Protect Your Property In Your Will
‘How can I protect my property for my children’ is a question frequently asked by a client when making a Will.
When you purchase a property with your partner, the property is often registered at the Land Registry as ‘joint tenants’. This means that in the event of either owners death the whole of the value of the property passes to the survivor, regardless of any provision in your Will.
It is possible to amend the ownership of the property so that it is owned as ‘tenants-in-common’. This means that whilst you still own the property legally in your joint names you can leave your respective half share of the property to whoever you chose in your Will by way of a Property Trust, whilst giving the survivor of you the right to live in the property for their lifetime or until they remarry or live with a partner as a couple.
This provision is extremely useful if you have children from a previous marriage or you are concerned that your partner may remarry and leave the property to his/her new partner thereby potentially disinheriting your children.
You are able to give each other peace of mind by making provision in your Will for your surviving partner to have either of the following rights:-
Right to reside
This provision allows your partner to remain in the property for their lifetime, or until they remarry and live with a partner as a couple. You may of course choose a set amount of time if you prefer. When your partner dies, moves into residential care or simply vacates the property for more than 6 months, their right to reside in the property comes to an end. The property can then be sold and your share of the property will pass to whoever you have provided for in your Will.
Your surviving partner would be liable for the upkeep of the property and utility bills during their right to reside. They would also need to insurance the property.
It is also possible to tailor the Property Trust to give the surviving partner the right to use all the sale proceeds of the property to purchase an alternative property to reside in if they so wish. The new property would be purchased half in the name of the survivor and half in the name of the Trustees of the deceased’s parties Will to be held on trust for their beneficiaries.
If there are any funds remaining after the new property is purchased the monies are divided so that half goes to the survivor and half will be distributed to the beneficiaries named in the late parties Will.
A Life Interest Property Trust in a Will has similar benefits as a Right of Residence, given that it has the same conditions as above, but has one important advantage. If the survivor finds they are left ‘cash poor’ when the other owner of the property dies, they have the option, if they buy a smaller property, to use income from the funds left of the deceased parties share. This can be beneficial in cases where the survivor has limited pension income. The capital of the deceased parties share is still protected for the deceased’s beneficiaries and is released to them when the survivor either dies or gives up their Life Interest.
When does the Property Trust take effect?
The Property Trust is written into the Will but is only effective on the death of the first owner. This means that you are able to move house as many times as you like during your lifetime. The only stipulation is that you advise your conveyancer that any subsequent property is purchased as tenants-in-common to ensure that the Property Trust in your Wills remains effective.
It is important when the first party dies that their share in the property is registered at the Land Registry in the name of the Trustees on Trust for the beneficiaries in the Will. This can be implemented after the Grant of Probate has been issued on the deceased parties estate.
It is also necessary to advise the Inland Revenue of the existence of the Trust when the first owner dies. There would not be any tax to pay unless the survivor decides to sell the property and downsize. Income Tax would then become payable on the deceased parties half share of the income from the unused capital going forward.
When does the Property Trust come to an end?
When the surviving party dies or gives up their Right to Reside or Life Interest. This can normally be achieved as soon as the survivor’s estate has the Grant of Probate issued.
Creating a Property Trust in your Will can be a very attractive option so why not have an appointment to discuss your circumstances and consider the benefit it could have for your family.
Call Melanie Cotterill now on 01752 546448 to have your free initial consultation to find out more