Protecting Your Assets

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. This person is then free to do what they want with it.

However, this can cause problems. For example:
  • If the survivor chooses to remarry, it is possible that the whole of the house will pass to their new spouse on their death, thus disinheriting the children of the first marriage. 

  • Further problems can occur if the survivor has to go into a Nursing or Residential Home. As they are the sole owner of the property, the Local Authority has powers to charge the cost of care against the value of the whole house. As a result, the children are again disinherited. 

  • The most effective way to avoid these problems is to change the way the home is owned from Joint Owners to Tenants in Common. As well as being straightforward, this process 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 by using a Will, can do whatever they wish with their share of the property on their death. Their options include:

  • leaving it to their (own) children so that if the surviving spouse remarries they will only own their own half of the property and can only give their share to their new spouse.

  • 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. This ensures 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 may not be able to charge any of the cost of care against the value of the house.
However, we do recommend provisions are also made in the Will using a Will trust. This will delay the gift and prevent the surviving spouse being forced out of the home as well as ensuring that the surviving spouse can have access to the capital and/or income if the house is sold. This type of trust is called a Life Interest Trust and is sometimes marketed as a Property Protection Trust.

Protecting your savings 

The trusts referred to above can also be used to protect savings from loss in the event of re marriage or the need to fund care fees. This type of trust is also a Life Interest Trust but is sometimes marketed as a Flexible Life Interest Trust. 

If you would like to find out more about how you can protect your assets, please contact one of our members by clicking here.