Useful ‘mixed bag’ Round Up

Some technical points are important to share, but not quite long enough for a full article on their own. This month’s round up brings together a few useful bite-size issues for practitioners.

Joint tenancy versus tenancy in common

For experienced Willwriters, the distinction between joint tenancy and tenancy in common will be familiar. For those newer to Will writing, HM Land Registry has produced a useful authoritative guide on the subject.

Read the Land Registry guide here

Care fees: why focus solely on the house?

The IPW has released a new lifetime trusts course, run by Peter Burton and Paul Hutchinson. It is well worth attending for anyone who wants to understand how settlements work, how they can be used, and the advantages and disadvantages of using them, particularly in relation to care fees protection.

Most practitioners will already be familiar with the use of life interest trusts in Wills, especially where couples own their home jointly. This often involves converting the ownership to tenants in common and placing the deceased’s share into a life interest trust, so that only the survivor’s share may be considered for care fees means testing.

However, this approach may not always maximise the opportunity. Practitioners often focus on protecting a share of the home, while residue is left outright to the survivor. Where residue is substantial, this may simply increase the survivor’s assets for means testing purposes.

It may therefore be worth considering whether residue should also be placed into a life interest trust, depending on the client’s circumstances.

Points of caution

• If capital is held in joint accounts, it will usually pass by survivorship, much like a jointly owned property.
• Clients may need to consider using sole accounts if they want certain funds to pass into a trust.
• The survivor must be comfortable not receiving capital outright and must be able to afford that arrangement.

A well-drafted life interest trust should give trustees suitable powers to gift or loan capital where appropriate.

Contemplation of marriage clauses and civil partnerships

When clients are planning to marry, Willwriters will often include a contemplation of marriage clause. Similarly, if clients are planning to enter into a civil partnership, a contemplation of civil partnership clause may be used.

But what happens if clients originally intend to marry, make Wills in contemplation of marriage, and later enter into a civil partnership instead?

Section 18 of the Wills Act deals with marriage, civil partnerships and conversions between the two. However, it does not cover the situation where a person contemplates marriage but then enters into a civil partnership instead.

In that situation, the contemplation clause may not take effect and the person may die intestate. The same issue can arise the other way around, where a Will is written in contemplation of a civil partnership but the client later marries instead.

One practical solution is to draft the clause so that the Will is not revoked by any subsequent marriage or civil partnership to the named person.

Technical Support
Paul Tansley