Joint tenants/tenants in common

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    Joint tenants/tenants in common

    What is the difference for a husband and wife to own a property jointly and to own it as tenants in common but for the wills to name the surviving spouse as the recipient of the deceased spouses half of the property.

    What are the difference if any for "common law" partners.

    #2
    Properties could be owned jointly as either joint tenants ot tenants in common.

    Where it is owned as joint tenants, it automatically passes to the survivor and could not be left to someone else in the will.

    Where it is owned as tenants in common, each joint owner owns a share of the property in their own right. This becomes part of their estate on death and given away according to the will.

    As far as I understand, there is no such thing in law as a common law partner. This person is simply just another person. That person can only receive what you have specifically left to him/her in your will and which you are capable of leaving to him/her. A property owned as joint tenants will automatically go to the survivor regardless of what you say in the will. If you want it to go to the common law partner, transfer the property to tenants in common basis and then prepare the will accordingly.

    Hope this is clear.
    Private advice is available for a fee by sending a private message.

    Comment


      #3
      Thanks for your reply - I do have a further query.

      If the property is in joint names, as I understand it, for a husband and wife no IHT is payable on the death of the first spouse. What happens in the case of two people, not married, but jointly owning a property say worth £800,000 on the death of one of them.

      Comment


        #4
        Look at it this way: with a 'tenants in common' relationship each of you effectively owns a specific percentage of the property - usually 50/50, but in some cases can differ where people have put down different amounts for the deposit or pay different shares of the mortgage each month. 'Joint tenants' means that BOTH parties BOTH own 100% of the property, so you own 100%, your partner also owns 100%. Therefore if one of you were to die, the other already owns 100% so there is no transfer effective for IHT purposes.
        If this is what you want to happen, it is always safer to do a 'belt & braces' job by covering it in your will as well. A suggested clause would be:
        (a) Although I believe the freehold property known as (property address) to be owned by the said (partner's name) and me as beneficial joint tenants so that my interest will pass to him automatically on my death I make the gift in (b) below in case this is not so or by the time of my death has ceased to be so
        (b) I give free of all inheritance tax and death duties and costs of transfer absolutely to the person named in (a) above all the beneficial interest which I have at my death in (or in the proceeds of sale of) the property described in (a) above

        This was the text my solicitor put in my will, not something I made up on the back of a fag packet!!

        Hope it helps

        Comment


          #5
          If you do not have any other assets to pass to your survivors, you would lose your entitlement to pass £275,000 nil rate band to the next generation IHT free.

          For simplicity, say a married couple own a house valued at £550,000 and they do not have any other assets.

          Scenario 1: Property is owned as joint tenants and therefore it passes automatically to the survivor at first death. The person who has died did not use the ability to pass £275,000 IHT free to say a son. The next to die will leave the house worth £550,000 less £275,000 nil rate band = £275,000 taxed to IHT at 40%.

          Scenario 2: Property owned as tenants in common. Husband dies and leaves his half share to his son. No IHT due as the gift is covered by £275,000 nil rate band. When the wife dies, she also transfers her half share to the son and again no IHT due as her share is covered by the nil rate band.

          It is always best to own properties as tenants in common and to pass at least £275,000 to someone other than the spouse, if financial position permits. There is no point in everything aggregating in wife's name and then get caught to IHT when she dies.
          Private advice is available for a fee by sending a private message.

          Comment


            #6
            Originally posted by Karongo
            .
            Scenario 2: Property owned as tenants in common. Husband dies and leaves his half share to his son. No IHT due as the gift is covered by £275,000 nil rate band. When the wife dies, she also transfers her half share to the son and again no IHT due as her share is covered by the nil rate band.
            This is not totally true, as the gift has to be left to a nil band discretionary trust to take advantage, as if the half share is just left to the son, the wife still living in the house, has a life interest share in the property, and as a result all the property comes under her for IHT. As I was caught out by this 2 years ago!

            Comment


              #7
              Joint tenants/tenants in common

              Forgive me if this is in the wrong forum but I am trying to assist my father in law. He is in his 80's and is in the process of changing the title of home. He wants (I think) to become tenants in common where half of house is given to estate and other half remains with living wife/husband. Estate will be worth well over inheritance tax level. (sounds grand but this is due to house increases). They live in the south!! He says a lot of his friends have done this but wanted reassurance it was the right thing to do. His main worry is, of course, tax implications. Can anyone shed any light on this rather morbid subject.

