When two or more people buy a property together, the property can be held in one of two ways. The first way is as joint tenants, where each person owns the entire property and their shares cannot be divided. If the house is sold, each person receives an equal share of the proceeds and if one tenant dies, the other(s) automatically own all the property.
With tenants in common, however, each co-owner has a separate and distinct share. For couples, this is usually 50% each, although this can vary. Co-owners may choose this type of arrangement if, for example, they have brought a property together but have contributed different sums towards the purchase price.
Owning a property as tenants in common also provides more versatility when writing your Will, as owning a property in this way allows you to gift your individual share to whomever you choose.
You may decide that you wish to give someone your share of the property directly. However, in cases where you share the property with someone else one of the following trusts may be more appropriate:
Discretionary Trust
Putting your share of the property into a Discretionary Trust can help reduce the impact Inheritance Tax has upon an unmarried co-owners estate. By putting your half of a property in a Discretionary Trust your other co-owner can benefit from it during their lifetime but your share of the property will not form part of their estate when they die.
Life Interest Trust
Many people are concerned about the impact care home fees could have upon their estate. Owning a property as tenants in common and putting your share into a Life Interest Trust can enable your spouse or partner to continue to live in the property after you are gone but will protect your share of the property for your chosen beneficiaries should the property later need to be sold to pay for your spouse’s care.
People who are currently jointly own their property as joint tenants can change this arrangement to a tenants in common agreement by serving a Notice of Severance.
Will-writing services from The Co-operative Legal Services
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Our team of legal experts are here to offer free legal advice on Wills, Discretionary Trustsand Life Interest Trusts. We will help you make the right choices about how to protect both your property and your chosen beneficiaries.
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