Worried about Tennants In Common

[pierrelejohn]

Hi
I hope someone can give me some advice.

About 7 years my husband and I decided to go from joint tenancy to Tennants in common, mainly because of the IHT- - care home fees and because he wanted to ensure that our daughter (now 7) would receive an inheritance.

There is a big age difference between us, he is 65, I am 41

At the time it seemed a very good idea, however 7 years on I'm getting worried.....

I have been granted life tenancy of our home in our wills, which we own outright (approx value £300k).
I understand that this means I can live until I die in our house.

My problem is .....

If I outlive my husband (very likely) and my husband passes away in the next few years (I have just lost my dad aged 71) I will need capital to raise our daughter.

I have read that because his share will then pass to our daughter, If I decide to downsize, I cannot get any money to reinvest.

example

1) our property is worth £300k
therefore If I were to sell this to get a smaller house value £100k, so I could spend the £200k on university fees, and bringing up our daughter etc, instead of being forced out to work (I'm a housewife)

or would this be the situation

2) our property is worth £300k
150k to daughter - buy a smaller house value £100k, therefore only get £50k to live on.

Im getting confused and worried, if the scenario in 2) is correct, is there anyway I can ensure that I am protected.

either by,
going back to joint tennants & giving my daughter a lump sum now.

any advice

Thanks
Ron

[Lee Young]

I think you have misunderstood what the term tenants in common means. It has nothing to do with tenancies in a letting sense. It merely means that you and your husband went from both jointly owning 100% of the property to each owning 50% of it, and also meaning that your wills can then deal with your respective halves of the property as each of you see fit. Iwould assume that at the time you also changed your wills?

[pqtaxation]

.... About 7 years my husband and I decided to go from joint tenancy to Tennants in common, mainly because of the IHT- - care home fees and because he wanted to ensure that our daughter (now 7) would receive an inheritance.

There is a big age difference between us, he is 65, I am 41

I have been granted life tenancy of our home in our wills, which we own outright (approx value £300k).
I understand that this means I can live until I die in our house.

Not sure that I share Lee Young’s impression that you have misunderstand about the term tenants in common. Perhaps you could comment.

Rather as I read your post, your husband’s will would create a life interest for you in his 50% share of the house and you have the concern that after his death you won’t be able to downsize to a cheaper home so as to release capital to pay the living expenses of your daughter and yourself. The usual reason for a spousal life interest, rather than to be bequeathed the 50% interest of the first spouse to die, is to ensure children of a previous marriage are not disinherited by the surviving spouse. You mention your husband's wish to make sure your daughter received an inheritance though in your case the she appears to be his only and your (joint) child.

As your husband’s will was executed before Oct 2007, there could also have been some thought about not using his nil rate band.

I suggest you discuss your concern with your husband and after clarifying your current wishes for your wills that you talk again to the solicitor who prepared your previous wills to make sure they still reflect your (individual) wishes since the advent of the transferable nil rate band.

[pierrelejohn]

Thank you PQ

As the IHT rules have now changed where the survivor gets the spouses rate, the original reason (IHT) is not valid now.

My husbands concern is that as I am so much younger I might want to marry again, so therefore whatever happens our daughter gets 50% value.
I don't have a problem at all with the 'tennants in common' as my husband can do as he wishes with his part of the house.
and yes we did change our wills at the time to lifetime tenancy.

My fear is that doing the tennants in common, will cause problems in the future.

I have probably read too many scare stories recently, but my real fear is that as I said above that I will be unable to use the equity from the house when / If I downsize, because my daughter would own half of it - and that I can only use 50% of the value for my own needs.

I can't really find answers, I have read about various trusts, but nothing seems to be concrete.

If we were the same age, then it would not be a problem, as if we were both 65, our child would have left home, and we would downsize together.

but the fact that I am so much younger, and that there is a possibility of having to bring up our daughter is causing me a real concern

Thanks again

I

[Lee Young]

The trust in the will should be sufficiently drawn to allow you to sell house A and buy house B and still be able to live there on the same terms etc.

As regards the generation of capital this might be a problem unless the trustees have the ability to advance capital to you in which case the property could theoretically at least be freed from the terms of the trust. However this would not safeguard the property for your husband's intended ultimate beneficiary, which might well be where the "tension" lies.