Friday July 04 2008

The way you jointly
own you home

Most people who co-own their home with another person do so as Joint Owners. They both own the whole property. On the death of a Joint Owner, the home AUTOMATICALLY becomes the sole property of the survivor - who can then do what they want with it. However this can cause problems:

If the survivor then remarries, it is possible that the whole of the house will then pass to their new spouse on their death, thus disinheriting the children of the first marriage,

or

If the survivor has to go into a Nursing or Residential Home, as the sole owner of the  property, the Local Authority has powers to charge the cost of care against the value of the whole house, again disinheriting the children.

or

The value of the house is such that the survivor’s estate will be liable for Inheritance Tax on their estate.

The answer to all of these problems, is to change the way the home is owned from Joint Owners to Tenants in Common - a straightforward process that doesn't involve the mortgage company even if the property is mortgaged.

As Tenants in Common each owner owns one half of the property and, using a Will, can do whatever they wish with their share of the property on their death, including:

1. leaving it to their (own) children so that is the surviving spouse remarries they will only own their own half of the property and can only give their own share to their new spouse. We do, however, recommend that provisions are also made in the Will, through a trust, to delay the gift and prevent the surviving spouse being forced out of the home and also to ensure that the surviving spouse can have access to the capital and/or income if the house is sold.                                                                          
2. leaving it to their (own) children so that if a surviving spouse needs care, the Local Authority can only charge the cost of care against the half of the house that they own - ensuring in either case that their children inherit at least half of the value of their home. In fact recent case law indicates that the value of half a house (providing the owners of the other half don’t want to sell their share) is effectively Nil and in these circumstances the Local Authority cannot charge any of the cost of care against the value of the house.

If you would like one of our Members to advise you on gaining the benefits of this arrangement just click here