first death (as everyone but me correctly said at the outset). So the surviving spouse has a life interest in 50% the house for as long as they survive and when they die that 50% is split between the sons.

From an IHT point of view the whole value of the house stays in the surviving spouse's estate 50% because it is owned outright and 50% because they have a life interest in it.

As mentioned above it stops the surviving spouse unilaterally changing who gets that 50% share of the house (eg if they remarry)

Thanks for that. Looks like I really hadn't understood how it worked.

But now I have more questions so that I can try and understand fully. I don't think the solicitor is going to be able to explain it any clearer than she did at the time.

Let's say my wife dies before me and I need to move into council care. The intention of tenants in common is to prevent the council using the whole value of the house to pay for my care? I clearly don't own the whole of the house at that point - that's the goal - I only own 50%. So who owns the 50% of the house that I have a life interest in? Is it not the "children"?

Jeremy535897 · 30 November 2024 at 10:06PM

drlabman said:

DRS1 said:

drlabman said:

As a layman, I do find the legal-speak confusing.

I realise the change to tenants in common was done separately to the will i.e. to the land registry.

So I guess the simple question is: does the wording I've posted achieve what we wanted i.e. on the death of the first spouse her/his share of the property (50%) passes to the children (adults) - 25% each? No see below And it allows the right of occupation to the surviving spouse? Yes

Does the wording create an IPDI? And if it does, the surviving spouse retains the £1m IHT threshold, yes? Yes

What it does is create a life interest trust on the first death (as everyone but me correctly said at the outset). So the surviving spouse has a life interest in 50% the house for as long as they survive and when they die that 50% is split between the sons.

From an IHT point of view the whole value of the house stays in the surviving spouse's estate 50% because it is owned outright and 50% because they have a life interest in it.

As mentioned above it stops the surviving spouse unilaterally changing who gets that 50% share of the house (eg if they remarry)

Thanks for that. Looks like I really hadn't understood how it worked.

But now I have more questions so that I can try and understand fully. I don't think the solicitor is going to be able to explain it any clearer than she did at the time.

Let's say my wife dies before me and I need to move into council care. The intention of tenants in common is to prevent the council using the whole value of the house to pay for my care? I clearly don't own the whole of the house at that point - that's the goal - I only own 50%. So who owns the 50% of the house that I have a life interest in? Is it not the "children"?

No. It is the trustees, acting for the life tenant and the remaindermen.

DRS1 · 30 November 2024 at 11:17PM

drlabman said:

DRS1 said:

drlabman said:

As a layman, I do find the legal-speak confusing.

I realise the change to tenants in common was done separately to the will i.e. to the land registry.

So I guess the simple question is: does the wording I've posted achieve what we wanted i.e. on the death of the first spouse her/his share of the property (50%) passes to the children (adults) - 25% each? No see below And it allows the right of occupation to the surviving spouse? Yes

Does the wording create an IPDI? And if it does, the surviving spouse retains the £1m IHT threshold, yes? Yes

What it does is create a life interest trust on the first death (as everyone but me correctly said at the outset). So the surviving spouse has a life interest in 50% the house for as long as they survive and when they die that 50% is split between the sons.

From an IHT point of view the whole value of the house stays in the surviving spouse's estate 50% because it is owned outright and 50% because they have a life interest in it.

As mentioned above it stops the surviving spouse unilaterally changing who gets that 50% share of the house (eg if they remarry)

Thanks for that. Looks like I really hadn't understood how it worked.

But now I have more questions so that I can try and understand fully. I don't think the solicitor is going to be able to explain it any clearer than she did at the time.

Let's say my wife dies before me and I need to move into council care. The intention of tenants in common is to prevent the council using the whole value of the house to pay for my care? I clearly don't own the whole of the house at that point - that's the goal - I only own 50%. So who owns the 50% of the house that I have a life interest in? Is it not the "children"?

With a life interest you have the right to the income while you are alive. So if you moved out into care and the house was rented out you would get all the rental income (let's ignore expenses for this example). 50% of the rent for the half you own outright and 50% for the half over which you have the life interest.

If you (that is you and the trustees) sold the house and put the money in the bank then 50% would be yours outright (and presumably available for care costs) but the other 50% would be in the trust and you would only be entitled to any income generated by it. The principal would remain untouched until you died when it would go to your sons.

I confess I know nothing about council powers in respect of care costs but I would assume they could not touch the principal of the trust. Hopefully others know more than I do about that (and indeed whether the council could make you sell the house if you didn't want to)

drlabman · 30 November 2024 at 11:44PM

Jeremy535897 said:

drlabman said:

DRS1 said:

drlabman said:

As a layman, I do find the legal-speak confusing.

I realise the change to tenants in common was done separately to the will i.e. to the land registry.

So I guess the simple question is: does the wording I've posted achieve what we wanted i.e. on the death of the first spouse her/his share of the property (50%) passes to the children (adults) - 25% each? No see below And it allows the right of occupation to the surviving spouse? Yes

Does the wording create an IPDI? And if it does, the surviving spouse retains the £1m IHT threshold, yes? Yes

What it does is create a life interest trust on the first death (as everyone but me correctly said at the outset). So the surviving spouse has a life interest in 50% the house for as long as they survive and when they die that 50% is split between the sons.

