How to Securely Pass on Your Home

We receive a lot of questions about home inheritance from our clients looking to set up a will, and for most homeowners, this is one of the most pressing matters they wish to sort out. Our houses are frequently the most valuable asset we own – physical testaments to the family that were often the product of years of saving. Everyone deserves assurance that their home will pass to loved ones through any eventuality.

Sole and Joint Tenants

The legal status of the homeowner is relevant to the process. 

If you are the ‘sole tenant’ of the property you own, it only needs to be listed in your will along with all your other assets and left to a beneficiary of your choosing.

If you are a ‘joint tenants’ of your home, this means you both own 100% of the property, and when one partner dies, the house is instantly inherited by the survivor and then passes through their Will on the second death. This is the most common position for people who are married or in civil partnerships. 

Alternatively, you can own the house as ‘tenants in common’. This status means you own a half share of a property, with someone else owning the other half, and your share can then be passed to other beneficiaries in a Will, instead of to each other, which can have a number of benefits.

Common Problems in Inheritance

It is normal to assume that your home will be automatically given to your descendants once you and your partner have passed away. Unfortunately, though, for many families, it isn’t always that simple. 

Sideways Disinheritance

In past years, there has been a growing understanding of the phenomenon known as ‘sideways disinheritance.’ Sideways disinheritance refers to an avoidable legal anomaly that leads to children and grandchildren completely losing their right to an inheritance. 

As life expectancy has lengthened, people in the UK have become far more likely to marry again after the death of a partner. When they are listed as joint tenants, the surviving partner inherits their deceased spouse’s share of the home. Upon remarrying, your property can become a shared asset in the new marriage, but should the survivor pass away, the home is liable to pass to their most recent spouse due to joint tenancy rules. When this happens, the children from the first marriage become disinherited. 

What To Do?

Joint homeowners can get around this by splitting shares of their home during their lifetime. You can divide ownership of your home between yourself and your partner, allowing you to specify an heir other than your co-owner in your will. 

If you want your share to pass on to someone other than your co-owner, joint tenancy is not the right choice. The easiest way around the automatic transfer of your property to a spouse is by re-registering as ‘tenants in common’ and writing a different Will in order to direct your share away from the co-owner. Doing so will protect your children and grandchildren’s eventual right to inherit the home.

Residential Care Fees

Our longer, healthier lives pose a second challenge to straightforward inheritance; residential care. Developing a care need is unavoidable for many people later in life and is a health requirement that between half and a third of all people will need someday. 

At present, anyone who has total capital assets valued at over £23,250 in England or £50,000 in Wales is not eligible for assistance with their residential care fees. To put this cut-off in perspective, the average weekly cost for a place in a care home is around £600, while nursing homes tend to charge over £800 (over 30k and 40k per year, respectively). Fees are even higher for those living in or near London. 

While some people close to the fee assistance limit are offered deferred payment, the value of the fees is taken out against the property value owned by the person in care, either when it is sold or when the person passes away. The tragic outcome of all this is the widespread forced selling of homes to pay residential care costs. 

What Can I Do?

Setting up a Protective Property Trust (PPT) for your home may defend your loved one’s inheritance from the authorities’ care fee calculations. These trusts work by splitting your property into two shares between you and your partner (tenants in common), thereby halving your respective capital ownership in the house. When the first partner dies, their half is held in trust through the Will. This ring-fences that value and cannot be means-tested in order to fund the surviving partner’s care. The co-owner can still remain in the house and protected until they pass away. 

Additionally, setting up a PPT can protect your children from disinheritance. Much in the same way as the share in trust not being used to fund the surviving partner’s care, that portion could not pass to a potential new spouse. Peace of mind that it will always pass the intended beneficiaries come what may.

Be cautious about any major changes you make to your ownership rights – this is your home first and foremost. You also do not want to take any actions with your home that jeopardise your position before the Deliberate Deprivation of Assets rules. Before making any expensive changes, it is far wiser to seek advice from a specialised legal team to assess your current situation and help you through the process.

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