@ Flounderbout

[Apache]

A question for our resident legal-beagle.

Just looking into mortgage agreements for our new pad, and the question 'Joint Tenants' or 'Tenants in Common' came up.

I understand that Tenants in Common' has certain benefits in terms of what happens to your house if one of you is taken into care, and in terms of inheritance tax. It seems like a good idea in principle. Any thoughts? Do's and don'ts?

I'll message you on Farcebook too as I don't know how frequently you visit these days.

[flounderbout]

A question for our resident legal-beagle.

Just looking into mortgage agreements for our new pad, and the question 'Joint Tenants' or 'Tenants in Common' came up.

I understand that Tenants in Common' has certain benefits in terms of what happens to your house if one of you is taken into care, and in terms of inheritance tax. It seems like a good idea in principle. Any thoughts? Do's and don'ts?

I'll message you on Farcebook too as I don't know how frequently you visit these days.

As I understand it there are two wheezes which are designed to avoid inheritance tax and reduce your means for means tested care home costs, which I believe have been proposed as a suggestion but not yet brought in. Both involve changing from joint tenancies (where one partner can't divest any part of the home because the property is owned jointly and inseparably by the JTs) into a tenancy in common, which means that one partner can leave half (or some other proportion) of the property to children, which reduces (arguably) the "means" which are assessed by care home mean test, and also allows property to be passed to children in two "halves" to reduce their inheritance tax burden.

As for the former, the suggested means test for care was going to be £23k - see here So must homes are going to way exceed that even if you only have half. As to the latter, I had understood that the government had put in place exceptions to ensure that one part of a couple could pass on their IHT allowance to their surviving spouse - see here.
Both schemes (and this is the general downside of Ts in C) is that they require a certain amount of trust in your offspring and your partner. If you have a JT, then if you or your wife dies, they own the house completely. That is so even if you split up shortly before the death, or for example your wife leaves her share in the house to the gardener (or you to your secretary).
Also, while it may seem a good idea for one partner to be able to gift their share of the house to the children (for example) on their death, this may mean that they are able to force a sale subsequently.

On the other hand, a couple who have or may have in the future children by separate relationships may prefer T in C since it allows them to leave their share of a property to their own children - if there is a JT then the property passes to your partner on your death, and they may then leave it to someone other than your children.

The upshot is that I would scrutinise the alleged benefits of T in C carefully to see whether there are any real benefits and if so what they are (they may have changed from the situation above). At the end of the day everyone's needs and arrangements are different, and which arrangement is better will therefore be different - I would go through any particular concerns that you have with a specialist conveyancing solicitor (the one dealing with the sale should know all this) and see what they say.

I should add that I haven't done any property law since I had to pass an exam in it about 12 years ago - intellectual property law (me) and property law (not me) have much less in common than the name would suggest!

Hope that helps a bit anyway,

H

[Apache]

Thanks for that H. I managed to read through enough of those articles to come to the conclusion that it's probably a good idea as long as we are quite explicit with our wills, though it seems we don't have to go that route right now as we can change for a small fee at any time.

I struggle with this kind of stuff - my brain isn't wired to understand legal / financial matters