From an IHT point of view the whole value of the house stays in the surviving spouse's estate 50% because it is owned outright and 50% because they have a life interest in it.

As mentioned above it stops the surviving spouse unilaterally changing who gets that 50% share of the house (eg if they remarry)
Let's say my wife dies before me and I need to move into council care. The intention of tenants in common is to prevent the council using the whole value of the house to pay for my care? I clearly don't own the whole of the house at that point - that's the goal - I only own 50%. So who owns the 50% of the house that I have a life interest in? Is it not the "children"?

No. It is the trustees, acting for the life tenant and the remaindermen.

That's interesting. But referring back to the Will ...

I appoint my husband X and my children Y and Z as my Executors and Trustees of this my Will

Does that mean X, Y and Z (myself and 2 sons) as trustees acting for the life tenant (me) and the remaindermen (sons presumably)? Struggling to get me head around that.

Sarahspangles · 1 December 2024 at 12:12AM

drlabman said:

Jeremy535897 said:

drlabman said:

DRS1 said:

drlabman said:

As a layman, I do find the legal-speak confusing.

I realise the change to tenants in common was done separately to the will i.e. to the land registry.

So I guess the simple question is: does the wording I've posted achieve what we wanted i.e. on the death of the first spouse her/his share of the property (50%) passes to the children (adults) - 25% each? No see below And it allows the right of occupation to the surviving spouse? Yes

Does the wording create an IPDI? And if it does, the surviving spouse retains the £1m IHT threshold, yes? Yes

What it does is create a life interest trust on the first death (as everyone but me correctly said at the outset). So the surviving spouse has a life interest in 50% the house for as long as they survive and when they die that 50% is split between the sons.

From an IHT point of view the whole value of the house stays in the surviving spouse's estate 50% because it is owned outright and 50% because they have a life interest in it.

As mentioned above it stops the surviving spouse unilaterally changing who gets that 50% share of the house (eg if they remarry)
Let's say my wife dies before me and I need to move into council care. The intention of tenants in common is to prevent the council using the whole value of the house to pay for my care? I clearly don't own the whole of the house at that point - that's the goal - I only own 50%. So who owns the 50% of the house that I have a life interest in? Is it not the "children"?

No. It is the trustees, acting for the life tenant and the remaindermen.

That's interesting. But referring back to the Will ...
I appoint my husband X and my children Y and Z as my Executors and Trustees of this my Will
Does that mean X, Y and Z (myself and 2 sons) as trustees acting for the life tenant (me) and the remaindermen (sons presumably)? Struggling to get me head around that.

Yes, this is when the ‘wearing different hats’ analogy comes in. You just need to remember you have specific duties when you are executors and when you are trustees.

Albermarle · 1 December 2024 at 11:33AM

Let's say my wife dies before me and I need to move into council care.

If you have sufficient funds then you would organise/pay for your own care. Only when you have less than £23K ( I think) is the Council obliged to pay.
However if you have little in the way of cash/income, but have an asset like a house ( or 50% of it in your case) , then the council will pay, but will want the money back when the house is eventually sold.

drlabman · 1 December 2024 at 7:02PM

Thanks everyone, this has been most helpful.

dinosaur66 · 2 December 2024 at 2:35AM

sorry for jumping in on your thread i have a different situation but on the same topic that i could use some advice on.

i was and have always been single never married and no children

in the 90s i bought my mothers council house in london under the right to buy 62k - from memory in order to buy it i had to move back in and pay the council full rent of £100 a week approx for 18 months to fufil council criteria of right to buy / my mother was a housewife /widow on a peppercorn benefit rent and had no money whatsoever / but i think it went in my mothers name because she was the tennant cant remember exactly

i sold the right to buy property in 2003 and bought a property with 100% contributon from me only in essex 250k

i had the property put in joint names 50/50 as in 2003 inheritiance tax was 255k ceiling and thought at 125k each we would both be ok as inheritiance tax threshold back in 2003 used to be raised with inflation every year and i thought as a 30 something that i would never ever get near the inheritance tax threshold .

naive on my part

now to limit my exposure to worst case scenario and mother has to go into private care home what are my options

only option i know is to sell the property and buy us another similar property and put it in my sole name bringing my mothers liabilty down to nothing and my fee for doing this would be about 25k in stamp duty and conveyencing fees

i was hoping last conservative govt plan to max care fees at i think it was 90k would go through but labour scrapped it as soon as they took power-

i would have just put 90k cash aside and end of problem or insurance around this would have popped up and you could have paid that.

i am guessing in my situation this splitting of property into tennants in common incur very large various taxes say 98-2 split ?

i have seen another term used for something else but every scenario i looked at was husband and wife/divorce /first buying of a house etc etc

never son and mother

IHT And Tenants In Common

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