              Many thanks. Flo

              Comment


                #8
                Originally posted by Flo View Post
                Forgive me if this is in the wrong forum but I am trying to assist my father in law. He is in his 80's and is in the process of changing the title of home. He wants (I think) to become tenants in common where half of house is given to estate and other half remains with living wife/husband. Estate will be worth well over inheritance tax level. (sounds grand but this is due to house increases). They live in the south!! He says a lot of his friends have done this but wanted reassurance it was the right thing to do. His main worry is, of course, tax implications. Can anyone shed any light on this rather morbid subject.

                Many thanks. Flo
                Beneficial ownerships are like beneficiaries of a trust. Separate from legal ownership:
                i. BENEFICIAL JOINT TENANTS together form one person for practical purposes. If one dies, beneficial ownership is held jointly by survivors or solely by last survivor.
                ii. BENEFICIAL TENANTS IN COMMON have separate shares (equal or unequal) which exist independently, so shares can be given away or left by Will/intestacy.

                Were you asking about legalities, income tax/IHT consequences, or Probate aspects?
                JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                4. *- Contact info: click on my name (blue-highlight link).

                Comment


                  #9
                  Tenants in Common

                  Hi, I am looking at filling in a form17 and putting my partner on one of my properties as a tenant in commen in order to re-allocate some of the rental income. Can anyone help me with the following

                  1) how do i go about becoming tenants in common? do i need a solicitor? if so how much do they charge?
                  2) will this give my partner any right over the ownership of the house?

                  Your thoughts much appreciated
                  Many Thanks
                  Steve P

                  Comment


                    #10
                    Originally posted by stephenp View Post
                    Hi, I am looking at filling in a form17 and putting my partner on one of my properties as a tenant in commen in order to re-allocate some of the rental income. Can anyone help me with the following

                    1) how do i go about becoming tenants in common? do i need a solicitor? if so how much do they charge?
                    2) will this give my partner any right over the ownership of the house?

                    Your thoughts much appreciated
                    1. At the moment, is it in one name or two?
                    2. "Tenants in common" means that each of you would have a separate share in the property's value. When one of you dies, his/her share would not pass to the survivor as an automatic consequence (i.ie. only if by Will or on intestacy).
                    3. [If in joint names already] You need to sever the beneficial joint tenancy. There are differing procedures, depending whether it is already registered at HM Land Registry.
                    4. Best to use a solicitor. Cost likely to be no more than £100 + VAT.
                    5. Desirable also to execute a Trust Deed to govern shares and who can or cannot force a sale against other's wishes- extra cost about £100 + VAT.
                    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                    4. *- Contact info: click on my name (blue-highlight link).

                    Comment


                      #11
                      Thanks Jeffrey,

                      At present is it in my name only.

                      If i did transfer it into 't.in.c' and we split, (not that i think we are going to but like to know the facts) would she be entitled to any of the property. she has never lived in the property and i owned the property before we met.

                      Many Thanks
                      Many Thanks
                      Steve P

                      Comment


                        #12
                        Originally posted by stephenp
                        Thanks Jeffrey,

                        At present is it in my name only.

                        If i did transfer it into 't.in.c' and we split, (not that i think we are going to but like to know the facts) would she be entitled to any of the property. she has never lived in the property and i owned the property before we met.

                        Many Thanks
                        There are two levels of ownership:
                        A. Whose name is on deeds (LEGAL).
                        B. Who has what shares in benefit (EQUITABLE).

                        It's cheaper- and makes no difference- to keep LEGAL ownership in one name only.
                        To achieve tenancy in common, you need a Trust Deed. This divides-up the equitable interest. You will be giving-away some of your 100% to her, so of course she will then have a proportion of the property's value- that's the whole idea, innit? If you don't want that, don't do it.
                        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                        4. *- Contact info: click on my name (blue-highlight link).

                        Comment


                          #13
                          As this is a partner not a spouse there is no inter-spousal transfer exemption and the value of the ownership to your partners will give rise to a CGT liability. And yes tshe will own part of the property and should you split it could get messy as if she gives it you back she incures a CGT laibility on the rise in value of her share form when she first owned it to when she gave it you back. There may also be a small SDLT complication if there is a mortgage on the property and they will have to be informed of the change of ownership anyway. Regards Peter

                          Comment


                            #14
                            OK - THanks, with regard to the CGT, can we split the CGT on sale if we are t in c, presumably not the whole gain but her % from the time we tfred the property, thus using her CGT also. can you amend the %'s throughout period of ownership and if so would you have to work out the gain for each year at the diff %'s

                            Many Thanks
                            Many Thanks
                            Steve P

                            Comment


                              #15
                              The apportionment is defined by the TinC agreement, it is not a flexible arrangment to minimise Income tas or CGT on the sale of the property. If you have downloaded a From 17 you would realize that. Regards Peter

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