Many homeowners want to be sure that their share of the family home goes where they intend. Some worry about their children’s inheritance if the surviving partner remarried, or want to provide for children from an earlier relationship. Two tools often come up in these conversations. The first is severing a joint tenancy, and the second is leaving your share of the home in a Life Interest Trust in your Will.
This article explains how they work and what they can and cannot do. It also sets out the points to weigh up before deciding whether they suit your family.
Joint tenancy and tenancy in common
If you own your home with someone else, you will own it in one of two ways.
- Joint tenants: you own the whole property together. When one owner dies, the other automatically becomes the sole owner, whatever either Will says. Lawyers call this survivorship.
- Tenants in common: each owner has their own separate share. When one owner dies, their share passes under their Will, or under the intestacy rules if there is no Will.
Many couples own their home as joint tenants. That is simple and works well for many families. However, it means neither of you can decide in your Will who receives your half of the family home.
What severing a joint tenancy does
Severing a joint tenancy turns it into a tenancy in common. Each of you then owns a separate share of the property. As a result, you can each leave your share as you choose in your Will.
At A.D.E. Wills, we sever joint tenancies into equal shares only. We draft a Notice of Severance and Form SEV, and you sign them. We then send the signed forms to HM Land Registry so that it records the change on the title. The property stays in your names and you carry on living there as before.
Unequal shares need a Declaration of Trust, which we do not prepare. We can refer you to an appropriate professional.
Severance on its own does not decide who inherits your share. You also need a Will that says what should happen to it.
Life Interest Trusts in Wills
A Life Interest Trust lets you leave your share of the home in trust rather than to your partner outright. Your partner can usually carry on living in the property, or benefit from it, for the rest of their life. When they die, your share passes to the people you have chosen, often your children.
A Life Interest Trust can help:
- let your partner stay in the family home after your death
- keep your share for your children if your partner remarries or makes a new Will
- provide for children from an earlier relationship as well as your current partner
A note on care fees
Severance and Life Interest Trusts are a way of deciding who inherits your share of the home. They are not a way of avoiding care fees, and a local authority can look at why an arrangement was made. For questions about paying for care, we refer clients to a specialist adviser. You can read more about our service on our protecting your home page.
A note on tax
Leaving your share of the home in trust can have tax consequences. For help with tax, we refer clients to an accountant or financial adviser.
An illustrative example
For example, imagine a married couple who own a £400,000 home as joint tenants and have two adult children. They sever the joint tenancy so that each owns a £200,000 share. They then make mirror Wills, each leaving their share in a Life Interest Trust for the other, then to the children.
If the first partner dies, the survivor can carry on living in the home. The trustees hold the first partner’s share. When the survivor dies, it passes to the children, even if the survivor has remarried in the meantime.
This is a simplified example, not a real client, and the outcome in any real case depends on the facts.
Is this right for your family home?
These arrangements suit some families and not others. Things to think about include:
- whether you and your partner both agree on what should happen to each share
- any children either of you has from an earlier relationship
- whether the survivor might need to move or downsize, and how the trust would handle that
- the ongoing role of the trustees, who will need to manage the trust share
- any mortgage or other co-owners
Edward will talk these points through with you before drafting anything, so you can make an informed decision about your family home.
Talk it through with us
Severing a joint tenancy and adding a Life Interest Trust to your Will are both available for a fixed fee. You can see prices on our Wills Pricing page, and read more about our estate planning services.
If you would like to discuss your situation, call us on 01865 507174 or email info@adewills.co.uk. Your initial chat is free and there is no obligation.
