And you thought leaving the house on death was straight forward

[jamesnparry]

Hi this is something from the telegraph, which makes you wonder are you in the same boat, or have you got it covered

 

 

"Geoffrey Boycott, the former England cricketer

Thousands of homeowners’ plans to leave property to their heirs could be hit for six by an obscure legal definition which Geoffrey Boycott, the cricket legend, has described as “double-Dutch”.

Mr Boycott went on to lose a test case in the High Court about the ownership of a home in the millionaires’ resort of Sandbanks, Dorset. But with the average house price now exceeding £161,000, according to the Halifax House Price Index, questions about who has legal title to property could have a major impact on much more modest households.

Now lawyers say many people – especially unmarried couples or those who have contributed unequally to the purchase of a home – may be caught out if they are unaware of the distinction between owning property as ‘joint tenants’ or ‘tenants in common’.

No wonder the straight-talking Yorkshireman suggested the difference was difficult to understand. But the legal jargon could mean other couples’ plans to bequeath or inherit property are stumped.

The Court heard that Mr Boycott bought a three-bedroom house overlooking Poole Harbour for his “friend and confidante” Anne Wyatt in 1996. Mr Boycott told the court he allowed Mrs Wyatt to live in the house rent-free, although they were no longer partners, for as long as she lived.

They were listed on the deeds as joint tenants. But when Mrs Wyatt died in 2009, aged 82, her half of the house went to her estate instead of to Mr Boycott. To his “huge surprise”, he discovered that Mrs Wyatt had changed the agreement in 2007 to a tenancy in common so that she could leave her share of the property to her heirs.

Andrew Goldstone, head of tax and wealth planning at Mishcon de Reya explained: “With a tenancy in common, when one joint owner dies they can leave their share to whoever they want in their will. That’s a big advantage where joint owners are neither married nor in a long-term relationship, since they won’t necessarily want their share to go the other on their death. Tenancy in common also makes sense for couples who each have their own children from an earlier relationship.

“It is possible to convert a joint tenancy to a tenancy in common but not the other way round. The technical term for bringing a joint tenancy to an end is called “severing the joint tenancy” and it’s very easy to do. It can be by mutual agreement, in which case the joint owners will usually document in what shares they will then own the property.

“However, it can also be done by just one of the joint owners giving written notice to the other. That sometimes happens when a couple are splitting up and one of them wants to be sure that if they die, the whole property won’t go to their ex-partner. This can mean that what was intended at the time of purchase can be overridden by one party alone. Once notice of severance is given to the other party it is too late to change.”

John Condliffe, a partner at Hogan Lovells, added: “In this case, Mrs Wyatt ended the partnership by serving notice on Mr Boycott, whose arguments did not push the boundaries of legal principles. If property is owned by joint tenants the owners together own the whole property equally and do not have individual shares in it. If one owner dies their share automatically passes to the others, and therefore a joint tenant owner cannot leave their share to somebody else in their will.

“By contrast, property owned by tenants in common entitles each person to a distinct share of the property, and their shares may be unequal. If one owner dies their share can be left to others in their will.”

This distinction is no longer as important for inheritance tax (IHT) planning by married couples and members of civil partnerships as it used to be, now the nil-rate band of £325,000 is automatically transferred to the surviving spouse or partner on the death of the first spouse or partner. That means even married couples and members of civil partnerships who have made no plans to utilise the first spouse or partner’s IHT nil-rate band effectively enjoy a £650,000 threshold for IHT.

However, the different forms of ownership remain relevant to many others; including unmarried cohabiting couples. Clare Rant, a property litigation specialist at Irwin Mitchell pointed out: “Disputes frequently arise following death where the ownership of a property has not been correctly identified at the will writing stage. A disappointed beneficiary – someone who is left an interest in a property under a will but where the property passes by survivorship to the joint owner – may also have a claim against the will writer.

“The distinction between the two interests is not just relevant to death. This is of particular importance to co-habiting couples, as they will not have the benefit of legislation which can redistribute property.”

So the legal jargon can prove more even important than the difference between deep square leg and silly mid-off. If in doubt, seek professional legal advice.

 

 

:arghh::arghh::arghh::arghh:

[silverbobby]

That's an interesting story. Me and my partner are not married but have children together and are joint tennants on our house. When we bought the house we agreed to trust each other and i hope if the worst did happen neither one of us would go against what we agreed.

[Petals]

It is always explained in an early letter the difference in ownership and I believe it would be no different in the Uk. Because of people not being married these days its one of the big discussions. Also comes up in defacto relationships if one party is putting in more cash than another or has dependent children from a former relations.

 

Another dark area is superannuation, people do not realise that if you do not put forward a beneficiary on death the trustees can bypass the wife and distribute to the wife and the children of the family. One to watch.