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Where Taxpayers and Advisers Meet

Joint property - Wills & DofV

Matthew
Posts:10
Joined:Wed Jun 07, 2017 11:06 am
Joint property - Wills & DofV

Postby Matthew » Mon May 23, 2022 2:44 pm

It is not yet two years since my wife died. My late wife and I were joint tenants. Of our children, X (who has a salary) also lives in the house, Y (who is married) in a rented flat, Z (who is also married) in a house with no mortgage. We all get on well together. Peering into the future, if I were to die, X will wish to continue living in the house, and Y-and-partner may at some time wish to move into the house as well.

There seem to at least three possibilities to achieve the above. (Naturally there will be sections of the form "but if so-&-so no longer alive, then ...", but I'm just trying to establish the basic approach.)

a) I write a new Will that says "the house to go to X and/or whichever other of the children wish to live in it. If none wish to live in it, then to all three equally to dispose of as they think fit. The rest of the estate (cash) to be divided equally among the three".

b) I set up a DEED OF VARIATION that says "My wife's joint-tenancy of the house passes not to me but to X". (But if I write a new Will as in (a) above, is (b) superfluous?)

c) Might it be advantageous in some way to use both my own WILL and a DofV (redirecting my wife's Will in respect of the joint tenancy) to achieve the desired outcome?

A comment on the viability, pros and cons of each possibility would be most helpful.

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Joint property - Wills & DofV

Postby AGoodman » Mon May 23, 2022 3:50 pm

There's no great advantage to diverting your wife's share (after a DOV) of the house to your children. Plus, if the 1/2 share is worth more than £500,000, the excess would be subject to IHT.
A DoV now also involves some risk on your part - you are no longer the owner of your entire home - potentially preventing you from moving or downsizing or selling up and cruising the world (etc). If the child receiving your share was divorced or bankrupted (or just short of funds) they might have to sell their share, and, if you could not buy it from them, you would lose your home.

It also risks you making decisions now which greatly disadvantage other children on your actual death - because they end up receiving a lot less.

The only possible tax advantage occurs if the value of the property grows faster than the nil rate band and residential nil rate band (currently £325k and £175k). If it did, you might save some IHT on your own death, but it carries the risks identified above.

This is not straightforward so best to find a specialist practitioner - ideally a member of STEP - to draw up the will.


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